New Delhi: Finance Minister Nirmala Sitharaman on Saturday announced a last mile ₹20,000 crore affordable housing package to benefit around 3.5 lakh home owners.
India’s plan to set up a special financing window to help revive stalled housing projects. The union government will contribute around ₹10,000 crore to this fund on the lines of National Investment and Infrastructure Fund (NIIF), while the other investors such as the Life Insurance Corporation of India (LIC), private capital, sovereign wealth funds and development finance institution (DFI) among others will contribute the balance ₹10,000 crore.
This window will provide the much needed last mile funding for housing projects which are non-NPA and non-NCLT projects. They will also need to be net worth positive and in affordable and middle income category to get the promised support.
To be set up as Category - II AIF trust fund, it would be professionally run with experts from housing and banking sector, Sitharaman said at a press conference.
“They will identify projects across the country that are middle income and affordable scheme related where nearly 60% of there work is complete and they don’t have any more cashflow to complete the rest of the 40%," Sitharaman said.
Around 8.5 lakh flats are stuck across the country. In such a scenario, the package announced on Saturday will help extricate more than a third of such distressed home owners.
The real estate sector, a major job creating industry, has undergone a prolonged slowdown for over five years now, with weak sales and huge unsold inventory being the key concerns. Developers and other stakeholders in the sector have been asking the government for some relief measures or a bail out for long now.
The housing sector’s woes further worsened with the ongoing liquidity crisis in non-banking finance companies (NBFCs) in the last year, since the series defaults of IL&FS were first reported in September, 2018. Since then, NBFCs, which provided a crucial funding lifeline to developers in the last few years, have gone slow on lending leading to project delays and a cash crunch.
The Reserve Bank of India (RBI) has cut interest rates four times since January to 5.4% by August, to help boost loan growth.