How are government policies boosting the growth of the Indian real estate market?

Several factors sent the real estate sector in India on a rollercoaster ride. These include unsold inventory, project delays, disruptions in the supply chain, low investor and buyer confidence, and negative cash flows.

To address these drawbacks, several regulatory developments and initiatives have been introduced over the last two years. These initiatives by the Indian government have helped the sector bounce back and revive.

Slated for immense growth in the market

As per experts, the real estate sector in India is slated to show remarkable growth in the next few years. It is also said that it will be one of the main factors that will contribute immensely to the gross domestic product of the country by 2047.

Initiatives taken by the government in real estate in India

The government has relaxed the norms related to FDI. This means it will convert into more inflow of funds. The initiatives of the government have fostered transparency and self-confidence among the participants of the sector.

The central government along with the state governments, has introduced regulatory reforms for implementing not just transparency but governance and financial discipline. Some of the policies of the government include the following-

1. Benami Transaction Act

2. Real Estate (Regulation and Development) Act of 2016

3. Interest subsidy applicable for first-time buyers

4. Deduction in profits by 100% for the construction of affordable housing

5. CLSS or Credit Link Subsidy Scheme on home loans under PMAY

6. Approval of Real Estate Investment Trust or REIT platform by SEBI

7. Public-Private Partnership or PPP Scheme

8. Introduction of GST

9. Approval of 100% FDI through automatic route

10. Changes in the norms related to arbitration for construction firms

What are the government initiatives?

Aside from the government policies introduced above, there are initiatives taken by the government as well. These include the following-

1. National Urban Housing Fund

2. Smart Cities Mission

3. Pradhan Mantri Awas Yojana-Housing for All. It has two components, namely, Pradhan Mantri Awas Yojana (PMAY) Urban and Pradhan Mantri Awas Yojana (PMAY) Grameen.

Although the above are the measures that the government has taken to make it congenial for the real estate sector in India to thrive, there are a few other factors it must consider. By doing so, this sector will function much better and will become streamlined with fewer glitches. These include the following-

1. The transaction cost is so high, it must be brought down.

2. The effect of dual tax has raised the cost and adversely impacted the developers, particularly the ones that have a smaller budget.

3. The developer must adhere to the norms of Reverse Charge Mechanism or RCM in GST. This regulation requires an individual who has registered under the GST is required to pay GST on all the goods and services that he avails from a person not registered under the GST.

To wrap up, the government of India is introducing and has already implemented many such opportunities that facilitate investment in this sector. To further facilitate investments and subsequently growth, the Real Estate Investment Trust or REIT has secured approval from the Securities and Exchange Board of India or SEBI for the improvement of as many investment scopes as possible.

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