The finance minister relaxed borrowing norms for real estate firms and extended the loan subsidy for low-cost affordable houses. The concessions have, however, failed to impress the industry leaders who termed it as a too-little-too-late move that would have a limited impact on the sector.
"I propose to allow ECB (external commercial borrowing) for low-cost affordable housing projects," the Budget said. The move has a dual aim of expanding the window of funds for real estate developers such that affordable housing projects do not face cash crunch and are completed within the time frame.
Global consultancy Deloitte said RBI had earlier allowed ECB for developers in integrated township projects of 100 acres or more till December 31, 2010.
The FM also extended, by a year, the 1% interest subsidy on loans up to Rs. 15 lakh where the cost of house does not exceed Rs. 25 lakh. "The industry was expecting the limit to be raised considering that very few properties are available in that cost," said Naveen Raheja, president of industry association Naredco and chairman of Raheja Developers.