Wednesday, July 24, 2024

Government’s Approval of 342 Proposals Signals Revival for Stalled Real Estate Projects and Homebuyers

As of November 16, 2023, the Indian government has given the go-ahead to 342 proposals under the Special Window for Completion of Affordable and Mid-Income Housing (SWAMIH) investment fund. This initiative is set to breathe life into stalled real estate projects, providing much-needed relief to over 2 lakh homebuyers. The approved proposals are expected to unlock a substantial sum of Rs 94,367 crore, signaling a significant boost to the real estate sector.

Union Minister of State for Housing and Urban Affairs, Kaushal Kishore, highlighted the positive impact of these approvals, emphasizing that they will benefit around 2,18,699 homebuyers. The SWAMIH investment fund, established by the government, is specifically designed to support projects that demonstrate financial viability, are registered under the Real Estate Regulatory Authority (RERA), and may include those facing insolvency proceedings.

To address the challenges faced by stalled real estate projects, the government formed a committee chaired by former NITI Aayog chief Amitabh Kant. The committee’s recommendations, aimed at enhancing the financial viability of these projects, have played a pivotal role in shaping the government’s approach.

The committee’s August report suggested measures to encourage financial institutions to fund stalled projects, proposing a scheme with subsidised interest rates, similar to those available for Micro, Small, and Medium Enterprises (MSMEs). Additionally, the report recommended the consideration of a guarantee fund, akin to the one for MSMEs, to further incentivize financing for such projects. The Ministry of Housing and Urban Affairs (MoHUA) is tasked with developing a detailed scheme for submission to the Ministry of Finance.

Recognizing the importance of maintaining a win-win situation for all stakeholders, the committee underscored that steps to enhance the internal rate of return of these projects would attract more funding. It further emphasized that legal interventions, such as insolvency and bankruptcy proceedings, should only be pursued as a last resort, advocating for project resolutions that benefit everyone involved.

In summary, the government’s proactive measures and the SWAMIH investment fund’s role in approving these proposals signal a positive stride toward revitalizing the real estate sector and addressing the concerns of homebuyers in stalled projects.

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