Real Estate Sector all set to get a major boost by the Rs. 20 Lakh crore package.
Prime Minister Narendra Modi on Tuesday announced the ‘Atma Nirbhar Bharat Abhiyan’ (Self-reliant India) based on the five pillars- Economy, Infrastructure, Technology-driven system, Demography & Demand and unveiled a whopping Rs. 20 Lakh crore economic package that is equivalent to 10% of India’s current GDP. Soon after, Finance minister Nirmala Sitharaman announced the first tranche of the economic package that includes the 1.7 Lakh Crore relief announced earlier in march 2020 along with the liquidity boost measures and interest rate cuts by the Reserve Bank of India. This package is seen as a huge relief to the real estate sector and will help to minimize the impact of COVID-19 on the sector.
1) COVID-19 be treated as ‘Force Majeure’ under RERA
FM announced that COVID-19 should be treated as ‘Force Majeure’ under RERA. This came as a huge relief to the developers who are getting delayed on the set timeline of delivery of projects. All the construction activities are at a halt because of COVID and the subsequent lockdown which will lead to a delay in the delivery of projects.
2) Extension of deadline for completion of real estate projects
All the state and the union territories and their regulatory authorities have been directed to extend the registration and completion date suo-motu by six months for all registered projects expiring on or after March 25, 2020, without individual applications. The regulatory bodies may extend this for another period of up to 3 months if required. Fresh project registration certificates will automatically be issued with revised timelines. The timelines for various other statutory compliances under RERA will also be extended.
This will provide significant relief to the developers and is seen as a much-needed move.
3) Special liquidity scheme
To revive positive sentiments in the sector, the government has announced a special liquidity scheme. Under this scheme, Rs. 30,000 Cr will be infused in NBFC’s, HFC’s, and microfinance companies with the help of debt papers. These debt papers will be fully guaranteed by the government. The first 20% of the loss will also be borne by the guarantor i.e the government. The finance ministry extended the scope of an existing scheme (Partial Credit Guarantee Scheme 2.0) under which Rs 45,000 crore liquidity will be infused in NBFCs.
This step is going to provide a major liquidity boost in the sector that is undergoing a liquidity squeeze.
All these announcements along with the rate cuts announced by the Reserve Bank of India earlier are sending in positive signals for the real estate sector. With prices at an all-time low, cheaper home loans, and the stability factor, this seems to be the perfect time to invest in real estate.
