The monetary policy 2010 – 2011 announced by the RBI today shall adversely affect growth of housing and real estate development in the country. The National Real Estate Development Council (NAREDCO) in its comment has stated that increase in CRR from 5.75 to 6 percent and hike in repo rate by 25 basis point are expected to result in higher interest rate on home borrowings from commercial banks.
Rohtas Goel, President, NAREDCO fears that demand for affordable housing for the lower and middle income segments of buyers may be adversely impacted. These segments face housing shortage the maximum. Therefore, atleast the first time home buyers should be covered under priority sector borrowing by RBI, with upper borrowing ceiling of Rs. 30 lakh. Further more an advisory to the commercial banks for subjecting this category to lower interest rate is desirable, in order to provide a fillip to affordable housing in the country.
Goel has, however, welcomed the anti inflationary stance of RBI Governor in reigning in pricing of the major inputs in construction, steel and cement in particular.
During the fiscal 2010-2011, the intention to tame inflation in general shall also depend on the Government’s ability to contain the fiscal deficit, which was 6.7 percent in the last financial year.