New Delhi, March 10, 2008. In a significant move, Finance Minister P. Chidambaram has opted to lower home loan rates for loans less than Rs. twenty lakhs. This decision comes at a time when various sectors are experiencing the adverse impact of escalating interest rates.
As the Economic Survey of 2007-08 indicates, most sectors, apart from electricity, trade, transport, and communication, are witnessing a decline in growth rates. The hike in interest rates has driven up production costs and diminished consumer goods demand, leading to anticipated lower growth for the manufacturing sector in the upcoming fiscal year.
Furthermore, construction activities are expected to slow, projecting a growth rate of 9.6 percent, a marked decrease from the previous 12 percent, attributable to decreased demand for homes and other projects. In fact, the annual increase in home loans had plummeted to 15 percent by the end of November 2007, a steep drop from 33 percent a year ago. Interestingly, while the demand for home loans wanes, the commercial real estate sector continues to flourish.