Finance Minister assured that the interest on home building advance will be lowered and will be linked with 10-Year G-Sec yields.
In a move to benefit 3.5 lakh homebuyers in India, Finance Minister Nirmala Sithraman has announced to contribute Rs 10,000 crore in affordable housing package. The government has made this announcement to help homebuyers stuck with under-construction homes by creating a special window to provide the last mile funding for housing projects which are non-NPA and non-NCLT and are net worth positive in the affordable and middle-income category. She added that there are many projects that are stuck with a cash crunch in their final delivery stage, which will be benefited from this fund. In another move to benefit the government servants, she assured to cut the interest rates on house building advance by linking it to 10-Year G-Sec yields.
Relief measures in housing sector:
- Relaxation of ECB guidelines for affordable housing: Nirmala Sithraman assured to relax the norms for External Commercial Borrowings (ECBs) to facilitate the financing of homebuyers who are eligible under Pradhan Mantri Awas Yojana (PMAY).
- Lowering of interest rate on house building advance: Finance Minister also assured that the interest on home building advance will be lowered and will be linked with 10-Year G-Sec yields. She added that the move will encourage more government servants to buy houses.
- Contribution of Rs 10,000 crores to provide last mile funding: To focus on the construction of unfinished houses, the government has announced to create a special window to provide last mile funding for housing projects which are non-NPA and non-NCLT and are net worth positive in the affordable and middle-income category. Rs 10,000 crores will be contributed by the government and nearly the same amount will be contributed by the outside investors.
- Organisation for credit enhancement: Nirmala Sitharman added that an organisation will be established to provide credit enhancement for infrastructure and housing.
“There is a need to change the definition of ‘affordable housing’. At present, the Government of India considers a unit with a price tag of Rs 45 lakh as ‘affordable’. We need to remove the price-cap while defining ‘affordable housing’ and focus on project size. I do not understand the logic why someone would think that Rs 45 lakh is a suitable benchmark for affordable housing when it makes no sense for projects in Delhi, Mumbai, and Chennai,” said Niranjan Hiranandani, President, NAREDCO.