“The sector should be given an industry status that will enable developers to have access to debt lending at competitive rates from banks and financial institutions,” said Sunteck Realty chairman and managing director Kamal Khetan
Mumbai: Developers in the realty sector, which is facing severe credit crunch due to higher interest rates, expect the government to relax norms for repatriation of foreign direct investment (FDI) and external commercial borrowings (ECBs) in the forthcoming Budget for 2012-13, reports PTI.
“The real estate sector has witnessed rapid growth in the recent past. However, raising funds continues to be a big constraint for us. We expect some policy decision on FDI in real estate that will benefit the market greatly,” Puranik Builders managing director Shailesh Puranik said.
The industry expects the Budget, to be announced on 16th March, to relax norms for FDI and ECBs, especially for township projects that will give developers source funds at a much reasonable cost.
Currently, it is not possible for foreign investors to repatriate real estate investment proceeds for three years, which is hampering investment flows, Jones Lang LaSalle chairman and country head Anuj Puri said.
“Relaxing norms for repatriation of realty FDI is the need of the hour. The market environment needs to be rendered more investment-friendly,” he said.
Besides this, the sector is hoping to get industry status as it is a major driver for economic growth and generates jobs across various verticals.
“The real estate sector is the second largest employer contributing 5% to the gross domestic product (GDP) and generating large-scale jobs across its varied verticals.
“The sector should be given an industry status that will enable developers to have access to debt lending at competitive rates from banks and financial institutions,” said Sunteck Realty chairman and managing director Kamal Khetan.
Realty players are also expecting sops for affordable housing and want it to be given priority in lending in order to address the acute housing shortage.
“We expect revision in tax for affordable housing projects in order to address the acute housing shortage in the country. The government should consider abolition of service tax for residential apartments up to Rs50 lakh to promote affordable housing.
“Besides, affordable housing should be classified as priority sector lending to ensure easy availability of funds for projects,” Housing Development & Infrastructure (HDIL) vice-chairman and managing director Sarang Wadhawan said.
Developers are also expecting the government to increase the subvention of 1% on interest rate to be available to broader price band.
They said that while tax incentives should continue for developers in the affordable segment, the subvention of 1% on interest rate should be available to broader price band.
To benefit home buyers, it is necessary that the last year’s interest rate subsidy of 1% is continued. The limit for the scheme should be raised from Rs20 to Rs30 lakh due to increase in cost of raw materials and various taxes incurred during home buying,” Sanghvi Group director Shailesh Sanghvi said.
NBCC proposes to make an initial public offer of 1.2 crore equity shares of face value of Rs10 each, the draft paper said but did not specify the total capital that the firm planned to raise through IPO
New Delhi: With one more issue of National Building Construction Corporation (NBCC) in the pipeline, the government will be able to achieve only a little over 36% of the disinvestment target of Rs40,000 crore in the current fiscal, reports PTI.
The government had filed draft prospectus with the Securities Exchange Board of India (SEBI) for 10% stake sale in NBCC last month and the approval from the market regulator is expected shortly.
“We are working hard to bring the NBCC issue in the current fiscal. Most probably the IPO will come after 16th March,” an official source said.
NBCC proposes to make an initial public offer (IPO) of 1.2 crore equity shares of face value of Rs10 each, the draft paper said but did not specify the total capital that the firm planned to raise through IPO.
“We will conduct road shows in Delhi, Mumbai, Chennai and Singapore between 7th and 9th March. The Empowered Group of Ministers will decide on the pricing of the issue,” the official added.
So far in the current fiscal, the government has been able to raise about Rs14,000 crore through disinvestment in public sector undertakings (PSUs), against the budgeted Rs40,000 crore.
While Rs1,145 crore was raised through an follow-on public offer (FPO) of PFC, Rs12,767 crore came from 5% stake auction in ONGC.
The ONGC stake auction was the first such issue after the market regulator SEBI allowed promoters to sell up to 10% stake through the auction window of the stock exchanges.
Although there was confusion regarding the ONGC auction as the bids could not be uploaded because of technical reasons, the government expressed satisfaction over the auction process and said it would consider more stake sale through the same route after analysing it.
The government has already identified a host of companies as possible candidates for disinvestment. These include Oil India, SAIL, BHEL, Hindustan Copper and GAIL among others.
Sources said the government is considering Oil India (OIL) as the next possible candidate for disinvestment through the auction route. However, it is unlikely that it could happen in the current fiscal.
BHEL which was also under consideration for stake sale through auction route has been postponed to next fiscal.
Where there is extremely high level of demand and resources are scarce, for instance spectrum, then there is no logical reason why it should not be auctioned,” CCI chairman Chawla told reporters. He, however, added, “Auction cannot be a panacea for everything (all other natural resources) and there will have to be some calibration”
New Delhi: There is “no logical reason” as to why scarce resource like spectrum should not be auctioned, Competition Commission of India (CCI) chairman Ashok Chawla, who headed a high-level panel on allocation of natural resources, said on Sunday.
“Where there is extremely high level of demand and resources are scarce, for instance spectrum, then there is no logical reason why it should not be auctioned,” Mr Chawla told PTI in an interview.
However, the former finance secretary added, “Auction cannot be a panacea for everything (all other natural resources) and there will have to be some calibration”.
The Chawla-headed committee had submitted a report on allocation of natural resources to the government last May.
While he supported the revenue-generating auction route for telecom radio waves, his views on other natural resources, are in sync with the contention made by the government in the review petition filed before the Supreme Court.
The apex court had cancelled 122 licences awarded to telecom service providers in 2008 and said that allocation of natural resources should be done through auction route.
Mr Chawla said, for resources in sectors like education and health the auction route cannot be adopted since there is an important social objective involved.
He further said that transparency in awarding the contracts or licences—whether or not through auction—is the key. The awards of the contracts should be based on “certain rule-based framework...well articulated and known to the people”.
He said most of the policies are done though executive framework which is “not grounded in any kind” and the rules can be interpreted in different ways.
Asked whether bureaucrats are responsible for the opaque rules, Mr Chawla said, “You can, of course, blame bureaucrats or anybody, but in such matters they have limited power and authority because ultimately it is the decision of the political executive either in the ministry or in a cabinet committee or the Cabinet”.