With the real estate sector facing huge slowdown, Union Minister Nitin Gadkari today asked builders to reduce construction cost and avail dollar loans to cut their interest expenses in order to revive demand.
The Road Transport and Highways Minister also announced that pending work on the 18-km Dwarka Expressway in the National Capital Region will start in the next 3-4 months.
Addressing a conference organised by industry body NAREDCO, he said demand in housing sector is poor but is expected to improve on the back of Seventh Pay Commission award.
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Gadkari said the situation in steel sector is also not very encouraging but hoped that demand for steel and cement will rise as lot of projects for road construction have been allotted.
"Interest cost is high in our country. At one time, the rates were as low as 6.25 per cent. The government is taking steps to lower the interest rates. But it will take time to reach that level," Gadkari said.
Recalling that Rs 3,000 crore loans were taken in dollar terms for development of roads near Jawaharlal Nehru Port in Mumbai at 2.75 per cent interest rate, he said, "My advise is that you should take loan in dollars which will reduce your interest cost and provide relief."
To provide affordable housing, the minister emphasised on reducing interest rates and cost of construction as well as improving construction quality.
He said construction cost can be reduced through pre-cast technology and use of waste material.
"The real estate sector is facing lot of challenges. There is almost no demand," he said, adding that poor people do not have the purchasing power to buy homes.
Gadkari said the cost of land, construction and bank loans are high while the builders are not ready to sell flats at cheaper rates.
Asking builders to diversify to other sectors, he asked the real estate companies to enter into road development.
He said the pre-qualification norm has been eased as more contractors are needed to build roads.
"Our department has allotted works worth Rs 3.5 lakh crore and my target is Rs 25 lakh crore," Gadkari said, adding that bank NPAs have been curtailed substantially.
On Dwarka Expressway, he said the work will start in the next 3-4 months.
The minister also talked about plans to decongest Delhi and said all the godowns, cold storage facilities and pre-cooling plants would be shifted outside the city to ease traffic.
Gadkari said he intends to develop 10 townships along Delhi-Jaipur Expressway and asked builders to participate in this programme.
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