Finance Minister Nirmala Sitharaman announced financial support of Rs 200 billion for about 0.35 million incomplete housing projects (non-NPA and non-NCLT) in the affordable and middle-income segment.
Projects that have been declared as NPAs by a bank and the promoters of which have been taken to the National Company Law Tribunal by the creditors will not be benefitted by this move. The fund will come to the aid of projects that are about 60 per cent complete but are in need of additional funding for further construction.
Although the Government is set to provide Rs 100 billion, it will gather an equivalent amount from institutions like the Life Insurance Corporation of India and other private-sector entities. The entire fund will be handled by experts and professionals well-versed in the housing sector.
“The Finance Ministry’s measures to boost economic growth is definitely a breather in these testing times,” says Murali Malayappan, CMD, Shriram Properties. “The infusion of funds for stressed assets is a welcome move as every rupee spent on housing has a direct impact on the GDP. I am certain that this, coupled with other measures such as the support extended to NBFCs to ease borrowing from abroad and encourage credit outflows from banks, will serve as a stimulus to help the economy get back on track and aid an additional 1.5 to 2 per cent growth.”
And Sanjay Dutt, MD & CEO, Tata Realty & Infrastructure, says, “The Government’s decision to provide the much-needed, last-mile liquidity to the affordable and middle-class housing sector is positive news for the industry. This funding for non-NPA and NCLT projects will not only arrest the rise of NPAs but reduce NCLT and RERA complaints overall. It will provide relief to customers and help restore confidence in the housing sector.”
The decision comes at a time when most real-estate developers are coping with severe financial stress, resulting in incomplete projects and affected buyers.