Realty stocks jumped in early trade on Wednesday after finance minister Nirmala Sitharaman dropped a hint that a big boost to the realty sector is likely in the near future.
The Nifty Realty Index jumped over 3%, with stocks like Godrej Properties, Indiabulls Real Estate, Sobha, DLF, Sunteck Realty and Prestige Estate Projects gaining 2-6%. Only Mahindra Life and Phoenix Ltd were trading in the negative, down up to 1% each.
On Tuesday, Sitharaman said that the government and the Reserve Bank of India (RBI) are in the process of resolving the issues faced by the real estate sector. “The government is working together with RBI to see how best we can tweak the existing norms wherever necessary to help the realty sector,” she said at an event organized by the National Stock Exchange (NSE).
Sitharaman added that the real estate sector has a spill-over effect on many other sectors, hence addressing its issues will benefit industries such as cement and steel, who are the major suppliers.
“There are many alternative funds which are now approaching us, saying we would like to do something with you as long as some supporting mechanism is available for reviving the realty sector,” she said, adding that even home buyers are looking up to the government to help complete the stalled projects through policy decisions.
The real estate sector in India is struggling with liquidity crunch as developers are finding it difficult to raise funds after the default by the IL&FS group. This was further aggravated by the ongoing economic slowdown, which has resulted in huge inventory pile-up due to lack of demand and also brought ongoing projects to a standstill due to lack of funds.
Notably, the government has been taking various steps to revive industries and consumption demand in India Since August. Recently, the government had cut corporate tax rate to 22%, which involved a revenue outgo of Rs 1.45 lakh crore. Later in September, Sitharaman announced the creation of a Rs 20,000 crore special fund to provide financing to stalled affordable and middle-income housing projects in the country.
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