After announcing earlier that India had exited the Regional Comprehensive Economic Partnership (RCEP) pact, the Ministry of External Affairs has now said that if the country gets a firm indication that its core concerns would get addressed by other members, it could consider taking a further decision on the matter.
Union Finance Ministry said that any stalled real estate project will get maximum of ₹400 crore from special fund. Also, dwelling unit with size less than 200 square metres only will get the finance for completion
The Government has announced setting up a dedicated fund to provide relief to home buyers. As approved by the Union Cabinet, ‘Special Window’ fund will get ₹10,000 crore and with the contribution from SBI, LIC and other financial institutions, initial corpus is estimated to be ₹25,000 crore. Later, many sovereign funds, pension funds and other global funds beside domestic financial institutions are expected to put money to expand the corpus.
As per industry estimates, in the stalled category, there are about 1,509 housing projects comprising of approximately 4.58 lakh housing units.
The leases of 329 mines of private mining companies, including 48 operative and 281 non-operative mines, will expire in the next four months, leading to supply disruptions of key raw materials to various manufacturers.
These mines are slated to be put on auction but may not fetch a good price given the global uncertainties and the prevailing low raw material prices.
Moreover, metal prices are not expected to revive any time soon with the US-China trade war persisting despite the talk of imminent resolution. While the mining leases of private commercial miners are being cancelled, the government recently renewed, up to 2030, the leases of captive mines allotted to top corporates.
According to RK Sharma, Secretary-General, Federation of Indian Mineral Industries (FIMI), “Nowhere in the world two sets of people from the same industry are treated differently and discriminated under a common law”. The bottlenecks are a hindrance to growth and need to be removed, he added.
Odisha is worst affected as half of the 48 operative mines whose leases will expire in March are in Odisha. And among the non-operative mining leases that are expiring, 184 are in Goa.
FIMI’s Sharma said the situation is alarming because in case a lessee is not able to retain the mine, he gets seven months to remove all material from the site. “How he removes and where he keeps that material is another issue,” he said.
Further, the raw material supplies to steel manufacturers will also be disrupted at a time when India is looking to produce about 300 million tonnes of steel in the next five years and become the second-largest producer in the world, he added.
India’s plan to set up a 250 billion-rupee ($3.5 billion) fund to help stalled residential projects will only be sufficient to complete about 6% of constructions that are running behind schedule.
The new program announced by Finance Minister Nirmala Sitharaman is an improvement on a $1.4 billion real-estate corpus announced in September and, unlike the previous plan, it will also support projects written off by lenders as bad loans. With $63 billion of housing projects stuck for lack of funds, the latest measure will help unclog the financing pipes, said Anuj Puri, chairman of Anarock Property Consultants.
The fund size isn’t enough to cover the entire problem but will act as a “lubricant to start the wheel that had been jammed,” Puri said. Once projects are revived and completed, money will start circulating in the system, which will help all developers, he said.
Revenue growth for highway developers in the engineering, procurement and construction (EPC) segment could get halved in both 2019-20 and 2020-21 fiscals to around 15% against 30% logged in FY19.
The decline would be largely due to slower awarding of projects and delayed receipt of appointed date, which is the zero date or kick-off date for start of a project, from the National Highways Authority of India (NHAI),” rating agency Crisil said.