Lately, the government of India has come up with a vision of self-reliant India and announced a mega economic booster of INR 20 lakh crore. This is a much needed economic relief package to revive the economy and bring life to normalcy post lockdown.
In the first tranche of the INR 20 lakh crore economic package the government of India, had announced a slew of measures like loan guarantees to struggling NBFCs/HFCs and policy supports (RERA) to boost growth, push demand and move towards self-reliant India.
The Real Estate Sector has undergone a long phase of consolidation due to various reasons like subdued demand, product mismatch, liquidity crunch, and lack of policy support from the government. These are some of the prominent reasons behind the real estate sector being not able to perform well as compared to other sectors.
After a long, dull phase in the real estate sector, the hope of revival is more evident post lockdown due to the government’s economic relief package announcements. Square Yards Research is an affirmative about revival in the real estate sector post lockdown, particularly into affordable and mid-segment residential projects.
Recently, an industry body named ASSOCHAM asked the government for 9 months extension as force majeure. In line with that, the government has given a big relief to all real estate developers and contractors by allowing an extension of six months for registration and completion of real estate projects with RERA. Real estate regulator (RERA) will be further allowed to give three months extension considering local challenges. Amidst coronavirus induced lockdown several real estate project constructions works coming to standstill and many project completions will be delayed. This policy supports by the government will help numerous developers to avoid payment of the fine due to the non-completion of real estate projects as per the stipulated timeframe with RERA. This will give a grace period to Real Estate Developers and contractors for delivering their projects.
To address liquidity issues among non-banking and housing finance companies, the government has offered loans up to INR 30,000 crore to NBFCs and HFCs which will be assured by the central government. An additional INR 45,000 crore fund under partial guarantee scheme will infuse credit to the real estate sector to solve acute liquidity issues faced by financing companies and developers. Previously, the government announced INR 25,000 crore stress fund during the last quarter of FY 2019-20 for the real estate sector.
The government has extended the Credit Linked Subsidy Scheme (CLSS) up to March 2021 i.e. a one-year extension. The extension of the Credit Linked Subsidy Scheme is expected to bolster the dream of owning home among first-time middle-class home buyers and stimulate housing demand & allied sectors. According to the government data, the extension of the scheme is expected to benefit around 2.5 lakh middle income families and already benefited 3.5 lakh middle-class home buyers so far.
Under the Credit Linked Subsidy Scheme, lower-income groups and middle-income groups get housing loan subsidy for affordable properties. According to several industry leaders and experts, it is expected that the extension of the Credit Linked Subsidy Scheme will spur housing demand and support close to 200 allied sectors like cement, steel, transport, and other construction materials.
Undoubtedly, this policy support and economic booster package will help in revival of the real estate sector post Lockdown and resurrect Indian economy.