New Delhi: The Narendra Modi cabinet Wednesday announced a Rs 25,000 crore fund to help complete stalled housing projects, in a bid to provide relief to homebuyers.
The Modi government expects this fund to revive the real estate sector, generate employment and provide a boost to the economy through demand for materials like cement.
The government will contribute Rs 10,000 crore, while the remaining amount will be put up by the State Bank of India and the Life Insurance Corporation of India, Finance Minister Nirmala Sitharaman said in a press conference after the cabinet meeting.
SBICAP Ventures Limited will be the investment manager for the fund and decide on which projects are eligible for the funding.
The government has also decided projects that have been classified as non-performing assets, or those stuck in the National Company Law Tribunal, will be eligible for funding too. However, the fund will not be available to projects that have entered liquidation.
The government estimates that around 1,600 affordable and middle-income projects are stuck across India, with 4.58 lakh homebuyers unable to get completed units.
Sitharaman said the fund will be structured as an alternative investment fund, and will be kept open to enable further investment from the government and other institutions like sovereign wealth funds. She added that the government has taken the Reserve Bank of India on board for the proposal.
Also read: Dubai applies brakes on real estate as oversupply leads to empty buildings
Another measure to revive the economy
The government has announced several measures over the past few months to revive economic growth, which slumped to a six-year low of 5 per cent in the first quarter of 2019-20, dragged down by weak consumption and investment.
The low June quarter numbers forced the Reserve Bank of India to lower India’s growth projection to 6.1 per cent for the full year.
The government announced a sharp reduction in corporate tax rates to an effective tax rate of 25 per cent, as well as some steps for the auto sector.
The government was hoping for a revival in demand in the festive season, though anecdotal evidence suggests there was only a slight pick-up.
Also read: Stalled residential projects worth Rs 4.47 lakh crore sound warning for banks in India