RICS welcomes the recent decision by the government to impose mandatory environment and disaster management clearances for buildings above 15 meters, as a precautionary step in preventing fire related catastrophes in the future. This policy decision which allows entry and exit roads to be wide enough for fire engines and relief measures to be facilitated quickly, will ensure there are no compromises in ensuring fire safety, at least at the policy stage. While both aspects - wide roads and proximity to fire stations - are wise to consider before high rise projects are approved, practical implementation and enforcement will need to be seriously considered, for the policy to have the desired results. 

In India, the enforcement of stricter norms for structural safety, environmental factors and disaster management pose a challenge. In spite of having 32 standards for fire fighting and another 132 standards in place for fire fighting equipment as mentioned by the Bureau of Indian Standards, we continue to grapple with violation in the implementation and practice of such standards. Mumbai, Bangalore, Kolkata, Delhi and Hyderabad are all witness to such cases of gross negligence. National Safety Council carried out about 100 safety audits in 2010-11 and found that the compliance with safety norms is indeed poor. Compliance is indeed a problem as fire safety is a State responsibility and states deal with it in different ways and with varying degrees of efficiency. Inadequate funding of fire departments and poor staffing are the other problems that impact capabilities to deal with fires effectively.

To make the policy decision of having fire stations in close proximity to high rises effective, there is an urgent need to build capacity of fire stations in the country. The National Disaster Management Authority (NDMA) has  pointed out gaping deficiencies in firefighting capabilities to the 13th Finance Commission-the country has only 2.46% of the fire stations it requires, only 3.72% of the necessary personnel and 19.96% of firefighting and rescue vehicles that are considered a minimum prerequisite.  To offer a contrast, New Delhi has only 51 fire stations and 2,500 firemen but New York has more than four times as many firefighters to respond to an area half the size of Delhi with nearly five million less inhabitants than Delhi. According to a study by State Fire and Emergency Services, Bangalore should have 79 fire stations but it has only 13 stations and the government has approved only 7 more. Further there is shortage of the staff in municipal corporations to inspect buildings for compliance against statutory building bylaws. For example, Ludhiana municipal corporation had 50 posts of building inspectors sanctioned while only 18 were filled, where none were technically qualified for the job.

Additionally, management and maintenance of building facilities tend to play an important role in ensuring fire safety standards and norms are met. In the absence of regulation and mandatory enforcement of building laws, a combination of self certification of professionals within the real estate and construction sector, external performance reviews by accredited agencies and random construction inspections and audits will definitely help create a strong and effective system.

It is therefore imperative that we bridge the shortfall of our trained fire personnel and 'beef up' our fire fighting and transportation equipment with the latest 'state of the art' technology and meet the requirements of our growing cities, while ensuring we have the capabilities of servicing structures even above 60 mts in elevation.

In India, property valuations lack a scientific approach and transparency is severely affected by lack of authentic and comparable data, in the absence of land use data and land records. Land valuations seem to be working in extremes where either land is bought at cheap prices from farmers, irrespective of the development value of that particular parcel or it is auctioned by state Governments to earn higher revenues. While the draft land acquisition bill 2011 sought to address the malpractices in this area, the approach to valuation in the bill seems flawed as it follows certain 'rule of thumb' assumptions, that don’t reflect market realities. Also, the practice of land auctions is responsible for pushing land prices to unsustainable levels and recent land deals are examples of how land prices have escalated exponentially. While McKinsey estimates land cost in tier 1 cities to be in the range of Rs.700 - 1300 psf, the landmark Wadala deal at 150,000 psf is an example of how auctions have led valuations to reach unsustainable levels.

As India looks to adopt IFRS, which is based on fair value accounting, institutionalizing of International Valuation Standards (IVS) that lays down standards for financial reporting will become imperative. Currently Indian accounting standards require assets such as land to be booked at historical cost but with IFRS coming into play in near future, all assets will need to be valued at 'fair value' each year which will be more reflective of current conditions.

Therefore, there is an urgent need to streamline the property valuations process in India, with an aim to professionalize and regulate the market through consistent practice standards, valuation techniques and applications, coupled with skilled and self-regulated valuation professionals. We do see the RICS Red Book of valuation standards - India edition as being critical for India to adopt, since it provides an application framework based on consistent global principals that valuers can adopt. It provides guidance on valuations for different purposes, including valuation of development land.

The real estate bubble burst in India in 2008 was characterized by rapid increases in valuations of real property such as housing until they reached unsustainable levels relative to incomes and other economic elements. With the advent of valuation standards and subsequent professionalism in this practice, it is expected that valuation of land and properties will no longer be artificially inflated and this will contribute significantly in containing land prices, which are extremely important to be able to provide homes at affordable prices.

Ahead of the Union Budget 2012-13, RICS expects the upcoming budget to provide adequate stimulus to the priority areas within urban infrastructure and housing.

The upward revision in circle rates is a step in the right direction as it will help bring some level of rationalisation in the market - by minimising the difference between the prevailing 'market rate' and the existing 'circle rate'. This would augur well and improve accuracy of property valuations. Considering properties are usually registered at circle rates, the rationale of the government is - higher the base rate levied the higher will be revenues generated as registration fee and stamp duty is calculated as a percentage of the registered price of a property. However, the increase in rates to the extent of 250% may act as a deterrent and adversely affect consumer sentiment as property registrations will become costlier.

It remains undisputed that the fragmented and unorganised real estate sector is in need of a regulatory authority. However the establishment of a regulator is a complex task, given that land is a state subject, as a consequence of which there have been numerous ongoing consultations and debates on the proposed real estate regulator. RICS appreciates the initiative to further improve upon and facilitate a smoother introduction of the regulatory authority within the purview if the revised regulation bill.

Amongst the main differences in the current version of the regulation bill in comparison to the previous versions available in the public domain since 2009:

·         The bill is no longer a model bill which the central government has prepared for state governments to follow. With the format having undergone a change, the bill is now applicable to the entire country and leaves it to the State Governments to establish a real estate regulatory authority and other rules and procedures in due course

·         The Appellate Tribunal provided for within the new version of the bill, is now at a Central Government level as opposed to the earlier State Government level. This prima facie seems to a wise move.

·         There is also a correlation between the Competition Commission of India, whereby the bill establishes that any disputes that fall within the purview of the Commission will be passed on to them for review and resolution.

Most of the other provisions - which were much debated - such as the minimum 5% bank guarantee, registration of projects with the authority, developers obligations towards consumers and the various functions that the regulator must perform have not undergone any significant change barring a few minor refinements.

While the intent behind the land acquisition, resettlement and rehabilitation bill is to protect poor farmers and land owners from being under compensated and exploited, there are some significant conceptual issues in the draft bill.

First, market value must not be laid down as a rule of thumb, but determined in accordance with internationally accepted standards and valuation needs to be carried out by competent valuers. The current bill prescribes market value to be determined based on registered sale deeds, which are significantly under reported and hence not reflective of the market reality. Instead of following an arbitrary approach of using a multiplier to inflate these values, RICS advocates adoption of global valuation standards and an enabling operational framework to ensure valuations are accurate. Recognising this crying need, the India edition of RICS Red Book of valuation standards, gives guidance to valuers on how to value development land in India. Adoption of such standards needs to be encouraged.

Second, the draft bill does not make any distinction between compulsory acquisition and open market transactions and treats the compensation to be given in both cases, equally. While we support compensation including solatium and resettlement provisions in case of compulsory acquisition, in market transactions between a willing buyer-willing seller, there is no emotional trauma for which a solatium (equal to 100% of the market value) needs to be given and neither should there by any responsibility of the buyer to provide rehabilitation and resettlement in such cases. The bill’s current approach, not underpinned by sound valuation & compensation principles, will certainly lead to cost of land becoming many times higher than today, thereby worsening the problem of housing affordability in the country.

The other important aspects that need to be better addressed by the bill pertain to the types of land that may be acquired. To ensure a balance between the need to provide land for urbanization and the need to grow food, the land acquisition principles should be based on the ‘quality of land to be acquired’ rather than ‘purpose of land acquisition’. As a general principle, high quality multi cropped irrigated agricultural land needs to be protected, for food security. To address this, the bill supported by an urban land policy, needs to include a land-use definition specifying what utilization classes and quality of land can be acquired and also, lay down exceptions. The other important aspect that needs work is the strengthening of public purpose argument which is very loosely defined and subjective at the moment. 

Be it the case of developing an SEZ in Nandigram or construction of the Sardar Sarovar Dam on the river Narmada, which led to the cancellation of a World Bank grant on grounds of displacement of tribal population or for that matter Singur, where 997 acres of agricultural land was to be acquired for the Tata Nano factory - a rising number of protests against land acquisition have surfaced in the country.

The most recent agitation has been in the villages of UP, where farmers are protesting against the poor compensation and false pretexts under which their land was acquired under the garb of 'industrial development' and then handed over to private developers to build residential townships in the Noida extension region.

Such consequences are increasingly dictating the need for legislation to address not only the issue of compensation, but also of resettlement, rehabilitation and public participation in negotiation of land acquisition. This is predominantly on account of the effects of displacement that spills over onto several generations and has dire consequences on the loss of traditional means of employment, change in natural environment, disrupted community life and marginalization of this segment of population.

Traditionally, land acquisition in India was carried out under the archaic Land Acquisition Act 1894, which allowed private land to be appropriated for a 'public purpose', such as building roads and irrigation canals to improve the country's creaking infrastructure. However, this act has been widely criticised as being weak and inefficient, given that farmers have been compensated unfairly, with the Indian government showing little regard for their loss of livelihood. Reports indicate that less than half of the over 40 million people displaced have been adequately resettled.

Though the Act was amended in 1954, it still has several fundamental flaws. Not only are the procedures complicated, but some of the most critical issues relating to land appropriation are not addressed in the legislation. Also, there is no clear definition of 'public purpose' and flawed property valuation techniques and the relocation and rehabilitation of displaced landowners has not been covered comprehensively in the framework of the Act.

Recognising these flaws, the government introduced the Land Acquisition (Amendment) Bill 2007 and the Rehabilitation and Resettlement Bill. The former limits the ability to acquire land for public purposes and expands the rights of those displaced by land acquisition, while the latter addresses compensation and resettlement of displaced persons. Both are before Parliament.

However, bearing in mind the recent upheaval in Noida extension, there is an imperative need to address the shortcomings even in these bills. A step in the right direction is the proposed single act that will combine both the land acquisition and rehabilitation and resettlement policies, which are currently managed separately. Additionally, the bills which are up for discussion in the next session of parliament need to address the issue of land being acquired by state governments for use by private developers. 

To this end, it is also necessary to improve the levels of transparency and accessibility to good quality land information within the system. Additionally, a process to aide the reduction of costs related to gathering and communicating of information and registration of land and property transactions needs to be implemented. Only when there is open access to good quality information, will the incidences of corrupt dealings reduce and help in the creation of a more mature land market.

It has been strangely characteristic for the real estate and construction industry in India to remain unregulated and unrecognized, even though it is one of the largest employers and contributors to national growth.

Real estate professional services have not quite matched the expectations of clients, as projects continue to remain plagued by several uncertainties and suffer on account of economic cycles, inflation and increased input costs, contractual bottlenecks and archaic laws and policies. All of these affect project commencement and delivery, along with the lackadaisical attitude and poor coordination between various authorities and agencies.

Consequently, both practitioners and the industry at large suffer from a tarnished and poor image. However, given the pivotal role that the industry is expected to play and as the sector becomes more complex in scope and structure, there is a growing demand for the realty sector to undergo a much needed 'facelift'. 

Greater emphasis needs to be awarded to project delivery in light of the human, physical and monetary resources that are lost as a consequence of such delays. Therefore, newer and innovative construction technologies, materials and equipments need to be leverage in order to build speed and efficiency into the project delivery mechanism, giving boost to a higher quality product. 

Also, with the growing international significance and realty markets being so intrinsically linked, there is a need to ensure that qualified professionals enter the industry, to elevate the level of expertise on offer. This can be substantiated by the increasing number of clients across the world looking at hiring qualified people that demonstrate a high level of commitment to project excellence.

To this end, self regulation and self regulatory professional bodies become extremely relevant especially in the near absence of an educational support system and a regulatory authority. Such bodies not only help improve the supply of qualified professionals and talent within the realty sector for developers/stakeholders to achieve their desired vision of projects, but also arms them with the requisite knowledge and life long learning and development through regular monitoring and training. Such form of regulation also helps ensure that all qualified professionals adhere to a prescribed code of conduct and ethics that help bring some level of accountability into the market. 

In addition to professionalism, enacting laws to enforce high standards of disclosure, transparency and corporate governance within the realty sector are also needed in order to minimize investor risk. Specifically with consumer interests in mind, there must be a redressal or complaint handling mechanism that provides much needed recourse against customer grievances.

So while this aspect is being addressed in the model real estate regulation bill, the current framework will need to be a lot more robust in indicating who and how disputes will be resolved. To this end, the regulator could look at identifying an ombudsman who would be responsible for adjudicating dispute cases, much on the lines of the SEBI Ombudsman regulations and Banking Ombudsman Scheme set up under the aegis of RBI.

The Indian property market has traditionally opted for illiquid, opaque and conservative sources of financing, unlike counterparts in the more developed markets where activities in the built environment are seen as potential avenues for investment. In fact until recently the construction sector even lacked 'industry status' which affected its prospects to acquire funds from banks and financial institutions.

And while 'special status' has now been granted to the real estate sector, the influx of capital to a large extent still remains limited; resulting in real estate being locked outside the financial market and unable to leverage investments. Construction and real estate being capital-intensive have further faced a liquidity crunch, with banks and financial institutions adopting a cautious approach to lending to the sector.

Now with realty firms looking to repay a debt of INR 75,000 crores of which INR 20,000 had to be repaid by 31 March 2011, various avenues of financing are being explored. In the recent past, developers have increasingly turned to non-banking financial institutions and private equity lenders to raise capital in order to roll over debt. In fact, private equity has experienced a phenomenal growth over the last two decades as institutional investors, seeking higher returns, have embraced this alternative to traditional asset classes. Such investment in 2010 accounted for approximately 34 deals taking place with a value over of $1100 million in the realty sector alone. PE funds are a good alternative source of finance as they typically look at investing in short-term, small-format projects with completion schedules of 3-4 years, thereby encouraging developers to stick to project delivery schedules.

But there is still hope for debt financing in the realty sector. Recent market conditions may have resulted in the near collapse of traditional real estate financing vehicles. But for those companies with investment grade credit looking to finance the acquisition and construction of new real estate projects, it is definitely worth while to revisit the synthetic lease financing structure.

The ability to finance 100 percent of costs associated with the asset under a synthetic lease is usually attractive to firms with alternative uses for cash. Even when residual value guarantees are required by the terms of such lease agreements, firms are able to invest restricted amounts of cash and generate interest income, which provide greater investment opportunities for the firm than a down payment on a traditional real estate loan.

Even though the budget is being regarded as a mixed bag for the realty sector, there is no doubt that low cost and affordable housing have received the much needed boost that it truly deserves, with both consumers and developers are at the receiving end of concessions. Primarily to stimulate growth in the housing sector and counter the impact of rising residential property prices, interest subvention of 1% on housing loans has been extended to housing loans of up to Rs. 15 lakh where the cost of the property does not exceed Rs. 25 lakh in comparison to the present limit of Rs. 10 lakh and Rs. 20 lakh respectively. This will ensure that ownership of housing and home loans become more affordable for larger base of households in the low income segments.

Additionally, allocations under the rural housing fund has been increased to Rs. 3000 crore and a mortgage risk guarantee fund under Rajiv Awas Yojana for urban housing is proposed. These funds will specifically aide in the provision of housing finance at competitive rates to targeted groups such as the LIG/EWS in both rural and urban areas.

From the point of view of the development community, the extension of investment linked deductions to businesses developing affordable housing under a notified scheme is definitely a welcome incentive. While specific details were not mentioned in the budget speech, subsequent announcement and clarity for this scheme is likely to encourage development firms to focus on low cost housing and thereby contribute in bridging the growing housing shortfall in India.

On account of rapid urbanization with over 40% of the population expected to inhabit cities by 2020 as compared to the current 28%, the Government has recognised and indicated housing as a priority sector and in spite of the housing shortfall, increasing pressure on land and infrastructure; housing in India continues to account for almost 80% of the real estate market, in terms of volumes. Therefore, it should not just be the prerogative of the government but also that of private developers to address the challenge of affordability, technology and capacity constraints in infrastructure and housing development in order to build a sustainable future.

Therefore, it is absolutely imperative that developers realise their corporate social responsibility and understand that business bottom lines are not the only operational and social concerns. By far, affordability is one of the biggest challenges and there is no denying that high property prices have affected coordinated economic development and social harmony. In the recent past, prices have continued to escalate well beyond the reach of a majority of urban Indians with the focus predominantly being on high-value high-margin developments rather than high volumes, low margins. This establishes the need for developers to increasingly focus on volumes and not prices, in order for a stable and sustainable property market to emerge.

To this end, the private sector needs to realise the enormous opportunity that exists within affordable housing. So while the Government continues its efforts to reform the market and facilitate participation for improved delivery of housing, developers must embrace new technologies and materials that aide in time and cost reduction, which in turn can leverage returns through higher volumes. Also, in the absence of a real estate regulatory authority and an appropriate consumer redressal forum, I believe that the onus should lie with developers in not being too 'short sighted' on corporate profits and should instead focus on the long term stability of a property market that is capable of attracting foreign investment and is an engine for economic growth.

Environmental sustainability is another aspect that developers need to embrace with open arms, especially in today's world. Several real estate companies during the development and construction process tend to ignore the laws of nature leading to growing ecological deterioration. We are well aware that buildings account for a large portion of carbon emissions, production of water effluents and solid waste and considering if these 'bye-products' of development are not addressed through the entire property life cycle, catastrophic consequences are to be faced - sooner rather than later. With such a bleak future, so blatantly staring us in the face, the realty sector has to be at the forefront of the shift towards sustainability, highlighting the need for sustainable development techniques and tools to be incorporated in the design, construction, operation and deconstruction phases.

This is definitely an aspect that will require realty professionals to upgrade their skills and knowledge to cater to inclusive and passive development. However, this is not the only aspect where the sector is facing a severe resource crunch. And while it might be true that the real estate sector has only developed over the course of the last decade, the truth of the matter is that our educational framework does not cater to the realty segment, where increasingly it is found difficult to attract and retain qualified professionals/talent and where demand is completely outstripping the supply of professionals. This establishes the need for professional formal education and also the need to train and retain employees that are capable of displaying higher levels of competencies, ethics and adherence to building standards.

Specifically with respect to building standards - this aspect has gained all the more significance, given the uncontrolled and rampant growth of unauthorised structures that continue to mushroom all over the country in blatant violation of building codes and safety standards, resulting in the loss of life and property. Thus, there is an urgent need to implement the compliance to the National Building Code, the so-called Bible of the construction industry. Also, adequate safety measures need to be voluntarily and mandatorily advocated by developers, given that most construction workers loose their life in 'on-site accidents' as a consequence of inadequate safety measures being implemented during the construction process, coupled with the lack of awareness, training and negligence of workers and project managers alike.

All these factors along with numerous others, in my opinion, should be adequate triggers for the realty sector to be sensitive to the social dimension of not only housing but also over-all real estate development in the country. Not only is there a need for appropriate pricing and strong ethical practices, but developers should also plan carefully as well as strategically to meet the demands of consumers and provide quality urban services, which can only be achieved through the bringing together of all the 'best-in-class' elements that conceptualize, plan and execute successful integrated development projects.

Given the cyclical nature of real estate activity, the sector over the last year has seen significant improvement post the recession with economic growth and favourable macroeconomic factors once again thrusting the sector into overdrive. However, it seems that the industry has been a bit too hasty in taking advantage of the positive turn in the market by constantly raising prices. In most cities, prices are once again out of consumer’s reach and investor driven speculative activity has resumed. These short sighted moves which have proved detrimental in the past have once again reared their so-called 'ugly head' and could undoubtedly affect the overall health of the market.

Therefore, as a pre-emptive measure to thwart yet another real estate asset bubble from forming, the central bank has over the course of the financial year, primarily as a tool to control the spiralling inflation and property prices, raised its policy rates. In the second quarter review of its monetary policy, the RBI has once again tightened its norms for the realty sector which will have implications on the end consumer as well.

It is quite clear that going forward, consumers will have to cough-up additional margin money towards residential purchases as housing loans have been capped at 80% of the total property value. While earlier there were no regulations which stipulated the maximum limit of borrowings from banks and financial institutions, typically about 10-15% of the asset value was funded by consumers as compared to the now mandatory 20%.

Though this does add pressure to a consumers' existing financial resources, it may be a good move, especially in the long run as this will encourage only serious buyers with borrowing credibility to invest in residential property and avail of home loans. Some sections of consumers may also benefit from the waive of pre-payment charges on home loans if foreclosures are funded by consumer capital as compared to borrowed sources of capital on which pre-payment penalties will to be levied.

However, as interest and home loan rates increase, albeit marginally as a measure to curb excessive borrowings, there will be an impact on the asset purchase decisions of both end users and investors, especially in the long run. Demand may be further dampened with standard asset provisioning norms for teaser loans increasing by five times to 2%. This could increase the credit costs for lending institutions, especially as they will now have to set more capital aside to cater for any defaults that may arise on teaser loans that have already been or are being issued.

Given that home loan disbursals increased by 20% during the last year driven primarily by various schemes offering low initial home loan rates, this move from the RBI has already forced several banks and housing finance institutions to rethink their strategy with respect to such products, with a number of banks already considering discontinuation of such schemes, given the now associated costs of these products. This move clubbed with the higher margin money requirement will definitely affect the demand for home loans, which may result in buyers deferring their purchase decisions, at least until the rates stabilise.

The apex bank is also looking at curbing speculative activity at the top end of the residential spectrum with the risk weightage of loans above Rs. 75 lacs being increased to 120%. This may subsequently cause interest rates on such home loans to go up, increasing the cost of borrowings. This move coupled with higher margin money requirements will definitely affect the demand for home loans in the luxury segment as well, which may result in weakening of demand for such properties.

Delhi saw the notification of circle rates for the first time in 2007. With the Government attempting to evolve a system to curtail the inflow of black money being invested primarily in immoveable properties, circle rates were levied as the minimum rates for valuation of land and property for the purpose of stamp duty on property transfer instruments. In fact, the Ministry of Finance is empowered to set up an all-India mechanism for determining rates of property valuation which would be uniform across major towns and cities in the country. Having said this, the circle rates have been hiked further as they reflected only 30 to 40% of the market value, which provide scope for the absorption of black money in property transactions. As on off shoot of the revision in rates in Delhi, neighbouring states of Uttar Pradesh and Haryana have also been enhancing circle rates over the last couple of years, specifically in areas such as Noida, Greater Noida, Ghaziabad, Faridabad and Gurgaon. In fact the rates have already been spiked in Gurgaon for the second time in seven months this year, with some areas seeing a spike of 100%. Even Ghaziabad has seen an increase of 10-20% in August this year.

In my opinion the revised circle rates which have been hiked by 100% in Delhi are unlikely to have too much of an impact on property prices. As prices are governed by the fundamentals of demand and supply whereas circle rates are more of an indicator of property prices. With the primary aim of the revision in circle rates being to minimise the difference between the average market rate and the existing circle rates, registration of property will definitely become a costlier affair while property valuation will move closer to fair or market value. For a genuine buyer, an increase in circle rates could also be regarded as a good move as consumers will now be able to avail higher loans from banks and financial institutions considering such organisations disburse loans on the basis of sales deeds which take into account circle rates while gauging property prices. Buyers can avail up to 80-85% of the total circle as home loans, which are extended only on the basis of the white component of money involved in the transaction.

With the likely adoption of International Financial Reporting Standards (IFRS) from April 2011, corporate India over the course of the last year or so has been valiantly attempting to cope with the advent of an entirely new form of financial reporting mechanism that will change the face of how revenue/earnings, valuation of assets or accounting for liabilities is undertaken by organisations across sectors such as IT, infrastructure and real estate. The adoption and implementation of IFRS principles will undoubtedly alter financial ratios and fundamentals and consequently change the perception of investors towards organisations and sectors.

In the realty sector, there has always been a high level of speculation and apprehension on the adoption of these accounting standards, especially as revenue under this system would be based on a 'completed contract method', wherein it is recognised and booked only when projects are completed and ownership transferred. This has definitely been a cause of concern for those developers with few projects in hand, resulting in revenues to be lumpy and staggered over several quarters. Additionally inventory, debtors and liabilities through advances would also be influenced and investors may come across a dip in depreciation as 'fair value' is used for valuing assets and liabilities.

Therefore you can just imagine the elation of the realty sector with the Government agreeing to let realtors continue to book revenues basis the 'percentage completion method', where account books are updated depending on the different stages at which projects are. This is definitely the right way to go, considering that a well planned road map for the implementation of IFRS needs to be instituted which will not adversely affect the performance of companies especially over the short run and at the same time provide international investors with the confidence of investing in Indian markets which are leaning towards the adoption of international best practices in accounting mechanisms.