Is the economic stimulus package of the Finance Minister going to revive the real estate industry?

By Abhay Shah, Realty Quarter

In an effort to increase slowing economic growth in India, the finance minister lately announced a slew of projects. It is not just the real estate industry that is experiencing a slowdown in growth, but the entire economy.

This has been ascribed to a number of factors, including global trade disturbances, inner problems, absence of timely government policy support, etc. The Indian economy cannot risk economic stagnation with one of the world’s largest youthful working populations. In this context, Finance Minister Nirmala Sitharaman announced some aid measures on August 23, 2019, in an effort to kick-start economic growth.

Liquidity crunch in the banking and financial sector

According to Deo Shankar Tripathi, MD and CEO of Aadhar Housing Finance, the infusion of Rs 70,000 crores in PSBs along with multiple projects announced by the FM will increase market sentiments and revive many industries, especially the automobile, MSME, consumer and retail industries. “Housing is probable to get a large boost, with resources from Rs 30,000 crores, including Rs 10,000 crores already provided to the NHB for HFC refinancing. Measures are also anticipated soon to solve the issues of house buyers and builders. In three to four months, the economy is probable to return to normal,” says Tripathi.

Over the past few years, the absence of liquidity has been a major roadblock in the growth of the real estate industry. Now builders whose projects are stuck because of the financial crunch may be prepared to obtain liquidity and finish their project on time.

Interest rate cuts by RBI to home buyers

Despite the repo rate that the Reserve Bank of India (RBI) has cut several times over the past 12 months, the banks have not immediately handed their benefit on to house buyers. Due to declining demand for property, the discontent of house loan borrowers was obvious. Now, the FM has announced that banks will instantly pass on the benefits of the RBI rate reductions to their customers. “With banks agreeing to pass on the rate reduction advantages to customers, it will increase end-user purchasing ability, thereby enhancing sentiments,” says Pradeep Misra, CMD, REPL.

Other Measures to raise the economy

Several specialists point out that the continuing slowdown is not sector-specific. Therefore, the government needed an integrated strategy and the FM delivered on their expectations, they retain. According to the curative policies announced by the government, Niranjan Hiranandani, national president, NAREDCO, demonstrates their responsiveness to implement an action strategy to kick-start India’s cooling economic growth. “The FM also ensured that tax terrorism would stop in order to elevate the economic sentiments of wealth makers. This financial booster will go a long way in restoring the trust of India Inc., reinvigorating investment into the capital market and allowing the cycle of consumption to carry on again,” says Hiranandani.