The following is the text of an interview with Deepak Sood, Secretary-General of the Associated Chambers of Commerce and Industry of India (Assocham):
Question: How do you assess the present state of real estate in the post-COVID period?
Answer: Like the rest of the economy, real estate too has shown a fast recovery, especially in the third quarter of the current financial year. The trend-line for the residential segment is definitely positive as indications emerge from the banks sanctioning new home loans. Some of the private sector banks have reported good numbers in new home loans. The demand is more visible for the ready-to-move flats in the big metros. The markets of Hyderabad, Bengaluru are indicative of sharper recovery.
When it comes to the overall health of the sector, it is improving for sure, but it would take time for the full recovery and would still require certain imperatives like pick-up in hiring, restoration of salary rationalisation etc.
Q: The Government has announced several measures for providing relief to the real estate sector. Are you satisfied with these measures?
A: In the Finance Act of 2020, the safe harbour of 5 per cent on the real estate transaction valuation, as per the circle rate of a state, was increased to 10 per cent. Under the Atmanirbhar Bharat initiative, this leeway has been significantly raised to 20 per cent, providing a big relief to homebuyers. On the other hand, it would lead to pick-up in demand, helping the real estate developers clear their unsold inventory. While this facility is for the primary sale of residential flats up to value of Rs 2 crore, the dispensation is good enough to cover bulk of the unsold inventory in the National Capital Region, Pune, Chennai, Hyderabad, Bengaluru , Navi Mumbai and even in Mumbai (in micro markets like Thane).
Q: What other announcements have the potential to bring about vibrancy in the real estate sector?
A: As much as Rs13,200 crore has been sanctioned under the Stress Fund for the real estate sector. As per the Government data, 135 stalled projects would qualify for this amount, helping in completion of 87,000 stalled residential flats. This should be a major relief for homebuyers and morale-booster for the sector.
Q: What about the PM Awaas Yojana?
A: This particular flagship scheme stands out as a major success story for the lower income groups and the units with smaller ticket size. Moreover, the announcement of additional Rs18,000 crore, over and above the Budget outlay of Rs 8,000 crore would provide speed to the affordable housing projects. In the bargain, employment generation in construction would get a boost while sectors like steel and cement would be major beneficiaries. We have already seen pricing power returning to the steel sector.
Q: How hopeful is Assocham is for recovery in economic activities?
A: Barring a few sectors like hospitality, entertainment, civil aviation, the pace of recovery is being witnessed in most of the sectors like automobile, housing, fertiliser, chemicals, pharmaceuticals and overall manufacturing. Agriculture, in any case, never remained stalled helping the rural economy to be leading the bounce-back.
While the health crisis is being taken head on by the people of the country and we owe a sense of gratitude to doctors, nurses and all other health workers, we have managed the economic recovery well.
The Government, under the resolute leadership of Prime Minister Narendra Modi has remained steadfast on speeding up path-breaking reforms in agriculture, defense and labour. Production-linked incentives for 13 sectors in all, with a Rs 2 lakh crore support would have a major multiplier effect in boosting manufacturing in the country.