India plans $7bn stimulus to complete housing projects, boost exports

Amid signs of a slowdown, India’s Finance Minister Nirmala Sitharaman has announced a $7 billion stimulus to boost exports and real estate sectors.

In the third set of measures, the government will set aside $2.8 billion to help complete affordable and middle income category housing projects stuck due to cash crunch.

This special fund to be equally shared by the government and others will bring relief to some 300,500 home buyers and developers who have been demanding a package focused on stalled projects. 

The real estate sector, which generates jobs for millions, is passing through a bad phase as home sales have plummeted and the fear of risk is keeping investors away.

Construction of some 800,500 flats are struck across the country for shortage of funds.

The special window of financing announced on Saturday will benefit housing projects where 60% of the work has been completed and the rest 40% is stuck because of cash-flow problems. However, it will not apply to housing projects stuck in legal tangle or bad debt.

To boost the exports sector, the government will relax lending rules so banks can provide up to an additional $9.57 billion of export credit.

The government also plans to bring the time to export to global standards by the end of the year. Kozhikode port in southern India takes around 1.10 days to export against Boston’s 0.55 days and Shanghai’s 0.83 days, the minister said.

The government hopes to increase shipments from sectors such as petroleum, engineering and leather which fared poorly leading to fall in exports by 6% last month.

The minister will hold a meeting with top officials of state-run banks on Sept 19.