Finance Minister Nirmala Sitharaman on Saturday announced a new set of measures to boost the economy, with a focus on boosting exports, real estate, and the housing sector. This has been the third instance of the Finance Ministry announcing measures to push the economy.
The Ministry announced multiple measures to push the real estate segment, with a Rs 10,000 crore special window to provide last-mile funding for the completion of ongoing housing projects which are not NPAs or facing bankruptcy proceedings under NCLT being the biggest one. The funding will only be for those pending projects which are non-NPA and non-NCLT and fall under the affordable and middle-income category. The objective of the government is to focus on the construction of unfinished units. The government will contribute to the funds, as per the National Investment and Infrastructure Fund (NIIF) guidelines and will also allow outside investors including LIC, private capital from banks, sovereign funds, DFIs, etc. The government will be contributing Rs 10,000 crores and the external investors will have to contribute the same.
The External Commercial Borrowing (ECB) guidelines will be relaxed to facilitate the financing of home buyers who are eligible under the Pradhan Mantri Awas Yojna (PMAY), in consultation with RBI. It will be an addition to the prevailing norms for affordable housing.
The interest rate on House Building Advance shall be lowered and linked with the 10-year government security yields. The FM said, "Government servants contribute to a major component of demand for houses. This will encourage more government servants to buy new houses".
Government servants contribute to a major component of demand for houses and this move will encourage more government servants to buy new houses.
The FM also highlighted the steps that had already been taken by the government. She mentioned an additional deduction up to Rs. 1.5 lakhs for interest paid on loans borrowed up to 31st March 2020 for purchase of house valued up to Rs. 45 lakh as well as a reduced EMI for housing loans by directly linking Repo rate to interest rates. She also mentioned the increased credit support for the purchase of houses, vehicles, consumption goods.