The government will soon come up with its next set of relief measures, this time for the real estate sector, Minister of State for Finance, Anurag Thakur said.
The real estate sector is faced with a multi-year demand slowdown due to various reasons including tight liquidity, default by many builders and elevated property prices.
“The next set of relief measures could be for the real estate sector. Announcement will come next week,” Thakur said.
On August 23, Finance Minister Nirmala Sitharaman announced a slew of measures to revive the flagging economy. This included easing foreign investment rules, concessions on vehicle purchases and encouraging banks to make loans cheaper to spur growth from a five-year low.
Thakur also said the automobile sector has been raising issues concerning the goods and services tax (GST). “The government is listening to the industry with an open mind and taking quick decisions. Regarding GST, we’ll have to see what are the other factors of the slowdown before taking any call,” Thakur said.
All sectors seem to have been hit hard by subdued demand. The auto sector is in the midst of one of its worst crisis. Passenger vehicle sales in the country declined 17.07 percent, 20.55 percent, 17.54 percent, and 31 percent, respectively, in the months of April, May, June, and July.
A persistent liquidity crunch among India’s shadow banks has been the biggest single factor in the auto sales collapse, which some fear may lead to more than a million job losses. Non-banking finance companies (NBFCs), or shadow banks, have dramatically slashed lending following the collapse of IL&FS in late 2018.
Slowing demand has moved beyond discretionary purchases, with fast-moving consumer goods (FMCG) companies that manufacture soaps, biscuits and other daily essentials reporting gloom in consumer sentiment.
India’s gross domestic product (GDP) grew 5 percent in April-June 2019, official data released on August 30 showed, buffeted by weak household spending and muted corporate investment. GDP growth was 8 percent in the same quarter of 2018-19.
To tide over a cash crunch in the banking sector, the RBI cut interest rates by 110 basis points this year to boost loans and revive investment. This was followed by the finance minister announcing the government’s decision to immediately inject Rs 70,000 crore to recapitalize state-run banks and encourage them to lend.