Dr Ashwani Mahajan
The real estate sector of India has been going through a worst crisis for a long time. While on the one hand there are millions of unsold houses due to lack of ready buyers, on the other hand thousands of housing projects are lying incomplete due to the paucity of funds with builders. Until some time back, no effective solution to this problem was visible. In such a situation, many efforts are being made by the Central Government to get these stalled housing projects started once again.
While the people’s hard-earned money is invested in these projects, lakhs of middle-class families have taken loans from banks for a shelter in these housing projects. These middle class buyers made the booking thinking that after getting the house they would not have to pay rent and they would pay EMI instead. But the builders misappropriated their money, not only demolished their dream of home, rather also increased the burden of EMI on them. To make builders fall in line, the government enacted a law called ‘Real Estate Regulatory Authority’ (RERA) to fix their responsibility and they have been made to commit that they will complete the housing project in the given time. Not only this, new housing projects were also brought under the ambit of RERA.
But even then it was seen that since the builders had already siphoned off the money of the housing buyers, it will not be easy to bring that money back to the same project in a short period of time and due to this the miseries of the people will continue unabated. In such a situation, the government started efforts under a very elaborate plan to bring back the stalled housing projects back on track. The name of this scheme is ‘Special Window for Affordable and Mid Income Housing’ (SWAMIH). Under this scheme, an investment fund of Rs. 25 thousand crores was set up, in which provision was made to complete Affordable and middle income housing projects registered under RERA which were stalled due to paucity of funds. The fund has been registered with the Securities and Exchange Board of India, that is, SEBI. SBI Cap Ventures has been made its Investment Banker, which is under SBI Capital Markets and fully owned by State Bank of India. This fund is sponsored by the Secretary, Ministry of Finance, and Government of India.
Till date 165 projects have been allowed under this fund for completing more than one lakh housing units. Of these, 55 projects have received final approval also. Preparations are underway to complete 6 thousand housing units by March 2022. ‘SWAMIH’ aims to support 1500 stalled housing projects, including projects that have been declared non-performing assets (NPAs) or are in the process of insolvency. The fund has 14 investors, of which 50 per cent share is with Government of India and LIC and State Bank of India hold 10 per cent each. It is estimated that 1600 projects with a total of 4.5 lakh housing units are stalled in the country, most of which are from Mumbai Metropolitan Region (41 per cent) and NCR (24 per cent).
After completion of this scheme it will be possible to revive 4.5 lakh stalled housing units. With this it will be possible to revive the dead investment of Rs 2 lakh crores and bring the same into the mainstream of the economy. Apart from this, another benefit of this scheme will be that it will also positively affect the cyclical flow of investment. It is to be understood that when the work starts in stalled residential projects, the middle class households, who had invested in the houses will also pay their dues and this will increase the housing investment. Not only this, the employment in the construction sector will increase when work starts in these stalled projects. Not only this, the demand for products of many industries, including steel and cement will also increase. With improved sentiments in real estate sector, the sale of unsold completed housing projects will also be possible and others who were still reluctant to invest in real estate, will now start investing in it. This will also increase investment in real estate. After these middle class households get their stuck house, they will be able to save on rental. They will be able to use the money saved, to improve their standard of living, which will increase the demand in the country. It can be said that this scheme of the government will not only benefit the middle class families investing in stalled projects, but will also have a favorable effect on the cyclical flow of income and investment in the economy.
Not a Government subsidy scheme
It is true that this ‘SWAMIH’ fund has been started with the effort of the Government of India, but this does not mean that it is a Government subsidy scheme. It is an investment fund, in which 50 percent of the participation is by the central government and the rest is contributed by 13 institutions, including State Bank of India, HDFC Bank, Life Insurance Corporation of India etc. In fact, it is also a beneficial scheme for these financial institutions as well, as rate of return of 12 percent has also been fixed in it. That is, the benefits of this fund will also be available to the Government of India and other financial institutions. It can be said that this scheme is beneficial for the customers (middle class families), government, financial institutions and the entire economy. The government has given a boost to the real estate sector of the country with this well thought of plan, financial institutions will also get direct benefits from it. If healthy development is possible in the real estate sector, then these financial institutions will get indirect benefit as well.
(The author is Associate Professor, PGDAV College, University of Delhi)
Dr Ashwani Mahajan