Two panels set up to consider industry suggestions on real estate sector.
The government has decided to form two committees on housing and urban infrastructure consisting of members from the private sector and the government to consider the suggestions made by representatives of the real estate industry for a policy package on these sectors. This was announced at the end of an interactive meeting between government officials and industry representatives held in New Delhi yesterday.
Industry chambers, like Ficci, Assocham and CII which participated in the meeting, appealed to the government that there should be no restriction on the foreign direct investment level in the real estate sector. Presently only NRIs are permitted to invest in the housing sector through overseas corporate bodies, and participants felt this was being misused.
More From This Section
An industry source said participants at the meeting urged the government to accord industry status to the housing and construction sector and allow liberal inflow of foreign direct investment in the sectors.
Housing and construction should be brought under priority sector lending and 10 per cent of the amount earmarked for priority sector lending should be made available to them, members felt.
The Reserve Bank of India should also direct the banks to allow bridge finance and long term project finance in the housing sector. Representatives from the sectors of steel and cement, two major ingredients in the construction sector and urban development department secretary N P Singh, UEPA secretary K Aggarwal and industry ministry secretary T R Prasad were also present. However, minister for urban affairs U Venkataswaralu who was scheduled to attend the meeting did not come as he was busy with the cabinet meeting to discuss the fallout of the political situation in Uttar Pradesh.
The industry also recommended that the government should source at least $5 billion every year for the next five years from multilateral institutions like the World Bank, the Asian Development Bank and the Euro currency market to meet the fund requirements of this sector. The government has been urged to undertake the exchange risk.
These funds should be made available to the borrowers in the industry at a maximum rate of 9 per cent as against the rate of 14 to 16 per cent prevalent now.
The other recommendations were about income and wealth tax issues relating to the sector that would boost the construction of rental property for both housing and commercial purposes.