India Uncut

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Thursday, December 08, 2005

One consequence of the rent-control act

The government will be spending Rs 2500 crores (apprx. US$ 5.4 billion US$ 540 million) of taxpayers' money -- our money -- into breaking down dilapidated buildings in Mumbai and building new ones in their place. So why is the rent-control act to blame? Well, consider why the owners of these buildings have no incentive to keep them in good shape in the first place, and why they cannot derive enough value from their property to maintain it properly.

And also consider that because there are more tenants than landlords, by far, it will not be politically possible anytime soon to repeal the act.

And also consider the many alternative uses for this money.

Update: For more on rent control in general, and why it is so destructive, do read Walter Block's essay on the subject.

Cross-posted on The Indian Economy Blog.
amit varma, 12:19 PM| write to me | permalink | homepage

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