India Prime Minister Announces Rs 20 Lakh Crore Incentive to Combat Corona virus Fallout

Prime Minister Narendra Modi announced a stimulus package of Rs 20 lakh crore to support the economy after the Corona virus crisis on May 12, 2020.

As India planned to enter the fourth phase of lockdown from May 12, 2020, to prevent the number of coronovirus infections, Prime Minister Narendra Modi announced on May 12, 2020, Rs 20 lakh crore to support the economy. Announced an incentive package. Narendra Modi extended the lockdown in India until May 30, with some ridership as Asia's third-largest economy attempts to mitigate the widespread damage caused by the epidemic.

In the coming times, Finance Minister Nirmala Sitharaman will provide details of the mega package, which is one of the world's most important stimulus packages against the epidemic. While Japan has announced a $ 992 billion coronavirus relief package that accounts for more than 21% of its GDP, the $ 2 trillion stimulus package announced by the US serves about 13% of that country's GDP.

India's support measure is likely to focus on tax breaks for small businesses and incentives for domestic manufacturing. Being the second largest employer in the country, real estate can be a major beneficiary of fiscal stimulus, Collier International India said in a statement.

Important is that the new package, which is equivalent to about 10% of India's GDP, includes the first Rs 1.7 lakh crore package announced in March 2020, as well as liquidity measures in various measures initiated by the Reserve Bank and Interest included Rate cut.

Corona virus stimulation package in India

The Center and the Reserve Bank of India (RBI) have announced a slew of measures in the past to support the economy as analysts predict a prolonged national lockdown to counter a corona virus outbreak in India's first-ill. May push economic growth to a three-decade record less.

In India, the number of infections has increased to 81,970, while the number of deaths by May 15, 2020 has risen to 2,649.

After the central government announced a Rs 1.7 lakh crore incentive package to provide direct cash transfers and food security measures to millions of poor people due to the lockdown, RBI announced a 75-basis point shortfall The interest rate, after an emergency meeting through video-conference of its Monetary Policy Committee (MPC) on March 27, 2020, to bring it to 4.40%.

A nationwide lockout that has forced India's 1.3 billion people to live in millions of low-income homes indoors, relying on daily wages to sustain their livelihoods in Asia's third-largest economy, which weakening economic activities in the country is also the weakest and brought many companies to the brink of bankruptcy.

How will corona virus affect the Indian economy?

ICRA states that India's growth fell to a six-year low of 4.7% in October-December 2019 and may decline to 2.4% in January-March 2020. On the other hand, rating agency Moody's projected job losses to accelerate in countries after COVID-19, resulting in widespread loss of income for businesses and individuals.

Ministry of Finance (MOF) or SBI authority plan priority positions for real estate under AIF

To strengthen stalled housing projects, SBI and Ministry of Finance plan priority positions for real estate AIF

Government, SBI and LIC contribute Rs 25,000 crore for Alternative Investment Fund to fund the delay in real estate projects. After the completion of the phase, an alternate fund of Rs 25,000 crore to provide funds for the delayed housing projects in phases.

Real estate projects which are in NPA or NCLT can also be funded by an alternative real estate fund of Rs 25,000 crore.

AIF to allow priority loan financing to complete delayed housing projects.

The State Bank of India (SBI) and the Ministry of Finance (MoF) are exploring a legal framework, where the assets of companies receiving funds with suggested Alternative Investment Funds (AIFs) to strengthen delayed housing projects and The first charge will be on cash flow.

It will finance 1,600 delayed housing projects carrying 4,58,000 housing units across the country. This step is to create employment opportunities as well as improve the demand for cement, iron and steel industries.

The government will put Rs 10,000 crore into this Alternative Investment Fund(AIF) while SBI and LIC will provide Rs 15,000 crore, taking the total size to Rs 25,000 crore.

It aims to relieve stress in key sectors of the economy. The size of the fund will increase as sovereign and pension funds are expected to participate in this AIF. AIF can also be used by projects that are declared non-performing assets or facing insolvency proceedings.

Changes may be made to the Insolvency and Bankruptcy Code, 2016 (IBC) to incorporate the lenders' seniority concept, which is not currently adequately recognized in the Insolvency and Bankruptcy Code (IBC) in its current form. According to sources, the Ministry of Finance (MoF) has referred the matter to the Law Ministry.

SBI, the country's largest lender and its arm, has been instrumental in arranging the SBI Capital Market Fund, and is approaching other banks and financial institutions to participate in AIFs - private joint ventures like venture capital, private equity Regulatory languages ​​and real estate funding for agencies.

By law, a bank may invest up to 10% of the Alternative Investment Fund(AIF) fund.

Therefore, the SBI is maximum Rs. Will be able to invest in 2,500 crore in the fund and asked other institutions to join the suggested Rs. 25,000 crore fund comprising the government Rs. 10,000 crores Rs. Addressing the AIF as a senior status among lenders may make it easier and easier for other banks to invest in it.

Under the scheme, the fund will come back when lending to a company that its seniority should be part of the inter-creditor agreement. If the company fails to recover and is subsequently declared insolvent. In this situation, the COC will have to identify the most senior charge among all lenders. If the company is already facing bankruptcy under the IBC, the COC will have to address the AIF and keep the seniority of the charge.

Currently, the IBC has made a provision for raising interim finance by the resolution professional after requesting approval from the CoC. 

Finance Minister Cabinet approves Rs 25,000 crore alternative fund for stalled housing projects

Cabinet approved Rs 25,000 crore alternative fund for stalled housing projects.

The government will invest Rs 10,000 crore in this fund, while SBI, LIC, and other sovereign funds will all generate funds of Rs 25,000 crore. Only RERA-registered projects with positive net worth will be funded. NPAs apply to fund NCLT-referenced housing projects.

Alternative Investment Funds (AIFs) can also be used by projects that have been declared non-performing assets or are facing insolvency proceedings.

Offering relief to millions of homebuyers, FM Nirmala Sitharaman announced an alternative investment fund of Rs 25 crore to help the real estate sector for stalled housing projects as it boosts the economy by kick starting incomplete housing projects.

The decision was approved by the Union Cabinet in a meeting chaired by Prime Minister Narendra Modi.

The government will invest Rs 10,000 crore in this fund, while SBI, LIC and other sovereign funds will create a fund of Rs 25,000 crore in all.

“An AIF (Alternative Investment Fund) will be created.

The government will create a fund of Rs 10,000 crore and others, such as SBI and LIC, of ​​Rs 25,000 crore each” she told a press conference after the Union Cabinet meeting.

Now she added other Quote, "This grant will be used to cater to housing units of less than Rs 2 crore in Mumbai, Rs 1.5 crore in Delhi-NCR, Chennai”. On Tuesday, FM Nirmala Sitharaman had said that the government and the Reserve Bank of India (RBI) are in the process of fixing the problems facing the real estate sector.

Now she added in her statement is 1,600 delayed housing projects with 4.58 lakh homes would benefit from the alternative funding mechanism, with the Reserve Bank of India (RBI) and its governor likely to negotiate with home buyers.

The fund size will increase as sovereign and pension funds are expected to participate in this AIF. “AIF can also be used for projects that are reported to be non-performing assets or facing insolvency action” these words spoken by her.

“The main criterion under the scheme is that the net worth of the project should be positive” she said.

The fund is not limited to projects in Delhi-NCR or Mumbai.

She said that every project in any part of the country meets the criteria if it can avail the funding.

The AIF was first announced by Sitharaman on 14 September 2019 which will act as a 'special window' for lending to over 1,600 incomplete affordable housing and medium-low income housing projects.

The plan is a revised version of the 14 September plan. The major change is allowing the AIF to finance projects that banks or lenders may have declared as non-performing assets (NPAs) or that have been transferred to NCLT for insolvency proceedings.

The fund is not limited to projects in Delhi-NCR or Mumbai. She said that every project in any part of the country meets the criteria if it can avail the funding

However, it stated that only RERA registered projects would be provided with funds along with net worth.

SBI Cap will initially maintain the fund through an escrow account. AIF funds will be released in phases and it will be preferred to the projects as per the development and funds for any project will be deposited in escrow of that particular project in a phased manner based on the percentage of completion of construction.

Now she express her statement “Adding to the realty AIF would be incomplete projects where housing units in non-metro areas are priced below Rs 1 crore and up to Rs 2 crore in Mumbai and up to Rs 1.5 crore in Delhi-NCR, Chennai, Pune, Hyderabad, Ahmedabad”.

Sitharaman said that the government is understanding the problem of homebuyers, who are obliged to pay EMI on the loan obtained to buy the house, but they are yet to get ownership and continue to pay both EMI and rent.

On Tuesday, she admitted that the problems facing the real estate sector have not been completely resolved, which is a concern as it has an impact on many sectors.

Meanwhile, the Real Estate Developers Association Confederation of Real Estate DevelopersAssociation of India (CREDAI) welcomed the move, saying it would solve the long-pending problem of homebuyers.

Real estate developers are finding it difficult to raise funds following a failure by the IL&FS group, which led to a liquidity crunch in the economy. This was mitigated by the economic downturn, which on one hand led to massive inventory piles due to lack of demand and stalled or delayed ongoing projects due to lack of funds.

What do real estate experts say on this?

"This will be a win for home buyers and real estate developers, as it will help ease the financial burden for homebuyers who have invested their hard-earned money, while producing productive goals like this There are also bailout funds stuck in delayed projects.

“The fund will help around 1,600 delayed housing projects in the country, and it is positive that the aspect of NCLT / NPA will not be a monstrous stone to stop projects delayed in reaching the fund. The positive results of the move include job creation, improving demand for cement, iron and steel industries and reducing tensions in other key sectors of the economy”.

“This is very welcome move from the first announcement (from 14 September). Now the only standards for eligibility are Net worth Positive Project. This will ensure that the fund is actually disposed to complete incomplete projects, which are also in the NPA or NCLT ”said Jaxay Shah, President of CREDAI.

Will home buyers stuck with this announcement benefit?

"We are certain that stuck home buyers will benefit from the Rs 25,000-crore stress fund decision, which is going to increase in value if needed," Shah said, adding that the quick disposal of funds and effective decision making The eligibility of projects for will solve the long-pending difficulties of home buyers.

What are the various steps taken by the government to revive the realty market? Or, for the latest announcement for Nirmala Sitharaman's immovable property.

Since August, the government has been taking several steps to strengthen market and consumer demand. Recently, the government reduced the corporate tax rate to 22%, with a loss of Rs 1.45 lakh crore.

Yesterday, on 5 November, the Finance Minister said that the government is working in a pinch to the current norms to promote the real estate sector.

In September 2019, Sitharaman announced six major steps to encourage exports, including a mega annual shopping festival like Dubai from next year, new automated return systems for the exporter and new RoDTEP scheme on export duties.

To motivate government servants to buy new homes, interest rates on house building advances would be reduced and combined with a 10-year G-Sec yield.

Which industries will benefit from this step?

The move is aimed at improving or strengthening employment opportunities as well as demand for cement, iron and steel industries. It also aims to reduce pressure in key sectors of the economy and shift to SuGanta.com which is new upcoming Real Estate website  We offer a wide array of properties such as flats, apartments, houses, villas and penthouses to name a few. You can easily find whatever you are looking for with the aid of enough number of sections and sub-categories. Even a search box is also designed where you can type the right keyword to find the property type you are searching for.