Realty sector says meh to FM Nirmala Sitharaman\'s sops

Chennai: Finance minister Nirmala Sitharaman on Saturday announced a Rs 10,000-crore stress fund for incomplete affordable and middle-income housing, with riders. The realty sector doesn’t think, however, that the incentives will create demand.

The Rs 10,000 crore fund will be provided to projects that are 60 per cent complete and those looking for “last-mile” funding. The special window will fund net-worth positive housing projects that are not non-performing assets (NPAs) and that are not before the NCLT. The government hopes that outside investors will match their Rs 10,000 crore.

The top seven cities have a stock of 5.6 lakh delayed housing worth Rs 4.5 lakh crore. The ata outside these cities is not known.

“The minister said the fund benefit around 3.5 lakh units. Each would probably get around Rs 3 lakh for completion, which is not enough. Even if it gets another Rs 10,000 crore from private investors, it will be just Rs 6 lakh per unit,” said Mr Samantak Das, chief economist and head of research & REIS, JLL India.

“Even the government’s fund of Rs 10,000 crore for affordable middle income housing projects will have limited impact since the majority of stalled projects are because of liquidity and will be NPAs,” said Mr Satish Magar, president, Credai.

The government will relax external commercial borrowings (ECBs) guidelines to facilitate financing of home buyers who are eligible under the PMAY, in consultation with RBI. Interest rate on house building advance will be lowered and linked with 10-year GSec yields. This will encourage government officials to buy houses, she said.

“The need of the hour, and the expectation of the home buyers and the real estate developers was the government would take bold decisions to help revive the crumbling sector,” Mr Magar said.