Strange as it may seem, IT professionals are building up the “land mafia” in Kerala. What’s more, they are converting their tax-payed white money into black money - and they don’t even seem to know it.Unlike most states, Keralites don’t invest in businesses is Kerala.
While the land is flush with NRI money, most of it is directed into palatial houses and real estate. Lack of investments in business has meant that a good number of youth has gone into lucrative but illegal activities, promoted by the so-called mafias - land mafia, spirit mafia, quarry mafia, sand-ming mafia etc. (In the strict sense of the word, none of this has achieved the level of “mafia”, which is actually a parallel government. At least, not yet!)
Of these, the one that has raised eyebrows of the central investigating agencies (DRI, ED, CBI, IB) is the sudden growth of “land-mafia”. Kerala is a small state with a high density of population, and naturally, land prices are on the higher side. Inward remittances from the Gulf already existed, but the growth in IT sector has meant that a lot more young people have a high disposable income in their hands. Unlike in the past when investment was limited to bank deposits or land, many more investment avenues exist now, like a well-controlled equity market and mutual funds (India has one of the most transparent mutual fund industry in the world). However, either due to ignorance or risk-awareness, those in IT still invest a good deal of their money in real estate. Most financial planners agree that the value of one’s real estate investment should not be more than 25% of one’s entire asset, but for IT professionals in Kerala, it is much higher, sometimes more than 100% (which means they are in debt due to loans). Buying flats to give out on rent is even worse - as any qualified advisor will tell you: the yield from them is less than bank FDs, even after including tax rebates. The current trend is based more on emotion and “also-ran”, rather than reason and facts. Banks have no problems in disbursing such loans to IT professionals though, due to their high income earning capacity.
Many middlemen have used these sunshine days to buy huge tracts of land from ordinary folks who reside in and around urban areas. What is alarming, however, is the arrival of “container money”. Last year, fake Indian currencies worth crores (thought to be printed at government security presses of neighbouring countries) have been seized from ships and containers at Kochi. DRI (Directorate of Revenue Intelligence) officials believe what has been caught is only the tip of the iceberg. Larger amounts have already passed into our economy. The only area where such huge amounts of money could change hands is the real estate sector, since other areas are now pretty well regulated by the Central Government. Since only 20-30% of the actual sale value is shown in the land records, and the rest changes hands as solid cash, a good amount of it is thought to be fake currency..
One significant point is the history of the real estate developers. Only a very few have been around for years. Most others have arrived, under the pretense of “Gulf” money. Coincidently, the above-mentioned containers too have arrived from the Persian Gulf. There is probably only one developer, Sobha Developers, who release their audited figures to the public. Others are private limited companies and apparently find no reason to release their figures, even after all the charges against the real estate developers. Building rules are nonchalantly violated by many newly constructed flats. For example, the building codes specify that there should be enough space around the apartment so that a standard fire engine can reach anywhere around the building. Look around in the city. At some flats, even a Maruti Zen would find that difficult!
IT professionals, by scorning other investment avenues, seems to be promoting the cause of the fraudulent real estate industry. Their readiness to buy land or flats at abysmally high rates enable the unscrupulous builders and their agents continue to thrive. (Amazingly, a flat at Kazhakootam anywhere near Technopark in Trivandrum costs as much as one at Hyderabad HiTech City? The internal finish of the ones at Trivandrum, however, are hopelessly pedestrian). The IT professionals buy the land or flat in the hope that land prices fetch highest returns. True, land prices do escalate faster than most other avenues (except probably stocks), but when they try to sell the land, they will be surprised to find that no one would be willing to buy it in “white”. In essence, if they do sell, they have actually converted their white money (when they had bought the land) into unaccountable black money. Bonus: Risk of the gotten black money being counterfeit is extra!
What a pity will it be when the IT professionals, who has sacrificed a lot for the economic spurt of this state, are themselves responsible for destabilising it. Whether they would continue to invest in land and flats or invest in much more productive and legitimate avenues, would determine whether this land would fall to the mafia -this time, in all sense of the word.
