The Tribune, Chandigarh, India

Realty developers using dealers to jack up prices
Ruchika M Khanna/TNS

Chandigarh, March 26
Most real estate developers in the region are now launching their projects through dealers appointed by them. Even before the project is formally launched by the company, most of these dealers, manage to ‘sell’ the project, by hype and word-of mouth promotion. This ensures that the cost of each plot/ apartment/ house is also increased substantially, thereby creating an artificial boom in the market.

Sources say that that this practice ensures that by the time the real estate developer formally launches the project, prices rise 20-30 per cent. Since most often, it is the dealers themselves who have picked up the property in the ‘pre-launch’ phase, they end up making a neat profit. On each unit (plot/ apartment/ house) sold, the dealers also get a commission (varying between 1.5- 2 per cent) from the real estate developer. Since the dealer is doing the whole ‘pep-talk’ with the buyer, the real estate developer simply pockets the profit and wash their hands off the dealers.

By creating this demand, dealers also lure customers by offering assured allotment and seek complete down-payment of the unit being bought. The developer thus makes profit within days. Almost all companies who have launched their projects in Mohali, Ludhiana, Amritsar and Panchkula have taken this ‘dealer’ route to ensure complete success of their project.

A similar scheme has come up on the fringes of the northern sectors in Chandigarh. Though this project, by the leading real estate developer in the country, is yet to be launched, it has already helped generate hundreds of crores - all accounted for-from investors wanting to get a plot here. Investors are being lured by dealers on promises of assured allotment, in case they make a down payment ( Rs 94 lakh to Rs 1.25 crore for 350 sq yard and 500 sq yard plots) within 45 days. This, when nobody knows the criteria for allotment.

“There is urgent need to have some kind of regulation on the way these builders are creating an artificial boom. Property rates are hiked by these dealers and the customer fails to get a decent accommodation as the rates are beyond their reach,” said a Chandigarh-based real estate agent.

Gujarat, Haryana top growth list; South India needs to catch up: Report

GROWTH PATTERNS

From 2005-10, real GDP growth in Gujarat has been 11.3 per cent, 11 per cent in Haryana, 9.6 per cent in Bihar, 8.5 per cent in Karnataka, 8.1 per cent in Kerala and 7.4 per cent each in Andhra Pradesh and Tamil Nadu.

Industry leaders attribute the slump in the South Indian region rising land prices, significant shortage in the availability of labour, infrastructure bottlenecks including port capacity and growing urban congestion in Bangalore, Chennai and Hyderabad.

Bangalore, March 26
Gujarat has leaped ahead of other Indian states in growth, while South Indian states are witnessing a growth slump, according to a report by Mckinsey & Co. Gujarat has grown 11 per cent compared to the all India average growth of 9 per cent, the report states.

South India has grown slowly, despite its overall strong position, McKinsey & Co Partner Ananth Narayan said. Ananth Narayan was present at the conference ‘The Next Wave of Growth- South India’, organised by the CII, where the McKinsey report was released.

Quoting the report, Narayan said Gujarat had achieved leadership in the chemicals industry, with 35 per cent share of all investments in this sector over the past five years. The state had also announced India’s first state policy on the development of new minor ports.

This has been followed with the “Jyothigram Yojana” for uniterrupted power supply and easing out business creation through a single window clearance system.

The state has also taken steps to market itself as an attractive investment destination through the “Vibrant Gujarat” summits held annually for the past eight years, he said.

While on one hand goverment policies - particularly on land acquisition - were still an issue, paucity of employees at skill levels was the main concern for the industry, he said.

The constraint on labour supply and low employability due to lack of skills drives up wage levels. This is growing into a major concern in Tamil Nadu and metro areas of Bangalore and Hyderabad.

South Indian states will have to create industry clusters to transform and grow, for example Tamil Nadu with its pre-eminence in automotive/auto components could have clusters in these sectors while Karnataka could have clusters in IT/ITES. The development, however, has to be sustainable and environment friendly, he said.

Aviation Notes
No quick-fix solutions possible
by KR Wadhwaney

Civil Aviation Minister Vayalar Ravi admits that he does not have a quick-fix formula to emerge out of the situation caused by the merger between Air India and Indian Airlines. Ravi says that majority of profitable routes, particularly to the Gulf region stand abandoned and route nationalisation is non-existent. He refused to disclose that why flights to revenue-earning routes were cancelled.

Ravi said: “We had a daily flight from Kochi to Sharjah at 8 p.m, on which occupancy was between 95-100 per cent. Without any justifiable reason, the departure time was shifted to 11 pm reducing occupancy from 95 per cent to 75 per cent. The private airlines were allowed to operate flights from the convenient time of 8 pm.”

No one knew why was this done and for whose gain except possibly providing benefits to private operators. However, the minister has placed a finger on the 'sickness' of the airline . He has also said that the government was wary of providing any more equity for the ailing national carrier and the turn-around of the airline has got to be brought about with the resources and man-power available. He added some profitable routes will be regained without hurting private operators’ interest.

"It is not possible to regain control on some revenue-making routes, without harming private operators,” analysts claim.

He also hinted that the Air India Express would be moved from Mumbai to Kochi. How will this exercise help Air India? The staff of Indian Airlines is of the view that it will be better to re-locate the national carrier back to Delhi, instead of rendering them ‘Gypsy’. Unions are of the firm view that de-merger of the national carriers is the only remedy.

Investor Guidance
No tax incidence on selling personal car
by AN Shanbhag

Q In my new employment, I am eligible for a company car, so I plan to sell my own vehicle which is over seven-years-old. However, I am not aware whether I would need to pay any tax on this transaction. For your information, my initial purchase price was much more than what I am going to sell it at - however, I am not aware if depreciation etc. should have been claimed - I am confused, since one of my friends told me that the book value of this vehicle would be negligible after accounting for depreciation and hence I would actually be making a profit.

— V N Mamtora

A An owned vehicle is a personal asset and there is no tax incidence, even if you were to sell the vehicle at a profit. By corollary, the loss that you will incur upon the sale is not tax deductible. In short, the entire transaction of the vehicle sale would be outside the purview of the tax net. What your friend maintains is more from an accounting point of view in the case of a business - however, depreciation etc. is not relevant in the case of an individual’s personal transaction.

Pension account

Q I am retired bank employee. Banks have recently allowed 2nd option for pension. I have opted for pension and to be eligible for pension, I have to pay back entire amount of Bank’s contribution to PF. Plus 56% of Bank’s contribution from my own sources of income. I have paid back to the bank this amount i.e. Bank’s contribution say Rs 6 lakh plus 56% i.e. Rs. 3,36,000 out of my salary arrears and interest income during FY 2010-11.

Can this amount of Rs 3,36,000 be set off against my total income for the FY 2010-11? Or can it be treated as Loss of Income and deducted from my total Income?

— Shamsher Singh

A There is no loss to you. This amount would be transferred from PF account to Pension account and both the accounts belong to you. This is a capital transfer. The rebates enjoyed by you in all these previous years will not be withdrawn.