FM Announces Cash Injection in Real Estate to Rev Up Economy

In a move to shift gears of the slowing economy, FM Nirmala Sitharaman announced a corpus of Rs 25000 crores, of which 15000 crores will be funded by LIC and SBI, for the Real Estate segment. This to rev up the halted projects, which also include projects that have been declared NPA and that are under the scanner of bankruptcy proceedings. FM also aims to revitalize employment along with the cement, iron and steel industries through this move.

Crux of the Matter
  • In the Real Estate segment, as a part of the government’s effort to revive the economy, as many as 1600 projects, containing 458,000 household units, will get aid under this announcement.
  • With the help of the category II Alternative Investment Fund, the pooled amount would assist the project homes with a value of less than Rs. 2 crores in the Mumbai, Rs. 1.5 crores in Delhi-NCR, Kolkata, Pune, Bengaluru, and Chennai and less than Rs. 1 crore across other parts of India.
  • The Real Estate Segment that is struggling since demonetization and IL&FS crackdown is expected to show positive reaction. This will als hrlp in reviving domestic demand.
  • The home-buyers who have halted their EMI’s on account of paused projects will now be asked to continue soon after the RBI nod.

The United States housing bubble was a real estate bubble affecting over half of the U.S. states. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reached new lows in 2012. On December 30, 2008, the Case–Shiller home price index reported its largest price drop in its history. The credit crisis resulting from the bursting of the housing bubble is an important cause of the 2007–2009 recession in the United States. Read More