Centre Announces Rs 25,000 Crore Fund For Stalled Real Estate Projects


The fund will help over 1,600 stalled housing projects, Ms Sitharaman said.

The government on Wednesday announced a Rs. 25,000-crore fund for stalled real estate projects, in a bid to boost the real estate sector. Announcing the decision, Finance Minister Nirmala Sitharaman said the government will put in Rs. 10,000 crore in this Alternative Investment Fund (AIF) while country’s largest lender State Bank of India (SBI) and state-run insurance company Life Corporation of India (LIC) would jointly provide another Rs. 15,000 crore, taking the total size to Rs. 25,000 crore. The announcement by the government comes at a time the country’s real estate sector is struggling against low demand and hundreds of delayed projects amid a liquidity crunch following a series of debt defaults by non-banking finance companies.

Here are 10 things to know:

  1. The fund will help over 1,600 stalled housing projects comprising 4.58 lakh housing units across the country, the Finance Minister said.
  2. The cash-flow squeeze in the system has halted building projects that have left numerous homebuyers stranded even after paying their monthly instalments.
  3. The government has approved the setup of a special window to provide priority debt financing for the completion of stalled housing projects in the affordable and middle-income housing sector, Ms Sitharaman said.
  4. This special window, the minister said, will enable home-buyers to get delivery of homes locked in stalled housing projects.
  5. The move is aimed at reviving the real estate sector and generating considerable employment.
  6. Besides, the revival of the real estate sector the Alternative Investment Fund will also lead to higher demand for cement, iron and steel industries, an official statement said. This initiative will have a positive effect in releasing stress in other major sectors of the economy as well.
  7. The government further said that the size of the Fund would increase further with participation from sovereign and pension funds.
  8. The Finance Minister said the Fund can be utilised even by the projects been declared as non-performing assets or those facing insolvency proceedings.
  9. The development comes amid property developers finding it difficult to raise funds after the default by the IL&FS group last year highlighted a liquidity crisis in the economy.
  10. Economic slowdown in the country has led to low demand, causing a huge pile-up of inventories in the sector and pushing the  ongoing projects to a standstill. GDP growth in the economy stood at a more than six-year low of 5 per cent in April-June.

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