Government support for revival of the real estate industry during Covid-19
The ongoing pandemic has been a difficult time for the real estate sector, which had been going through a rough patch in the past owing to certain policies like RERA, demonetisation and GST. In this background, the pandemic and the resultant lockdown brought everything to a halt, stopping all forms of activity, several businesses coming to a standstill, all of which together resulted in an economic slowdown. The real estate sector too had to face the consequences of this global crisis, and in India too, we witnessed property sales coming down, which is worrying as real estate sector is India’s third-largest employer, after agriculture and manufacturing. Therefore, it became imperative for the government to initiate measures for the revival of this segment, which is a much-needed to boost economic growth.
In the past, too, governments have taken initiatives on micro and macro levels intending to revive the real estate sector. And in the recent times, initiatives and policies such as the enforcement of RERA, Pradhan Mantri Awas Yojana (PMAY), GST, smart cities mission, setting up of the real estate investment trusts, (REITs) and various other subsidies and tax exemptions, were taken and it was expected to have a lasting impact. In this backdrop, when a new decade commenced, it was being expected that the real estate industry would achieve its breakthrough on the back of these reforms. However, the results were not as promising. For example, it was expected that the implementation of RERA would speed up the recovery of the real estate sector across India, but it benefited only a few states like Maharashtra and Delhi.
During the lockdown period, the government took a few measures with an aim to help the real estate sector. For example, to help soften the blow caused by the pandemic and to help borrowers and developers under monetary pressure, the Reserve Bank of India permitted banks and lending institutions to a three-month moratorium from March 2020 to May 2020, which was later extended till August 2020. The Maharashtra government lent an olive branch to the state’s developers by reducing the stamp duty on real estate transactions. It reduced the stamp duty by 3 per cent. The UP government too followed, with the aim being to provide a push in reviving the real estate sector. They also allowed construction activities to continue, along with providing help to on-site workers and waved off the penalties for developers in case of a COVID-infected person. The central government too, tried to give relief and issued an advisory to all states and their respective RERAs to treat the COVID19 pandemic as a Force Majeure and extended the completion and registration dates of all projects under RERA.
The pandemic has lasted for seven months now, and while restrictions have eased, it is not going anywhere, and social distancing and masking will now continue for a long time till a vaccine is developed. However, realtors are coming to terms with measures on how to deal with the challenges caused owing to the pandemic, and in such a situation, steps taken by the central and state government will surely help them reach the road to recovery.