Following the government’s decision to provide 6-month extension for realty projects’ completion, developers are hoping that measures like one-time restructuring or roll-over of debt and other issues including liquidity enhancement may be unveiled soon.
Given that real estate sector accounts for 6-7% of India’s GDP and employs nearly 10-11% of population directly and through ancillary industries, realty developers have been seeking relief in terms of liquidity support and easing debt burden among others.
“Industry is pegging a big hope on much awaited fiscal relief to be granted to the second largest employment generating sector. Liquidity infusion will be imperative to turn around the depressed scenario of the sector,” said Niranjan Hiranandani, President, NAREDCO. In the backdrop of Coronavirus outbreak and its impact on the economy, realtors have suggested that the debt repayment scheduled over the next 3 months be put off allowing them to repay that in instalments over the subsequent 12 months.
They have also suggested that interest rate on all realty project loans to be re-fixed at the repo rate while assuring that the relief will be passed on to homebuyers. “We are hopeful that the Finance Minister will soon announce other necessary measures by infusion of liquidity, de-cartelization of cement prices, restoration of supply chain to ease construction on the project sites and help uplift the demand by offering more sops to homebuyers by increasing the tax deduction limits for interest on home loans,” said Jaxay Shah, national chairman, CREDAI.
According to them, the declaration of Covid-19 as ‘force majure’, extension of timelines for completion of project under the RERA, is expected to provide a breather to the sector that is grappling with a demand pullback, cash crunch and halt of all construction activity owing to reverse migration of labourers. However, measures to support liquidity and demand creation would help the sector gain some momentum.