After a resounding comeback, Modi government is now on a mission to chalk out plans for the first 100 days. There seems to be a clear understanding in the government — from the PMO to the Chief Economic Advisor to the finance secretary — that unless real estate is revived, the economy and job creation will remain a challenge.
Here's experts' take on what the new government's priorities should be to revive the realty sector :
Pankaj Bajaj, MD at Eldeco Infrastructure: “Why has liquidity dried up to this sector suddenly? Public sector banks had retreated from the space a long time ago and that was filled in by the private sector banks. However, then the whole NPA thing happened and even they retreated and the credit function in a way was outsourced to NBFCs who borrowed from banks, mutual funds, and commercial papers and they were lending to real estate developers as housing finance companies. I am told that that figure is now almost 40-50 percent of the entire outstanding to the sector. Now after September of last year that has suddenly got jammed and people just want to withdraw their loans. So, this squeeze or crisis to my mind is an artificial crisis and some kind of confidence-building measure is needed."
Amit Bhagat, CEO and MD at ASK Property Investment Advisors: “We are expecting a lot from the government. If you see the last 5 years, it is a wakeup call after the IL&FS crisis. The way the lenders have not exercised prudence in giving money to this sector and all NBFCs were playing a valuation game by increasing QoQ their assets under management, somewhere I feel that there was not prudence exercise of risk management framework by lenders and we want the government to set it right.”JC Sharma, vice chairman and MD at Shobha Ltd:
“I believe that this sector needs to be looked at with an open mind. Of course, there have been issues with the developers, but what has happened post IL&FS crisis is that the viable developers also have started suffering.”