The Reserve Bank of India’s (RBI’s) governor, Urjit Patel, on August 2, 2017, pointed out that slow clearances are affecting affordable housing projects at the state level. “I think we need a time-bound single-window clearance,” he told reporters, after unveiling the third bi-monthly monetary policy review of the current financial year. Patel also described the Pradhan Mantri Awas Yojana (PMAY) for affordable housing, as a ‘very important initiative, which has the potential for a very strong growth impulse’.
After a 10-month pause, the RBI, on August 2, 2017, cut the benchmark lending rate by 0.25 per cent to its lowest in over six years, citing reduction in inflation risk. This move could lower the interest on home, auto and corporate loans. The repo rate, at which the RBI lends to banks, is now down to six per cent.
Affordable housing schemes, along with clearing infrastructure bottlenecks and reinvigorating sagging private investments, hold the key to boosting economic growth, Patel said. “I think a fair number of pieces of the jigsaw in that context are already in place,” he said.
GDP grew at a much lower 6.1 per cent in the March quarter of last fiscal, 2016-17, due to the note-ban and experts feel that the GST roll-out from July 1, 2017, is set to put further stress on it. According to reports, the realty sector is wary about GST and the introduction of the real estate regulator at the state level, is resulting in project slowdowns.
“The MPC (monetary policy committee) is of the view that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojana for housing needs of all,” the RBI said in the policy review.
The government and the Reserve Bank are working in close coordination, to resolve large stressed corporate loans and recapitalise public sector banks, within the fiscal deficit target. These efforts, it said, should help restart credit flows to the productive sectors as demand revives.