Bailout package to have sops for realty, financial sectors

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New Delhi: The much-awaited economic stimulus package is likely to be announced by Prime Minister Manmohan Singh on Monday (December 8). The comprehensive relief package will include incentives for the realty, financial services and export sector to help them tide over the current financial crisis.

This could include sops for low cost housing projects and easing of home loan rates.

Simultaneously the Reserve Bank of India (RBI) is also likely to reduce its benchmark rates and further streamline norms on External Commercial Borrowings (ECB) to add liquidity in the financial system.

An apex committee of ministers led by the Prime Minister met here on Tuesday to decide on the measures. The measures will now be fine-tuned by the concerned secretaries and RBI officials, led by Cabinet secretary KM Chandrasekhar.

The realty sector, severely hit by the effect of financial crisis and high interest rates, will be permitted to reschedule their overall debt, sources said. The government is also likely to relax the rules on ECBs to boost investment in the infrastructure and in the realty sector, they added. The focus on realty sector is also due to the sector’s capacity to create jobs. The leading five realty companies alone have helped in providing direct and indirect employment to over 2.5 lakh people across the country.

The low cost housing projects would be given a boost by allocating more funds to the National Housing Bank (NHB). NHB in turn will use these funds to enhance the refinancing amount to Housing Finance Companies to facilitate affordable housing projects. In a bid to boost infrastructure project the RBI is likely to give its green signal to the planning Commission’s proposal to augment funds to the government owned India infrastructure Finance Company Ltd (IIFCL).This would enable infrastructure developer to get cheaper funds from IIFCL.

The government may also permit developers of Special Economic Zones to raise funds through the ECB route only for infrastructure development activities, like construction of roads, ports, airports, power generation facilities and water supply amenities. Currently, only SEZ units are allowed to bring in ECBs.