A 14-member committee. constituted to examine stalled real estate projects and recommend ways to complete them, submitted its report on August 21.
GS III: Indian Economy
Dimensions of the Article:
- Committee on Stalled Real Estate Projects: Findings and Recommendations
- Major Recommendations
- Special Window for Affordable & Mid-Income Housing (SWAMIH) Scheme
Committee on Stalled Real Estate Projects: Findings and Recommendations
- In March 2023, the Union Ministry of Housing and Urban Affairs established a committee chaired by Amitabh Kant, former NITI Aayog CEO, to address stalled real estate projects.
- The committee included officials from Union Finance Ministry, Uttar Pradesh and Haryana state governments, Insolvency and Bankruptcy Board of India, National Housing Bank, and Real Estate Regulatory Authority (RERA) of Haryana and UP.
- The committee submitted its report to Housing and Urban Affairs Minister Hardeep Puri.
- Legacy Stalled Projects: Indian Banks’ Association estimated 4.12 lakh dwelling units worth Rs. 4.08 lakh crore were “stressed,” with 44% in the National Capital Region and 21% in the Mumbai Metropolitan Region.
- Financial Viability Issue: Stress in these projects resulted from “lack of financial viability,” causing cost overruns and delays.
- Solution: Enhance the Internal Rate of Return of projects to attract funding.
- Stakeholder Cooperation: Developers, financiers, land authorities, etc., must accept compromises to make projects viable.
- Mandatory RERA Registration:
- All projects over 500 sq. meters or with more than eight apartments must be registered with state RERA.
- Enforce registration for transparency.
- Rehabilitation Package for Stalled Projects:
- States should establish a rehabilitation package to revive stalled projects.
- Developers committing to the package must complete projects in three years.
- Proposed Noida and Greater Noida model includes a “Zero Period” of two years to waive interest and penalties during the pandemic.
- Developers can involve a “co-developer” to complete work.
- “Partial surrender policy” allows developers to return unused land for dues waiver.
- Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund:
- MoHUA should prepare a scheme using SWAMIH Fund to finance stalled projects.
- Reconsider minimum Internal Rate of Return and first charge requirements in SWAMIH fund.
- Most recommendations fall under state jurisdiction.
- Housing and Urban Affairs Ministry shared the report with all states.
- UP’s NOIDA and Greater Noida authorities are considering implementing the rehabilitation package.
- The adoption of recommendations by other states remains to be seen.
Special Window for Affordable & Mid-Income Housing (SWAMIH) Scheme:
The Central Government initiated the SWAMIH Scheme in November 2019.
- Extend priority debt financing to conclude stalled affordable and mid-income housing projects.
- Aid developers in completing unfinished projects, ensuring timely delivery to homebuyers.
- Foster growth in India’s real estate sector.
Eligibility and Beneficiaries:
1,509 housing projects, housing about 4.58 lakh units, meet the scheme’s criteria.
- Stalled due to insufficient funds.
- Belong to affordable and middle-income categories.
- Projects must be net worth positive.
- Registered under RERA (Real Estate Regulatory Authority).
- Preference for nearly completed projects.
About SWAMIH Fund:
- SWAMIH Fund, a government-backed Category-II AIF (Alternate Investment Fund) debt fund registered with SEBI.
- AIF: A privately pooled investment vehicle collecting funds from sophisticated investors for investments aligned with a defined policy.
- Investment Manager: SBICAP Ventures, subsidiary of SBI Capital Markets and State Bank of India.
- Government infusion commitment up to Rs. 10,000 crore in affordable and mid-income housing sector through SWAMIH.
- Maximum financing for any individual project capped at Rs. 400 crore.
-Source: Indian Express