Officials Of Finance Ministry, Housing Ministry To Discuss Solutions For Housing Sector Issues
Liquidity crisis and rationalization of taxes major issues facing real estate and infrastructure
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After the first formal meeting between the Finance Minister Nirmala Sitharaman with a delegation from India’s Housing and Infrastructure industry on Sunday, 11 August, more meetings between officials and housing sector representatives are on the cards in coming weeks. Sources said, the possible solutions for slowdown in sales of houses including liquidity crunch faced by developers across cities will be dealt with in coming weeks. This stems from the first round of meetings held by the Finance Minister on August 11, Sunday where she first met with the officials of the two apex realtors' industry bodies CREDAI and NAREDCO, and the second with homebuyer associations, to discuss the issues concerning the real estate sector and steps to be taken to strengthen the industry.
Housing and Urban Affairs Minister Hardeep Singh Puri, Minister of State for Finance Anurag Thakur and top officials from the departments of economic affairs, revenue, housing, CBDT, corporate affairs and RERA were also present in the meetings.
Sources said representatives of CREDAI and NAREDCO talked about the "unrest" in the sector because of liquidity crunch and poor sales, and demanded that banks and NBFCs should be encouraged to fund projects. They also expressed concern that the situation could worsen during the coming festive season when generally demand is higher.
In coming weeks, there would be a separate high level meeting, under the chairmanship of the cabinet secretary, in next few weeks to discuss setting up of a stress fund to deal with stalled projects and bail out lakhs of stuck homebuyers, a source added.
Briefing the media after the meeting, Puri said: "Lot of useful discussions happened at the meeting with the real estate industry. We looked at a number of issues, clarified a number of issues and the government will be addressing these issues in the days to come." With these discussions, he said, the process of finding solutions to some of the problems that have affected the real estate industry has started. "Whatever problems are there of the homebuyers, stalled projects etc we are exploring ways to move forward on this. Many homebuyers have moved the Supreme Court and there are judgements too. So it's a very complicated arena. But given the goodwill within the government, amongst the homebuyers and industry, so whatever problems are there we will find solutions for them," Puri asserted.
When asked about creation of a stress fund, he said a number of issues were discussed, but declined to give details.
CREDAI Chairman Jaxay Shah said, "We had a great positive, patient hearing from finance minister. Government is cognisant about the matter affecting real estate industry including the liquidity crunch and taxation issues. We are very hopeful to have some good and tangible results in coming weeks." CREDAI President Satish Magar said the government wanted to know about all the issues affecting the industry.
Dr. Niranjan Hiranandani President NAREDCO pointed out that globally, real estate and infrastructure growth have proved to be drivers of economic growth as also job creation, and India was no different. "If real estate and infrastructure was given a boost, it would positively impact GDP growth as also create jobs," he said. Liquidity crisis and the need for tax rationalization were two major challenges facing India’s real estate and infrastructure industry, the NAREDCO leadership team told the FM.
In a related point, Hiranandani added that rental housing had the potential to fulfil the goal of ‘Housing for All’, adding that real estate and infrastructure would play a major role in creating sufficient rental housing stock, with obvious advantages in form of job creation as also driving GDP growth.
Rationalization of Taxation issues impacting real estate, and resolution of liquidity crisis would be paramount in helping real estate and infrastructure get a boost, in turn enabling these to help positively impact the economy in terms of GDP Growth and job creation, said Hiranandani.
Asked about the government's response, Hiranandani said, "No response in terms of what actions the government wants to take, we are not aware and nor was anything committed on behalf of the government." NAREDCO Vice Chairman Parveen Jain said the issue of stalled projects in the NCR region was also discussed.
To boost demand and address liquidity issues, the industry bodies suggested various measures, including reduction of interest rates on home loans to 7 percent and withdrawal of the recent NHB circular prohibiting subvention scheme (where the interest is paid by the developer for certain fixed time). They also said the real estate regulators established under RERA should be the first point of grievance redressal for homebuyers.
Meanwhile, homebuyers body Forum for Peoples' Collective Efforts (FPCE) President Abhay Upadhyay said 5 lakh customers are stuck across the country due to delayed projects. He demanded creation of a Rs 10,000 crore stress fund to complete such projects and provide relief to these homebuyers.
Hiranandani is President (Nation), National Real Estate Development Council (NAREDCO), which works under the aegis of Ministry of Housing and Urban Affairs, Government of India.