NEW DELHI: In yet another stimulus package to revive the sagging economy, the Union cabinet on Wednesday decided to pump Rs.10, 000 crore into the ailing construction sector.
Finance Minister Nirmala Sitharaman told reporters in New Delhi after the cabinet meeting that the allocation will be put into an alternative investment fund (AIF) to revive 1600 stalled housing projects that could potentially benefit 4.58 lakh home buyers and revive the ailing sector.
The government will also rope in State Bank of India (SBI) and Life Insurance Company (LIC) to put another ₹15,000 crore into the fund. The minister said that the fund size is expected to increase as sovereign and pension fund may also contribute to the AIF.
This will provide finance to 1,600 stalled housing projects comprising 4.58 lakh housing units across the country, Sitharaman said.
“The fund will be set up as Category-II AIF registered with Securities and Exchange Board of India (Sebi). The government shall act as sponsor for the purpose of setting the fund”, Sitharaman was quoted by Times of India as saying.
The move is aimed at generating employment as well as reviving demand of cement, iron and steel industries. It is also aimed at relieving stress in the major sectors of the economy.
Incomplete housing projects worth less than Rs.2 crore per unit in Mumbai, Rs.1.5 crore in metros including NCR and Rs.1 crore in other parts of the country will benefit from the move. The fund will be used for completion of the project.
Real estate projects worth ₹1.8 trillion are stalled across India, according to Anarock Property Consultants. The focus on real estate is part of the government’s broader plan to kick-start economic growth, which has slowed to a six-year low of 5% in the quarter ended 30 June, according to Livemint.
The real estate industry has failed to recover from the twin shocks of the ban on high-value currency notes in November 2016 and the goods and services tax that was introduced in July the following year. This has resulted in piling inventory, stagnant-to-falling property prices and dwindling funding for developers. (with inputs from media reports)