The Union Government recently announced financial aid of Rs. 20,000 crore for the real estate sector and this will help the developers in completing the projects that are stalled due to “last mile” cash crunch. This financial help from the Narendra Modi-led Central Government has bought relief to approximately 3.5 lakh distressed middle-class home-buyers.
Finance Minister Nirmala Sitharaman said that a special window will be opened to offer last-mile funding for housing projects which are non-NPA and non-NCLT projects and are net worth positive under affordable and middle-income category.
She also said that the Government will contribute Rs. 10,000 crore and other investors such as LIC and sovereign funds will also contribute nearly this amount. The Finance minister also announced that the government servants demanding housing units will get home loan at lower rates.
More than 8.5 lakh homebuyers are waiting for the possession of their unit as the residential projects across India are delayed due to liquidity crunch and demand slowdown.
While answering to the question of homebuyers’ future in Delhi-NCR who are stuck in bankruptcy-bound realty firms, FM Sitharaman said the insolvency proceedings have started in these projects and the issue would be resolved under the Insolvency and Bankruptcy Code (IBC).
She stressed that home buyers have already been made financial creditor under the IBC and they would get their claim.
FM Sitharaman said the objective (of this fund) is to focus on the construction of unfinished units. The government, on the lines of NIIF, can contribute to the fund while rest of the investors would be LIC and other institutions and Private capital from banks/sovereign funds/DFIs (development financial institutions) etc. She further said that the fund would be set up as a Category – II AIF trust and will be professionally run with experts from housing and banking sector.
The Union Government also announced relaxation of ECB (external commercial borrowing) guidelines for affordable housing to facilitate the financing of home buyers who are eligible under the PMAY (Pradhan Mantri Awas Yojana), in consultation with the Reserve Bank of India.
To boost housing demand, the interest rate on ‘House Building Advance’ would be lowered and linked with 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, the finance minister said.