It is praiseworthy that the Modi government is taking steps to pull the slowed down economy out of the rut in which it finds itself. Once the economy slips into the slow mode it is no mean task to restore it to a positive direction. But there is no dearth of effort.
The latest measure is aimed at reviving the real estate sector which has been in dire straits. The new special window approved by the Union cabinet with a funding of Rs 25,000 crore seeks to open up funding to housing projects that are stuck.
The thrust is towards reviving the key sector, providing a boost to the economy and bringing relief to the homebuyers. The money would be available to “net worth positive” buyers.
Notably, stuck projects classified as non-performing assets and those undergoing resolution under the National Company Law Board Tribunal will also be eligible for funding unlike earlier when they were excluded from such a benefit. It is on the cards that this funding move will alleviate stress for homebuyers, real estate players as well as banks that have backed these projects.
The crucial thing would be to judge whether a project is net worth positive and is therefore fit to be considered worthy of funding. Initially, as many as 1,600 projects with 458,000 dwelling units will potentially be covered under the dispensation. Those dwelling units which are in an advanced stage of completion will be taken up first.
That the total value of homes that are stuck is estimated at Rs 1.39 lakh crore, energising this evidently will provide employment to a fair number of people and provide succour to many.
The government is hoping that opening this up will release stress in other major sectors of the economy too. An escrow fund will be set up to be managed by SBI Caps appraise projects and release funds. It is to be hoped that the scheme would be rolled out after adequate preparation and spade work so that it does not fall by the wayside as demonetisation did due to lack of groundwork.
Finance Minister Nirmala Sitaraman has said that the total funding could be increased with sovereign and pension funds expected to join, but there would need to be close monitoring and effective implementation. All in all, it is in principle a worthy move with potential of re-railing the economy along with other steps.