Letters: Bailout not the solution

The editorial, "Unsold homes" (July 29), suggests that the central and state governments should implement some reforms to save the already slumping real estate sector from sinking further. In the past decade, when real estate companies were witnessing a boom, nobody thought of imposing more taxes or duties on them. Considering the fact that these companies are still sitting on huge plots of land acquired at low prices, their Rs 70,000 crore debt pile, as mentioned in the article, does not seem that daunting an amount.

Higher margins are a thing of the past. Builders should offer properties to customers at lucrative prices and be prepared for wafer-thin margins. Seeking a bailout package from the government is not the solution. It is akin to the government providing PDS ration to the poor. Government support will paralyse the sector in the long run. It should be left on its own to fight back.

The editorial also states that there is a shortage of 20 million homes even as 11 million homes remain vacant. This indicates the disparity in property price expectation between buyers and sellers. Builders should be ready to forget their losses, sell at lower prices and focus on cash-flow and topline for the time being.That is the only way for the sector to come out of the crisis.

Siddharth Surana Chhindwara

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