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India’s Tallest Building Cut Down To Size

Summary:
The FT writes about the bust in India’s construction sector: It was meant to be the tallest building in India, with luxury flats, a swimming pool and cinema where billionaires and Bollywood stars could enjoy a life of perfect splendour looking down over the Mumbai skyline. But the Palais Royale complex now sits unfinished alongside other partially built structures tangled in the megacity’s traffic-choked downtown streets, an apt symbol of a crisis that threatens a key part of India’s financial system. Part of the problem is cyclic, a shadow banking system that overextended credit and is now having to deleverage. India’s construction sector, however, is also plagued by systematic issues including the fact that major construction projects are invariably sued and thus become entangled with

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The FT writes about the bust in India’s construction sector:

It was meant to be the tallest building in India, with luxury flats, a swimming pool and cinema where billionaires and Bollywood stars could enjoy a life of perfect splendour looking down over the Mumbai skyline.

But the Palais Royale complex now sits unfinished alongside other partially built structures tangled in the megacity’s traffic-choked downtown streets, an apt symbol of a crisis that threatens a key part of India’s financial system.

Part of the problem is cyclic, a shadow banking system that overextended credit and is now having to deleverage. India’s construction sector, however, is also plagued by systematic issues including the fact that major construction projects are invariably sued and thus become entangled with India’s notoriously slow legal system. Drawing on a Brookings India working paper by Gandhi, Tandel, Tabarrok and Ravi the FT notes:

But progress was soon slowed by legal challenges over allegedly unauthorised features, sparking a series of delays….However grand the planned building, Palais Royale’s woes fit a familiar pattern: 30 per cent of real estate projects and half of all built-up space in Mumbai is under litigation, according to a 2019 Brookings India report, with projects taking an average of eight and a half years to complete.

The post India’s Tallest Building Cut Down To Size appeared first on Marginal REVOLUTION.

Alex Tabarrok
Alex Tabarrok is Bartley J. Madden Chair in Economics at the Mercatus Center at George Mason University and a professor of economics at George Mason University. He specializes in patent-system reform, the effectiveness of bounty hunters compared to the police, how judicial elections bias judges, and how local poverty rates impact trial decisions by juries. He also examines methods for increasing the supply of human organs for transplant, the regulation of pharmaceuticals by the FDA, and voting systems.

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