Finance Minister Nirmala Sitharaman’s announcement of Rs 20,000 crore special window to extend funding for incomplete housing projects is expected to prove a lifeline for more than 2.5 lakh housing units stuck in the country’s top seven cities.
The special window will provide funding to those projects in the affordable and middle-income segments that are not non-performing assets (NPAs) and not in the national company law tribunal (NCLT). The government will provide Rs 10,000 crore and roughly the same amount will be contributed by other investors like LIC and sovereign funds.
According to Anuj Puri, chairman of Anarock Property Consultants, around 4 lakh units are stuck in various stages of non-completion across budget segments that do not fall under NCLT. Nearly 2.5 lakh or close to 63 per cent of these projects are in the affordable and mid-segments, that is, in the sub-Rs 80 lakh bracket.
“There is no simple yardstick to calculate the exact number of units and the actual funds that are needed to complete them. After considering the government’s caveats—non-inclusion of projects under NCLT, and inclusion of mid and affordable units only, Anarock has shortlisted units launched in 2013 or before. It emerges that a total of 4 lakh units in projects launched in 2013 or before are stuck or delayed across various segments, excluding NCLT projects. Of this, only those that fall under the affordable or mid-categories—2.5 lakh units—can legitimately avail of the government’s new provisions,” said Puri.
The Mumbai Metropolitan Region (MMR) has the highest number of qualifying stock at 92,350 units, with at least 60,000 units in the affordable segment. This is followed by Pune, which has 67,240 units that will qualify for the special window.
In the NCR region, stuck projects of developers like Amrapali, Unitech and Jaypee Group will not not get any help, considering they are already in the NCLT. However, there are still around 60,700 homes in the region that could be revived.
In contrast, Bengaluru, Hyderabad and Chennai have a combined inventory of only 22,040 units (9 per cent) that are delayed and fall within the sub-range of Rs 80 lakh.
Puri says there needs to be clarification on the timeline of setting the Rs 10,000 crore fund and implementation. “If the implementation process is delayed over the next four to five months, more units could either turn into NPAs or fall under NCLT—thus eliminating their eligibility for this funding,” he said.
Furthermore, Puri says the definition of affordable homes that can avail the government’s special window also needs an update.
As per current norms, a home is considered affordable in metros if it measures 60 square meters or less in carpet area and is priced within Rs 45 lakhs. This price is too low in cities such as Delhi-NCR and Mumbai, he points out.
The government’s move will give relief to lakhs of homebuyers who have been waiting to see their stuck homes completed. However, it is unlikely to have any significant impact on new demand.
