RBI Mandates Housing Start-Up Index to Monitor Real Estate Sector
The Reserve Bank of India (RBI) has instructed the National Building Organization (NBO), a government agency responsible for collecting statistics on India's housing construction activities, to introduce a housing start-up index by March 2009. This initiative aims to assist the central bank in evaluating the effectiveness of financial and monetary incentives implemented to revitalize the real estate segment.
Enhanced Data Collection and Decision-Making
The forthcoming index, set to be launched by the NBO under the Ministry of Housing & Urban Poverty Alleviation, will provide dependable statistics to both the RBI and other governmental bodies. This enhanced data resource is anticipated to contribute to more efficient and timely decision-making processes.
A senior NBO official, speaking on condition of anonymity, stated that the index will initially be published every quarter and subsequently transition to a monthly release schedule. The index will utilize 2003-04 as its base year.
Major global economies employ comparable indices to assess economic dynamics using data on housing supply and demand. Given the significant forward and backward linkages of the housing industry, the proposed index holds promise for assessing demand and supply dynamics in related industries such as cement and steel.
Implementation Review by Advisory Committee
An advisory committee established by the RBI is scheduled to convene by the end of the year to oversee the implementation of this directive.
DR Dogra, Deputy Managing Director at credit rating agency CARE, emphasized the challenges posed by the current absence of a robust housing database, stating: "Lack of a reliable database on housing hampered decision making in the country." The data for the forthcoming index will be gathered based on building permits issued by local authorities.