Government Plans to Address Indian Real Estate Sector Problems

Government Plans to Address Indian Real Estate Sector Problems

The realty sector is facing a slowdown in residential demand because of several reasons such as delayed projects, large debts, tight liquidity condition, etc. The government is planning to provide financing to the delayed housing projects in the country. The necessary initiatives are taken to solve the problems in the real estate sector. Smt.Nirmala Sitharaman, the Finance Minister, has done various discussions with the urban affairs ministry representatives and Reserve Bank of India (RBI) about the necessary steps to be undertaken to uplift the real estate industry.

Latest Announcement of Nirmala Sitharaman

The government is planning to solve the problems facing by the real estate industry in India and is about to come up with solutions for delayed housing projects for stressed home buyers. More credit support will be given to Housing Finance Companies (HFCs) by the National Housing Bank. It also offers funds for borrowers by charging a small fee. The proposed fund aims to support borrowers who do not have a steady income and a good credit rating due to which they are unable to qualify for a bank loan.

RBI has composed a panel which has suggested to set up an intermediary under the National Housing Bank (NHB) which will be sponsored by the government. This delegate will focus on developing securitisation in the home loan market. This fund will not only provide a guarantee for housing loans, but it will also boost lending since banks will be comforted with an assurance of government. With the introduction of a fund, the eligibility of borrowers will increase, and the credit rating will also improve.

The RBI (Reserve Bank of India) is in the process of resolving the issues faced by the real estate sector. On the 25th anniversary of the National Stock Exchange (NSE) event, Nirmala Sitharaman said the new proposal would benefit industries such as cement and steel and also several home buyers. The government is working with the Reserve Bank of India to see how best they can tweak the existing norms wherever help is needed in the realty sector.

With the new proposal of the government, developers can gain trust amongst people when it comes to under-construction projects and the demand for residential properties would improve. The plan will ease finances for potential buyers and increase the real estate business in India. This will also smooth the way for retail investors to invest directly in other government securities and will help revive real estate and consumer demand. It is speculated, that this move will positively impact the realty sector and its stock market. 

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By: Shailaja K