The Supreme Court of India’s recent observations on the Real Estate Regulatory Authority (RERA) are not just about real estate – they are about governance itself. By questioning RERA’s relevance and lamenting its failure to protect homebuyers, the Court has delivered a grim reminder that institutions must justify their existence or face extinction. This is a landmark moment: the judiciary has placed accountability of public spending squarely at the centre of India’s governance debate.
The Court’s intervention is timely. India is on the cusp of becoming a global economic powerhouse, yet it risks being dragged down by bloated, inefficient institutions that consume resources without delivering outcomes. The RERA case is emblematic of a larger malaise: institutions that exist more to perpetuate themselves than to serve citizens. India’s middle class is the nation’s fiscal backbone. In FY 2022–23, individual income tax collections surpassed corporate tax collections, meaning salaried taxpayers now contribute more than India’s corporations. Just 3 per cent of salaried taxpayers contribute more in taxes than all of corporate India combined.
Yet, despite this disproportionate contribution, the middle class receives little relief. Crores are spent annually on maintaining commissions, boards, and authorities that deliver little measurable benefit. Many of these institutions function as sanctuaries for retired bureaucrats, complete with lavish offices, staff, and perks – all funded by taxpayers. Retired officials already draw inflation-linked pensions, yet continue to enjoy institutional privileges. This dual burden – pensions plus institutional maintenance – creates resentment among taxpayers who see little return on their contributions.
The imbalance raises a piercing question: Is the hardworking middle class funding inefficiency and privilege rather than progress?
RERA: A Case Study in Institutional Hollowing: Conceived under the Real Estate (Regulation and Development) Act, 2016, RERA was meant to protect homebuyers from unscrupulous builders. Yet, the Supreme Court has now observed that RERA has become a “facilitator of defaulting builders”, failing to enforce accountability. Across states, RERA offices consume hundreds of crores of rupees annually in salaries, infrastructure, and administrative overhead. Yet enforcement remains toothless. Many state RERAs fail even to publish annual reports, violating statutory obligations. A whole system has been set up, but without teeth, it has become another bureaucratic rigmarole.
At present, there is no single consolidated national figure for RERA’s annual expenditure across India. Each state establishes and funds its own RERA, and the spending is reflected in state budgets rather than in a unified central allocation. This lack of transparency itself is a governance concern. If we extrapolate across all 30+ states and union territories, the combined expenditure on RERA nationwide is likely in the Rs 400-500 crore per year range. This is a conservative estimate, as larger states like Maharashtra, Uttar Pradesh, and Gujarat consume disproportionately higher budgets.
This is symptomatic of a larger malaise: institutions that consume resources but fail to deliver outcomes. When we look at how nations allocate resources to governance, the contrast is striking. India spends roughly a quarter of its GDP on public expenditure, but much of this is swallowed by administrative overhead and fragmented institutions. Developed economies in the OECD spend closer to 40 per cent of GDP, but their higher spending is justified by robust accountability mechanisms, performance audits, and citizen-centric reforms. China, with public spending around one-third of GDP, channels resources into infrastructure and industrial policy, supported by streamlined governance structures that avoid duplication. The United States spends close to 38 per cent of GDP, but its oversight systems and transparent reporting ensure taxpayers can see where their money goes and what outcomes are achieved.
India, by contrast, overspends on governance without achieving efficiency. The problem is not the quantum of spending but the quality of its deployment. Institutions proliferate without sunset clauses, accountability is weak, and citizens rarely see tangible benefits from the crores poured into maintaining bureaucratic sanctuaries. Inequality and Governance: A Missed Opportunity: Here lies the paradox. According to the World Bank’s Spring 2025 Poverty and Equity Brief, India is the fourth most equal country in the world, with a Gini Index of 25.5 – lower than China (35.7) and the USA (41.8).
In theory, societies with lower inequality should have more accountable institutions and stronger public goods, because citizens expect equitable returns on shared contributions. OECD studies confirm that countries with lower inequality tend to have higher trust in public institutions and better governance outcomes. Nordic countries, for instance, combine relatively equal societies with highly accountable public institutions, ensuring that every tax rupee translates into visible public benefit. Nordic countries, with Gini coefficients averaging around 0.27, stand out as examples of societies where equality and accountability reinforce each other.
Their governments publish transparent budgets, conduct rigorous audits, and ensure that every tax contribution translates into visible public benefit – whether in healthcare, education, or infrastructure. By contrast, India, despite ranking among the most equal societies globally, has yet to align its institutions with this principle of accountability. India’s achievement in reducing inequality – lifting 171+ million people out of extreme poverty in the past decade – should have translated into stronger, more citizen-focused institutions. Instead, the persistence of hollow bureaucratic structures undermines this progress.
Citizens who contribute equitably to the tax system are left wondering why their money funds inefficiency rather than public goods. As stated, numerous commissions and authorities exist primarily as sinecures for retired officials. These institutions provide lavish offices, staff, and perks, funded by taxpayers. Retired bureaucrats already draw inflation-linked pensions, yet continue to enjoy institutional privileges. This dual burden – pensions plus institutional maintenance – creates resentment among taxpayers who see little return on their contributions. Worse, it perpetuates a culture of entitlement, where institutions exist not to serve citizens but to serve insiders. India’s aspiration to become a super economy hinges on governance reforms. Immediate measures include:
� Performance Audits: Annual evaluations of all public institutions, with closure or restructuring of underperforming bodies.
� Digital Governance: Leveraging technology to reduce human discretion, increase transparency, and cut costs.
� Civil Services Reform: Aligning bureaucratic incentives with citizen outcomes, not tenure or privilege.
� Sunset Clauses: Institutions should have defined lifespans, extended only if they demonstrate measurable impact.
� Citizen-Centric Accountability: Public dashboards showing expenditure, outcomes, and performance ratings of institutions. These reforms would not only reduce waste but also unlock resources for infrastructure, education, and innovation, propelling India into the global big league. The Supreme Court’s bold stance on RERA is more than a legal observation – it is a clarion call for governance reform. By questioning the very relevance of RERA, the Court has:
�Reinforced the principle that institutions exist to serve citizens, not themselves.
�Strengthened public faith in the judiciary as a guardian of accountability.
�Set a precedent for evaluating other underperforming bodies. This intervention is timely and transformative, reminding policymakers that public money is sacred and must yield public good.
India stands at a crossroads. On one hand, it is poised to become a global economic powerhouse; on the other, it risks being dragged down by bloated, inefficient institutions. The Supreme Court’s observations on RERA should ignite a nationwide movement for performance evaluation, accountability, and reform. The middle class – the backbone of India’s tax system – deserves better than to see its hard-earned money squandered on bureaucratic sanctuaries.
Comparative data from OECD nations and China shows that India is overspending on governance without achieving efficiency. And with India ranking among the most equal societies globally, its citizens have every right to demand institutions that deliver more. Administrative reforms, backed by judicial vigilance, can immediately elevate India into the ranks of super economies. The message is clear: Institutions must deliver or disappear, perform or perish.
(THE WRITER IS A DISTINGUISHED TECHNOCRAT, ACCLAIMED WRITER, AND POLICY VISIONARY WHO HAS SCRIPTED INFLUENTIAL WHITEPAPERS AND ANCHORED NATIONAL DIALOGUES ON GOVERNANCE AND REFORM. HE MAY BE CONTACTED AT CHARUDUTTA403@GMAIL.COM)