Centre’s package to help housing sectorDate: 07 November 2019 Tags: Infrastructure
The government has approved a plan to set up a 25,000 crore alternative investment fund (AIF) to revive stalled housing projects, as it seeks to provide relief to distressed homebuyers.
The housing sector is undergoing turmoil especially due to lending crisis that has made funds availability a major problem. The government funds will be used to complete stalled projects.
The government will invest 10,000 crore in the fund and the remaining 15,000 crore will come in from State Bank of India, Life Insurance Corporation of India and other such institutions.
Incomplete housing projects worth less than 2 crore per unit in Mumbai, 1.5 crore in other metros, including the national capital region (NCR), and 1 crore in other parts of the country will benefit from the move.
The projects need to be registered in RERA (Real Estate Regulation and Development Act) and their net worth should be positive. Even if the project has been declared an NPA or dragged to NCLT but not asked for liquidation will also benefit.
The prospects of the industry have turned worse since the ban on high-value currency notes in November 2016 and the implementation of the goods and services tax in July the following year.
The new measure expands the scope of including more projects under the new corpus by allowing projects undergoing insolvency proceedings to benefit from the distressed fund scheme.
The focus on real estate is part of the government’s broader plan to kick-start economic growth, which slowed to a six-year low of 5% in the quarter.
Alternate Investment Funds
AIF is a privately pooled investment vehicle that collects funds from sophisticated investors, whether Indian or foreign, for investing them in accordance with a defined policy.