Govt unveils ₹70,000cr boosttoexports,housing
BATTLING SLOWDOWN Real estate push to help complete 350,000 houses
NEWDELHI: Finance minister Nirmala Sitharaman on Saturday announced a set of measures to boost the economy — the third in four weeks — including a ~50,000 crore package for exports and the creation of a ~20,000 crore fund for real estate projects that is expected help complete around 350,000 flats and houses stuck in various stages of construction.
Sitharaman said the government will contribute ~10,000 crore in setting up a special window to provide last-mile funding for unfinished housing projects that haven’t turned into non-performing assets (NPAS) and are not facing proceedings at the National Company Law Tribunal (NCLT).
The projects would be “net worth positive in affordable and middle income category”, and contributions of “roughly same amount” will come from outside investors, she said.
Many of these flats and houses have been sold. According to an April report in Mint, around 400,000 such units (worth ~3.5 trillion) are stuck in the National Capital Region (NCR) centred on Delhi, and in Mumbai. Their buyers, typically belonging to the middle class, have been burdened with equated monthly instalments (EMIS) on loans taken to buy the flats and houses,
and, in many cases, the rent they pay for their current dwellings.
“The announcement of ~20,000 crore fund to help stuck affordable housing projects is similar to the concept of a ‘stress fund’ to help bail out incomplete projects that have been stalled owing to problems of liquidity..,” said Niranjan Hiranandani, president of the National Real Estate Development Council, and one of Mumbai’s largest real estate developers. “It will ensure many affordable and MIG [middle income group] projects stuck because of last mile funding
requirements – subject to not being under NCLT or NPA -- will be able to get completed.”
The fund will provide muchneeded “last mile funding” for unfinished housing projects and help about 300,000-350,000 homebuyers across the country, Sitharaman said.
“GOI [government of India] on the lines of NIIF [National Investment and Infrastructure Fund], can contribute to the fund while rest of the investors would be LIC {Life Insurance Corporation} and other institutions and private capital from banks, sovereign
funds, DFIS [development finance institutions] etc,” she said, explaining the contours of the real estate fund.
Stuck residential real estate projects have dampened sentiment and reduced the purchasing power of buyers. Economic affairs secretary Atanu Chakraborty said around 850,000 units are stuck and are in the process of resolution. “Even buyers of such units are recognised as operational creditors under the IBC [Insolvency and Bankruptcy Code] and they will get their dues,” Sitharaman explained.