Unreal Realty

In India, it is not shocking. Well established bank officials have taken bribes to dole out multi-crore rupees loans to real estate companies. It is suspected that some of the projects are risky and dubious. Though, apparently it looks like bribes-for-favours scandal, there must be much more than meets the eye. There are inherent irrationalities involved in the realty sector. The realty prices are soaring not because of the actual demand, but the prices are manipulated by the builders. The banks are providing them easy money which helps them to hold-on to the property thereby an artificial demand is created. Prices are rigged by the builders lobby in all the major cities.

The government should intervene and investigate the scandals since government banks and institutions like LIC of India are involved, and it is public money. It is high time that the prices of realty should have some controls and the prices should be justified. The bank officials should be made responsible for the recovery of loans given to the builders in a given time frame. The guilty should be punished and sent to jail. India should not end up in a situation similar to the US sub-prime mortgage crisis.