Is FDI in real estate beneficial for the common man?

Is FDI in real estate beneficial for the common man?

The new government has gifted the people with many hopes of "Acche Din". They expected the first budget of PM Modi led government to be a big bang. With all the positive and fair announcements it cannot attract the needed smile. Amidst the expectations and reality, the one sector that got all the required attention was Foreign Direct Investment in real estate. It is one of those steps that can bring the economy closer to the coveted dream of better days. So what is your opinion on the matter? Is FDI in real estate is beneficial for the common man?

Yes

• FDI in real estate will allow the people from the middle and lower-middle section of society to get their own house.

• The minimum built-up area is relaxed to 20,000 square meter from the previous set 50,000 square meter. The new change will attract the foreign funds that will further pave way for quality and affordable housing.

• The upper limit on FDI is raised to $10 billion from $5 billion. It will again attract cheaper funds that will allow the timely completion of the projects.

• Relaxing FDI norms is about easy availability of fund flows that will provide strength to the Indian currency and will keep a check on inflation.

• Investor sentiment matters a lot in real estate sector. FDI will work as a booster for investor sentiments and will enhance sales.

• The foreign funds will provide strength to the internal structure of investment bringing in more transparency in the system.

• Laborers will benefit from FDI in real estate as the MNCs pay premium over domestic-term wages.

No

• FDI in real estate is not a welcome step as the major big companies are already having huge debts in their balance sheets.

• The FDI in real estate dropped below $1.3 billion in last one year as compared to $3.1 billion between the period April 2012 and March 2013. The already set bar is not crossed, and government has raised the bar which will bring no benefit to economy and people.

• The multinational companies can create a cloud burst like the Lehman brothers did long back in year 2007. It will hamper the economic prospects of India.

• The decline in FDI in last one year is also a signal of the number of scams that took place during UPA government. Politicians are making money and no real benefit is reaching to common man.

• The FDI in real estate will hamper the progress and functioning of local businesses and they have to make changes in operations in terms of costs.

• In the long run FDI affects the balance of payment negatively from the time the investor covers its initial outlay. Later on, it is the host country that gets the actual capital returns.

• Initially the labor will benefit from premium wages but in the long term it will disrupt the local employment market.

Conclusion

The recent changes done in FDI sector in real estate are certainly a welcome sign. The introduction of premium international standards in terms of technology, material and design in regard to construction will boost the sector. The funds will be available at low cost and workforce will be more trained with latest means. The only concern area is the impact of FDI in long term. Government should make sure that in long term the policy should not become destructible for Indian economy.