August 18, 2019

Fix real estate mess to house growth

In this article, Shankkar Aiyar examines the real estate industry which poses an economic and systemic risk—the buyer without an asset and the builder with an unfinished project in the context of the Supreme Court ruling which directed government-owned National Building Construction Company to take over unfinished projects in the National Capital Region. 


"Does NBCC have the money required to complete the projects? As of March 31, 2019, NBCC had Rs 1,384 crore as reserves and surplus and current liabilities of Rs 6,637 crore.

The cost of completing the unfinished units of the Amrapali Group is estimated at over Rs 7,700 crore. Also queuing up at the Supreme Court are those who invested in nearly 85,000 stalled projects of Jaypee and Unitech.


The queue at the Supreme Court is one sign of a malaise which has left homebuyers in the lurch and has dragged down the economy. There are multiple factoids on stress and distress."


He further discusses the economic impact: 


"Real estate is at the intersection of the agrarian and industrial economies hosting over 40 million jobs. It affords seasonal employment to lakhs of circular migrants from rural areas. Income opportunities at the low-skills level for rural and peri-urban workers drive consumption.

At a broader level, studies in India, China and elsewhere have revealed and validated the simultaneity of real-estate sector and economic growth. Real estate growth is known to have direct and indirect impact on over 200 sectors at multiple levels of consumption, whether it is cement, steel, bricks, tiles, commercial vehicles and services—segments which drive mass employment and consumption.


Read the complete article here



Topic : State Capacity / In : OP-EDS
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