Cabinet clears ₹25,000 crore plan for realty revival

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The real estate scenario in India has been a tumultuous one so govt came up with plan for realty revival.

The decline is the economic growth that plateaued at 5% in the previous quarter further stirs away from the growth of this industry.

The most recent update in real estate comes as a respite in real estate revival. Cabinet clears crores to catalyze the stagnating real estate industry.

The plan for realty revival

The current finance minister of India expressed the government’s intention of clearing a realty revival plan worth Rs. 25,000cr.

India is witnessing a sticky situation with regards to real estate projects with over 1.8 trillion worth of projects that are stalled midway, based on data published by a Report.

Distressed home buyers are being steered away from the real estate owing to the negative experience due to such stalled projects.  

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The government has approved a plan realty worth Rs. 25,000 crore on Wednesday.

It involves alternative investment funding (AIF) to breathe life into these stalled projects.

AIF is an investment scheme entails pooling in  privately collected funds from reliable investors both local and global.

These investments have to carefully adhere to strictly defined policies.

The government is set to invest 10,000 crores of these funds while the balance 15,000 crores will be pooled in from the State Bank of India, life insurance corporation of India among other similar institutions.

Who will benefit the most from this initiative?

Current finance minister mentioned that projects that have been stalled, the ones worth less than Rs. 2 cr in Mumbai, and less than Rs.1.5 cr in other metros (per unit) including the NCR region and other cities in the country will benefit the most of this initiative.

Emphasis is being laid on the fact that the funds will be used towards the completion of the stalled projects.

Projects registered with RERA (Real estate regulation & development act) are the ones that are eligible for these funds. These must have a positive net worth.  

Reasons that have been responsible for the downhill sales of Real estate

One of the core reasons why the sales have been dwindling in real estate is attributed to the complete drying up of funds.

This includes funds on redevelopment projects, slow-moving inventory, and falling process.

Banks are not keen on lending to real estate projects owing to the risk of defaults.

Other factors that have catalyzed this slow down is the implementation of GST and the ban on high-value currency notes.

Thus affecting the liquidity investments on these projects.

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The future of real estate projects in India

The clearance of Rs.25,000 cr is estimated to set the ball rolling positively towards the economic growth of the country.

With stalled projects clearing up, real estate investments are expected to rise once again.

Once the liquidity crunch has been looked at within the real estate market, subsequently, the economic growth scenario is expected to rise once again.

This will prove to be a significant step in the right direction for mid-income groups that plan on investing in real estate especially in the affordable housing category.

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