This in reference to the report “Builders in trouble as unsold flats continue to pile up” (September 3, FE). The burgeoning inventories of the realty sector point to shrinking demand owing to a lack of disposable income among the people, and the non-availability of reasonably-priced loans. Despite the large realty inventories, housing prices are still not affordable to consumers, barring a few high net-worth individuals. The high level of the inventories are putting pressure on the profit margins of the builders, leading to default in servicing the borrowings from banks, which, in turn, are pushing up the level of bad assets of banking industry. To resolve the issue, the government and Reserve Bank must look for sector-specific relaxations in the norms relating to non-performing assets, as well as implementing affordable rates of interest and relaxed repayment schedules for builders and developers to enable them to service the bank borrowings without defaults. Likewise, in order to boost the demand for housing, banks must look at having reasonable rates of interest with easy repayment schedule to boost the sale of their housing loan products. Even granting interest subvention to eligible borrowers can be thought of so as to address the sluggish demand for housing. Apart from that, the government must look at reducing the lag while granting permission and clearances to builders, enabling them to reduce the time to complete the projects. This, in turn, will enable them to pass the benefits from decreased cost overruns to the consumers. Piling up of realty inventories will lead to stalling investment,which, in turn, will adversely affect the growth of economy, and as such, government has to step forward with radical reforms to address the issue.
No Mann ki Baat for labour?
This refers to the report “Trade unions strike: One-day stir cost R25,000 cr to economy, says CII” (September 3, FE). When the trade unions gave a clarion call for nationwide strike, one thought that the prime minister would play his pitch to allay their fears regarding the alleged anti-labour policies, quite in the manner he has reached out and shared his views on various issues with people though his Mann ki Baat radio talks. Modi’s timely intervention would have saved the nation a whopping R25,000 crore. While the PM believes in advisory talks being important to resolve any issue (from Pakistan to the Patel community), when it comes to assuaging the feelings of 15 crore agitating workers, he doesn’t seem to practise such homilies. With abortive attempts at bringing black money home, enforcing the GST, getting the land acquisition (amendments) Bill passed, the Modi sarkar’s promise of acche din is turning out to be a damp squib. The accusation that the government is going against the wishes of people does have some merit as it failed to take the stakeholders and the opposition parties into confidence on many important bill and laws to build consensus prior to framing and tabling them in Parliament.
R Prabhu Raj
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