It is not only the real estate sector but the whole economy, which is facing a slowdown in growth. Several reasons have been attributed to this, including global trade disturbances, internal issues, lack of timely policy support by the government, etc. With one of the world’s highest young working populations, the Indian economy cannot risk an economic stagnation. In this backdrop, finance minister Nirmala Sitharaman, on August 23, 2019, announced some relief measures, in a bid to kick-start economic growth.
Infusion of liquidity in the banking and financial sector
The infusion of Rs 70,000 crores in PSBs, along with various initiatives announced by the FM, will boost market sentiments and revive many sectors, particularly the automobile, MSME, consumer and retail sectors, says Deo Shankar Tripathi, MD and CEO of Aadhar Housing Finance. “Housing is likely to get a big boost, with Rs 30,000 crores funds, including Rs 10,000 crores already given to the NHB for refinance facility to HFCs. Measures to resolve home buyers’ and developers’ problems are also expected soon. The economy is likely to come back to normalcy, in three to four months,” adds Tripathi.
The lack of liquidity, has been a big roadblock in the growth of the real estate sector over the last few years. Now, developers whose projects are stuck due to the cash crunch, may get access to liquidity and be able to complete their project on time. Timely completion of projects will boost home buyers’ confidence. An improvement in the demand-supply dynamics will also mean that lenders will get their repayment on time.
Faster transmission of the RBI’s interest rate cuts to home buyers
Despite the repo rate cut by the Reserve Bank of India (RBI) several times in the last 12 months, the banks had not passed on its benefit immediately to the home buyers. The discontent of home loan borrowers, was evident from the falling demand for property. Now, the FM has announced that the benefits of the RBI’s rate cuts, will be immediately passed on by the banks to its customers. “With banks agreeing to pass on the rate cut benefits to the consumers, it will enhance the buying capacity of end-users, thereby, improving sentiments,” opines Pradeep Misra, CMD, REPL.
Other steps to boost the economy
Several experts point out that the ongoing slowdown, is not specific to a particular industry or sector. Therefore, an inclusive approach was required from the government and the FM delivered on the expectations, they maintain. According to Niranjan Hiranandani, national president, NAREDCO, the curative measures announced by the government, demonstrate their responsiveness to execute an action plan, to kick-start India’s cooling economic growth. “The FM also assured of an end to tax terrorism, in order to uplift the sentiments of wealth creators in the economy. This economic booster shall go a long way in rebuilding India Inc’s confidence, by enticing investments back into the capital market and causing the consumption cycle to roll on, again,” Hiranandani concludes.