Finance minister Nirmala Sitharaman on Saturday announced a third round of measures to boost sagging economic growth by stimulating consumption in the real estate sector, pledging a Rs 10,000-crore fund to help complete stuck housing projects, a move that can potentially help as many as 3.5 lakh dwelling units. The new fund will have an NIIF-like structure where the government will contribute half of the corpus and other investors, including foreign ones and domestic financial institutions like LIC, will do the rest. It will be run by professionals, who will offer funds to the stuck projects that have not been declared non-performing assets or dragged to the NCLT. It will help complete only affordable and middle-income housing projects. As per rough estimates, housing projects worth as much as Rs 1.8 lakh crore are either categorised as NPAs or dragged to the NCLT, said a top government official.
Similarly, to ease funding for housing developers, the minister said external commercial borrowing (ECB) guidelines would be relaxed to help them obtain overseas funds. Such norms will also be eased to facilitate financing of homebuyers who are eligible under the Pradhan Mantri Awas Yojna, after consulting the central bank. Similarly, the interest rate on housing building advance will be lowered and linked to the 10-year G-sec yields.
“Government servants contribute to a major component of demand for houses. This will encourage more government servants to buy new houses,” Sitharaman said. While welcoming Saturday’s announcements by the government, Amit Modi, director at ABA Corp, said the current additional deduction of up to Rs 1.5 lakh interest paid on home loans for properties up to Rs 45lakh should be extended to more expensive houses as well, especially in metro cities.