CREDAI, the apex body of Private Real Estate Developers Associations, sought the Prime Minister Narendra Modi’s intervention to provide a much needed relief to the ailing realty sector that has been hit hard due to the coronavirus crisis.
CREDAI, in a letter to the PM, has pressed for additional credit equal to 20 per cent of the existing real estate project-related advances at the MCLR with no additional security. If need be, this could be offered by extending government guarantees without the classification of the project as NPA.
It has appealed that the penal interest charged by banks and financial institutions should be suspended for a period of one year or until such time as it takes for the pandemic to abate. Besides, CREDAI has called for a one-time restructuring of loans, as permitted by Reserve Bank of India in 2008, to be quickly instituted by all lending institutions.
CREDAI president Satish Magar urged the PM to reduce the maximum rate of interest on new income loans to 5 per cent by subsidising the interest component of EMIs for the next five years, and increase the limit of principal deduction on housing loans under Section 80C to Rs 2.5 lakh as well as the interest deduction under Section 24 on housing loans for home buyers to Rs 10 lakh. Further, RBI may allow housing finance companies to offer a 24 months subvention scheme to home buyers. The 24 months’ subvention is adjusted by extending the loan tenure by 24 months with the subvention amount recovered in the last 2 months.
Further, CREDAI has voiced concern over the cartelisation of raw material for construction and urged the government to control the price rise for construction to be started in full swing and to get the country’s economy back on its growth path. “Across various states, there has been an increase of Rs 100 to Rs 250 per bag of cement and about Rs 2,000 to Rs 2500 per metric tonne of steel. Such an abrupt increase will be a bolt on the blue for the developers and will lead to rise in construction cost and overall project cost,’’ said Magar.
CREDAI has demanded that the benefit of GST at the rate of 1 per cent be extended to units costing up to Rs 75 lakh from the present level of Rs 45 lakh. The option of GST at 12 per cent for normal housing and 8 per cent for affordable housing with ITC benefits in line with the scheme applicable for the contracts for the government may be revived and made applicable to real estate.
