Real Estate sector seeks quick holistic fiscal package to safeguard Indian Industries, recuperate businesses and boost economy

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New Delhi, 09 APRIL 2020: In the unprecedented crisis impacting the Indian economy as a result of COVID-19 pandemic, one of the biggest worries is that global investors may take over Indian companies at very low-price points, unless bankruptcy and insolvency laws are temporarily suspended.

In a media interaction, Dr. Niranjan Hiranandani, President NAREDCO (National Real Estate Development Council ) pointed out that global investors are waiting for Indian stocks to fall in value, to take over these listed companies at throwaway prices. “Hence in lieu of protecting the Indian companies, suspension of NCLT law for at least 6 months is imperative to salvage the capital erosion” he said.

Tough times seeks exceptional measures to thwart one of the deepest recessions recorded across the globe. Retrieving industry out of economic meltdown, govt of India is looked upon to follow world economies to institute stimulus package upto 10 percent of nation’s Gross Domestic Product (GDP). Industry seeks urgent infusion of nearly $200 billion which can pump into the market in a staggered manner to retrieve the business cycle without incurring further economic loss. The industry seeks working capital to ensure that the Indian economy doesn’t tank; business organizations don’t default and saddle banks with NPAs, as also cause job losses, he emphasized.

The economic turmoil is rightly equated as cancerand fiscal stimulus in way of crocin lacks bandwidth to cure the deep and bigger ailment that the nation is enduring. The current economic menace urges for chemotherapy dosages to combat economic meltdown. India Inc ensures that COVID-19 challenge will be handled under the best central and state leadership working to mitigate the aftermath as best possible. The economic aspect needs to dealt withquickly.

Dr. Niranjan Hiranandani conservatively estimated the losses to real estate as of the present at Rs 1 lakh crore, and rising with each passing day. He suggested that the economic stimulus package for all industries across the economy should be atleast 10 per cent of the country’s GDP. “If you can overcome the crisis today, you may be able to stand up tomorrow,” he explained. Stressing on the need for a one-time rollover for debt restructuring as also provision and working capital requirement as a ‘must do’ as part of the economic stimulus package, he said more credit supply needs to be extended to industries across the economy.

Post the pandemic, he estimated delays in on-going projects to range from 3 months to a year and half, depending upon the stage of the project and location, among other factors. Site labor remains major issue, unless they get back to routine work under strong adherence of COVID19 guidelines and paid for the same, they will end up returning to their villages and shifting to agriculture. This will translate into lack of skilled workers across various industries in cities morphing into agricultural labor, and to prevent this, it stands imperative to permit work to restart at construction sites where labor are present and being looked after.

The revival story post the pandemic would largely be driven by the need-based customers, and ‘affordable housing’ segment should be first off the starter’s block. The challenge that real estate would face was whether they wanted to work in the high-end segment or affordable segment. “It is like the automobile industry, India sells million-plus Maruti cars vis-à-vis a few thousand luxury cars. It is the same in real estate, the Maruti car segment – affordable housing – has much larger demand, and real estate business will have to adapt to the change circumstances.

On the possible fall in prices post the pandemic, he said price-points would come down as there would be some ‘desperate to sell’, but this would again depend upon location and type/ segment of individual projects. It is not price; we need a vibrant economy. The success of any business will depend upon this. Industries across India, including real estate, will be driven by demand rather than price correction.

Will depend upon location, segment. There is a possibility that some segments, like ready possession homes in certain locations, may command a premium if delays for under construction projects increases post the lockdown. Commercial realty may bounce back over a period of 6 months to a year, and this will obviously have an impact on the residential segment.

He stressed on the need for a roll-over as was done in 2007-08; pointing out that the present situation was far worse and definitely warranted both, the roll-over as also availability of low cost credit, if the Indian economy was to survive the crisis; ensure no more job losses as also bankruptcies, which in turn would result in NPAs and cripple the Indian banking system. “Deficit financing, if needed, can be implemented. The situation is bleak; we need to ensure that we come out of this not just alive, but also with a vibrant, functional economy,” he said.

Addressing the media through Video Conferencing Mr. Parveen Jain, Vice Chairman, NAREDCO said “This is a difficult period for all of us. RERA timelines should be increased by a year on account of the COVID-19 pandemic. This will give developers across the country to fulfil the mandatory compliances in order to commence their projects. Real estate projects need multiple compliances such as fire safety, environment, building plans and licence etc. These in general take time. But due to the current lockdown the process has become even more complicated and tardy. Hence an extension by a year would help the industry in a big way.”


The COVID-19 pandemic has resulted in one of deepest recessions in recorded history and the deepest in my lifetime of 40 years in business. This is not a financial markets recession – this is real demand erosion. Global demand has crashed. In keeping with this most economies have instituted stimulus measures starting with 10% of GDP. US has done 2.2tn USD already on a GDP base of 20 trillion USD with similar numbers emerging for EU, Japan, Indonesia and other states and other places. Our GDP is 2.8 trillion USD plus.

These are exceptional times and therefore, exceptional measures are essential. Demand has seriously contracted and these measures of stimulus will be essential to stave of the oncoming headwinds of deflation. Even if the currency depreciates, with oil expected to remain sub USD 40 / bbl for the next 3 years – it will not add to our balance of payments burden but in fact, shall make exports very viable. Further, while it seems like the exchequer is losing enormously, these measures will in fact, bring many more entities into the formal economy – both individuals and businesses. Therefore, even when the temporary abeyance measures are removed, we shall see the tax base increase exponentially, which should allow us to actually have a reasonable tax system for the formal economy as more players will be part of it.



1. GOVT SPEND – We need a stimulus of over 200bn USD with an ability to go up to 300 bn USD with 100bn USD provided immediately, 100bn in 4 months and the last 100bn in 8 months. In fact, in 2002 our debt / GDP ratio was 100%. If required, the FRBM Act can be modified to consider debt/GDP ratio as a metric and not fiscal deficit. This was also the consensus of the NK Jain committee report in 2017 on the FRBM Act. Target debt / GDP can be kept at 60% with 2027 as the target to reach that number. Pause inflation monitoring 2yrs and Pause Basel 5 norms for 2 years.

2. GST -Reduction in GST across the board by 50% for 3 months and 25% for the fiscal. The final GST due should be payable in 6 quarterly instalments starting October 2020 with no interest. Final income tax of FY 2019-2020 and advance tax FY 2020-2021 should be payable starting October 2020 in 6 quarterly instalments with no interest and 5% GST on under construction real-estate to be scrapped/to be given full input tax credit

3. RBI:

a.) DEBT RESTRUCTURING – One-time restructuring (as was called one-time rollover after the Global Financial Crisis of 2008) available to all corporates – big, medium, small due to this crisis. Banks should be able to redo / restructure all loans with everyone starting afresh assuming a principal repayment start date moving upwards from March 2021.

b.) INTEREST RATES -Reduction of interest rate/repo-rate by another 100 bps by the RBI (and another 75 bps to be kept in reserve depending on the tenure of this crisis). Reverse-repo rate should be brought down by 250 bps immediately as banks are still not lending and parking funds with the RBI only.

c.) BONDS- For the fiscal stimulus by Government, RBI should directly subscribe to Govt. bonds so that the Govt. doesn’t squeeze liquidity out of the market. This is already permitted in the law.

d.) EMI – RBI should declare an EMI waiver on all loans to extend for 6 months (with RBI repo rate reduction) there should be minimal impact on EMI or tenure

4. STAMPDUTY & READY RECKONER RATES -Enhance permissible stamp duty variance to actual consideration under Section 50C, 50CA and 56(2)(x) upto 30% of stamp duty value. Section 43CA which states that sales of less than 10% of the circle rate price will be dealt with punitive consequences will further exacerbate the crisis by constraining developers from selling their flats at a discount. Those that don’t sell will be destroyed by Section 23(5) which says that developers’ inventories will be tax with notional rent. Given these times – both provisions need to be scrapped immediately.


Uplifting Partial lockdown for Construction workers similar to agriculture- Millions of Construction workers are living at the sites. Their work can start as they are becoming restless and their wanting to go back will be eliminated. There is a lot of work to be carried out before the onset of monsoon. Basements have been excavated, drains have to be completed, underground metro work, railway sites, drains to be cleaned to prevent flooding of railway tracks.