In an effort to counter the slowdown, Urban Development Minister Jaipal Reddy has requested an additional package for the real estate sector.
In a letter addressed to the Prime Minister, Reddy emphasized that "more needs to be done to reverse the slowdown facing the sector". He proposed a series of measures, including industry suggestions aimed at revitalizing the sector.
"Some of these suggestions with appropriate modifications could be favorably looked into," Reddy stated in the letter to the PM.
The real estate sector plays a critical role in the country’s economic growth and job creation. However, due to the ripple effects of the global financial crisis, the sector is grappling with severe liquidity issues. Real estate transactions have plummeted by nearly 80%, halting the sector that was previously driving the economy.
Consequently, many developers are experiencing liquidity crunches, partly due to financing long-term assets with short-term loans.
Among the proposed measures, the real estate industry has advocated for the rationalization of home loan interest rates. They suggested a 6.5% interest rate for loans up to Rs five lakh and a 7.5% rate for loans above Rs five lakh and up to Rs 30 lakh. Additionally, the industry has requested an increase in the income tax exemption limit on rental income from houses, from 30% to 50%, among other suggestions to revive the sector.