Oct 2019 , by , in Latest News

The last mile government funding has brought much needed respite to home buyers of housing projects near completion. But is it really enough?


T he Centre recently declared a 20,000-crore stress fund to help stalled residential real estate projects. However, projects that are undergoing insolvency proceedings or have bad loans have been kept out of the funding ambit. Such funding would only be available to provide financial support to affordable and mid-segment housing projects. Apparently, luxury home buyers do not find any recourse and for the home buyers of projects that are stuck in bankruptcy proceedings, NCLT remains the only route.

While the government aims to contribute 10,000 Crore to this stress fund, the remaining amount will come from external investors. As per the Finance Minister’s announcement, projects that are 60% complete will be able to tap cash from this special window. This will ensure that healthy projects with potential for completion are not pushed into a bad debt like situation for want of working capital and that buyers get their homes.

Appreciating the move, Manoj Gaur, MD, Gaurs Group & Chairman, Affordable Housing Committee, CREDAI stated, “Several mid-income and affordable housing projects which are witnessing slow progress due to lack of funds, will be expedited as the result of setting up this special window. The fact that the special window will be managed and monitored by professionals from housing and banking sector is another step in the right direction.”

In these testing times this decision by the government will certainly bring relief to lakhs of homebuyers but is it really enough? The Indian real estate sector is going through one of the most trying times with India’s GDP growth decreasing for the fifth consecutive quarter in April-June 2019 to 5 percent, the lowest in six years. It is now the need of the hour to streamline measures that will help boost Indian economy and especially the real estate sector.

Decisions such as these indicate the government’s efforts in making constructive steps towards growth but they seem more piecemeal than a streamlined strategy. Jaxay Shah, Chairman CREDAI, rightly points out, “The government has just scratched the tip of the surface with the recent announcement. They are not realizing the gravity of the situation.”

The announced last mile funding for stalled projects barely covers more than 5.5 lakh units that are stuck or delayed in top 7 cities alone which would be much higher if we consider all cities and towns.

In a press statement, Abhay Upadhyay, President, Forum for Peoples’ Collective Efforts (FPCE) also expressed hope that the government would expand the ambit to include projects which are less than 60 percent complete or which have become NPAs.

Stating similar opinion, T Chitty Babu, Chairman and CEO, Akshaya Pvt Ltd said, “The proposal of a special window to provide last mile funding for housing projects which are non-NPA and non-NCLT will protect the interest of the homebuyers and their investments. In addition, establishment of an organization to provide credit enhancement for infrastructure and housing projects will encourage the realty sector and in turn contribute to the turnaround of the economy.”

Apart from the recent measures and stress fund announcement, government will need to rethink its long term economic policy to fix drawbacks plaguing not only the real estate but other sectors as well. After all the demand for real estate is dependent on the growth of other industries. Declaring fragmentary initiatives from time to time is not the solution that will fix the crumbling economy.


  • Stressed asset fund will boost economic growth from a six-year low.
  • Finance affordable housing projects and will benefit around 3.5 lakh homebuyers.
  • Interest rate on house building advance to be lowered and linked with the 10-year G-Sec yields.
  • Increase in India’s GDP and employment opportunities.


  • At least Rs. 90,000 crore will be needed to cure the housing sector of its ills.
  • Funding is not for projects which are already under NCLT and/or are an NPA.
  • Fund is for projects in the affordable and mid segment housing only, homebuyers within the luxury -segment may have to wait even further.
  • No clarity of the price of mid segment homes that will be included.

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