Nirmala Sitharaman held meetings to discuss real estate sector issues and measures to be taken to strengthen the industry.

By Abhay Shah, Realty Quarter

On 11 August, after the industry and homebuyers met with Finance Minister Nirmala Sitharaman to emphasize their issues regarding liquidity crunch, demand slowdown and stalled projects, the government proposed it would soon solve the problems that are affecting the real estate sector.

The Minister of Finance conducted two separate meetings on August 11 – the first with the two apex realtors’ industry bodies CREDAI and NAREDCO, and the second with homebuyer associations to address the problems related to the property industry and measures to improve the industry.

The meetings also included 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.

Sources suggested that officials of CREDAI and NAREDCO stated that liquidity crunch and bad revenues are causing an “unrest” in the industry and asked for encouragement for banks and NBFCs for project funding.

They also voiced the fear that the scenario might get worse in the upcoming festive season when demand is usually high. There might be a separate high-level meeting to discuss the establishment of stress funds to address stalled projects and to rescue lakhs of blockade homebuyers, in the next couple of weeks under the chairmanship of the cabinet secretary.

In a briefing to the press after the conference, Mr Puri said: “A lot of helpful talks took place at the conference with the real estate sector. We examined several problems, explained several issues and in the coming days the state is going to deal with those problems.”

With these conversations, he said, the method has begun to find alternatives to certain issues affecting the real estate sector. “We’re looking at the way we can move forward, whatever are the issues of homebuyers, stalling projects, etc. Many homebuyers have moved the Supreme Court and there are judgments too, which is very difficult, but with the government’s goodwill, including the homebuyers and industry, we will discover alternatives for whatever the problem is,” said Puri.

When questioned about creating a stress fund, he mentioned a number of problems were discussed but refused to provide information.

Jaxay Shah, CREDAI Chairman, said, “We have heard from the Finance Minister a very favourable and patient hearing. The government is aware of the issue influencing the real estate sector, including the liquidity crunch and taxation issues. We are expecting very positive and concrete results in the coming weeks.”

Satish Magar, President of CREDAI said the government would like to know all the problems affecting the industry.

NAREDCO President Niranjan Hiranandani said: “As you know, the real estate sector is in crisis, and the rest of the economy is, too. We’re therefore very happy that we were gathered by the Minister of Finance and the Ministry of Housing on a Sunday morning to know about the scenario. The good aspect is that the government has recognized that we have to go forward and do it fast, he says.

Asked about the government’s response, Hiranandani said, “We do not know, nor were anything committed on behalf of the government, in terms of which actions the government wants to take.” The problem of stalled projects in the NCR region has also been addressed, said NAREDCO Vice-Chairman Parveen Jain.

The industry authorities recommended multiple steps for boosting demand and tackling liquidity problems, including cutting house loan interest prices to 7% and withdrawing the new NHB-circular prohibiting subvention scheme (where the developers pay the interest for certain fixed time) to cover the problems. They also said that the property regulators set up in accordance with RERA should be the first point of grievance redressal for homebuyers.

Meanwhile, Abhay Upadhyay, homebuyers body Forum for Peoples’ Collective Efforts (FPCE) President said 5 lakh customers throughout the nation are stuck because of the postponed projects.

In order to carry out such projects and provide relief for homebuyers, he demanded the creation of Rs 10,000 Crore stress funds.

Jaypee Group homebuyers told the Minister of Finance that projects are not completed despite the fact that promoters have a large land bank and other assets such as the Yamuna Expressway project.