NEW DELHI: The Indian economy may cross the $5 trillion mark even earlier than envisaged because of the “dynamic” leadership of Prime Minister Narendra Modi, but it urgently needs to shun the mid-50s socialist urbanisation policy of “thinking small, and managing shortages” and plan big, said DLF Ltd chairman emeritus KP Singh, who received the the EY Lifetime Achievement Award last Thursday.
An economy that size requires scores of new cities, he added, and, right now, the law does not exactly favour creating them.
DLF, under Singh, is widely credited with building Gurugram, which, over the past three decades has become home to the Indian HQs of many Fortune 500 companies, an IT and start-up hub, and a preferred residential destination dotted with high-end condos (including many built by DLF).
Singh, who spoke to Hindustan Times on the occasion of his recognition by EY, as part of its annual Entrepreneur of the Year award, rued that the current policy regime for real estate precludes the creation of another Gurugram. There was nothing like it before, and there will likely not be another like it again, he said in an interview at DLF’s Delhi HQ in Parliament Street, the large floor-to-ceiling windows in his room overlooking the iconic Jantar Mantar in the heart of the capital.
Rapid urban development must keep pace with the growth, which needs the government to rethink its land policy, Singh said.
“The government has to have power to acquire land. If they don’t have the power to acquire land for industry and for townships, then how can you have [them]? Today they can pass the law, they have majority in both places [the two Houses of Parliament],” he said. Land acquisition is a tough and often treacherous process in India, and the nature of landholdings and ownership makes the acquisition of large contiguous swathes of land for large projects next to impossible.
That could cripple India’s economic journey, Singh indicated, adding that urbanisation has to “stay ahead of growth”. And there’s no way that can happen unless the government steps in, Singh emphasised.
“I’m saying this, today I’m not an executive. But at the fag end of my life, I do believe I don’t want to abdicate the responsibility of highlighting what I have found,” he said. “…it is a thing is to know what has not happened and what should happen. And fortunately, we are blessed with a dynamic government today.”
Singh said the government should plan cities the way Noida was planned. “I would urge the government to follow the Noida example where the government acquired the land and auctioned it out to eligible people. But they have to be careful [in selection criteria of developers]… The government role becomes that of an enabler, facilitator, leaving the execution side to the private sector. What is a DDA? DDA is an enabler, facilitator and an executor. How can you do three things? It’s not possible. See the result. Who is suffering? The public.”
Singh spoke of how DLF exited the real estate business in the 1950s, as the government made it difficult for developers to acquire land in cities. In the 1980s, he said, he was able to build Gurugram because it was not considered an urban area. But it still took considerable effort for him to acquire individual plots of land (usually on credit from landowners with whom he dealt directly), aggregate them, and then convince the government of the day to grant him permission to build high-rises in a region that had been traditionally averse to them. Delhi, for instance, is largely low-rise. And then, Singh added, he had to work with the government again to build infrastructure, sometimes doing it himself.
Gurugram’s high-quality commercial real estate encouraged corporations based in Delhi’s crowded business centres such as Nehru Place to move out; General Electric’s (GE’s) decision to house its back office in the satellite city made it a magnet for IT and back office services companies; and its high-end condos attracted professionals and executives starved of similar options in the Capital. Everything came together.
It will be difficult for private developers to build a similar city now, Singh said, explaining that this was his logic for arguing that the government should modify the law so that it can acquire land and auction it out to real estate developers.
Looking back at his career, Singh summed up his learnings by quoting his friend, the legendary Jack Welch, who served as chairman and chief executive officer of GE from 1981-2001: “Lessons learnt by me for my past actions or policy failures have always given me an opportunity to begin again more intelligently.”