The Government of India has taken historic move of demonetization of Currency of Rs 500 and 1000 notes as legal tender on 8 November 2016 headed by Prime Minister, Mr Narender Modi in order to tackle problems of black money and corruption. Such demonetisation drive has resulted in the heavy downside in the housing sector, Prices are started to tumble in a way that experts predict that in coming days the Real Estate Market will taken as badly hit. Government is also aware that Country’s GDP estimated to be 11% from Housing Sector is also badly affected. Keeping this in mind Government is working towards doing certain major measures to boost the Housing Sector. It is estimated that government under leadership of Finance Minister Mr Arun Jaitley is likely to soon announce Significant discounts to prevailing home loan rates and the government is keen to launch the Scheme of Cheaper home loan rates of 6 to 7 percent versus today average of more than 9%.
Plans of Government of India
After Demonetisation drive taken by government changes are likely to be more that government is going to utilize the money that is compiled with it in giving Cheaper Home loan rates to make homes affordable within the range of common man, lure black buyers and rescue builders that are grappling with massive unsold inventory. In this regard, Government has already made a special draft and is discussing with reserve bank of India. It is estimated that government soon is going to announce its special schemes before the presentation of Budget more often by 1st February 2017 which boost the hit sector of Housing.
Main plans are mentioned below in details as:
Huge decrease in the interest Rates on Home loan: According to new Schemes home loans taken for amount Rs 50 lakhs has been charged with cheaper home loan rates of 6-7% versus today average of more than 9%.These schemes are for new buyers who want to have own their new house. The Government is working on the objective of offering more and more housing to general people to fulfill its objective of giving house to each one living in India. This wills definitely going to boost the badly hit housing sector.
Govt will soon announce to give more housing loans from 8 to 10 percent from banks: Real Estate sector is one such sector in which bank invest majority of its money to make more profit. Banks used to earn 15 to 17 percent interest from housing sector whereas other sectors contribute 8 to 10 percent which adds to huge profit of the banks, but due to demonetization and hit in the market various developers has taken their hand away from banks. In other hand, banks will be going to have Excess money available with them in the near future. That is why government along with RBI also wants that this money should be utilized and circulated rotationally so that market will grow. All Banks along with RBI more likely to declare in this regard.
Huge pressure on Government to boost the Real Estate Sector: Real Estate Sector is the second major sector of employment. After Demonetisation drive it got a big hit. If this condition prevails for more time than many people will get unemployed. Govt admit it. That is why the budget have given many provisions by which selling of housing boost and owing to the huge pressure on the government to boost Housing Sector government is soon likely to decrease the interest rates. Top agent magazine’s editor R.S Malhotra has told that coming Budget is very important for the Modi Government as many schemes for common men is announced in which many lesser home loan rates with income tax.
Government to boost Real Estate Industry towards transparency: With demonetisation drive government wants to put an end to unscrupulous growth of illegal builders who are making the housing rates skyrocketing making the housing rate beyond the reach of commoner. With demonetisation builders are now proceeds towards more transparency in dealing along with building of more affordable houses with timely possessions.
Conclusion: This is very early to say but final results will be seen once the government will see the full fiscal impact of demonetization. The new housing schemes may also find its way into the Union Budget that Finance Minister Mr Arun Jaitley will be presented in February 2017.