To boost sluggish economic growth by enhancing real estate consumption, Niranjan Hiranandani, NAREDCO President has said that alternate investment funds worth Rs 1.50 lakh crore fund needed to help complete stuck real estate projects. This initiative can potentially help as many as stalled housing units.
Need for Additional Fund for Stalled Projects
The unexpected Covid-19 pandemic has dragging the already-stressed real estate sector to a grinding halt, and the proposed alternate investment funds would help for the completion of the stalled housing projects in the country, with the Special Window for Affordable and Mid-Income Housing ( SWAMIH) fund.
The government announced last year the SWAMIH fund comprises Rs 25,000 crore, with Rs 10,000 crore from the government. Many banks and financial institutions are interested to invest in these assets, so there is no need for the government to invest in them. The more money is required for last-mile funding of stalled projects the same as done with SWAMIH campaign.
Proposed Financial Aid
It was proposed that Rs 25,000 crore fund should be extended to Rs 1.50 lakh crore. Five additional funds are also needed, each with a Rs 25,000 crore corpus minimum. Multiple banks and companies can render this funding when they are allowed to open an alternative investment fund.
In accordance with the ECLGS implemented in the economic package 'Aatmanirbhar Bharat' for MSMEs, sovereign guaranteed loans was required for the real estate sector. In order to alleviate liquidity in the industry, NAREDCO's demand for a one-time roll-over of all the outstanding debt of developers.
It should be observed that the pandemic might prove to be the final tiny gap of an incident for the real estate sector, which has already been seriously impacted by GST, RERA and liquidity crisis. The government would take the required steps to boost demand in the sector.
To enhance demand, the proposal was made to waive GST for three to six months. Although the real estate sector expanded, in the context of the current crisis, many players would be pushed out of the market. The restructuring would be different this time because big as well as small players could be shut down.
With the GDP growth picking up construction activity would uplift by Diwali and residential real estate demand would also improve in the first quarter of 2021.
By: Shailaja K