By D S Tripathy in Bhubaneswar, May 12, 2020: The real estate in India is one of the worst affected sectors in the aftermath of the coronavirus pandemic. The Rs 20 lakh crore package announced by Prime Minister Narendra Modi hopefully addresses the key issues impacting this sector which has been hit hard as the projects are deferred by the developers and demand-supply disruption.

Developers have been literally forced to delay their project launches while people are not investing in real estate due to uncertainty in the market. Construction work is stalled as labourers have left for their hometown. Even after the upliftment of the lockdown, the real estate sector will take time to end the economic distress.

The real estate sector has been in a slump since last year and has been experiencing highest ever payment default from customers paying the installments linked to construction. To make thing worse, the long lockdown in the wake of Coronavirus pandemic has created a drastic drop in residential sales with no clarity on a revival.

“New launches of residential units may also witness a 25%-30% decline to anywhere between 1.66 lakh-1.78 lakh units,” a recent press release by the Indian Chamber of Commerce (ICC) said.

In fact, the sector was just recovering form sluggish demand and liquidity crisis post demonetization, introduction of Goods and Services Tax (GST) and The Real Estate (Regulation and Development) Act, 2016 (RERA). But with the deadly virus causing havoc across the world has derailed the whole process and the recovery of this sector may take a couple of years.

International trade restrictions followed by Covid-19 have halted the supply of essential raw materials to the real estate sector. It, however, provides good opportunity to Indian manufacturers to expand in the domestic market. But the government has to step in by provision some tax incentives of such supplies.

The real estate sector has piled up losses to the tune of over Rs one lakh crore, which continues to rise with each passing day. The real estate sector should be supported by all state governments by way of a waiver of local taxes if any for at least one quarter. Besides, real estate firms which are not able to clear up taxes or bills should not be penalised and be given at least six month for repayment of the same.

The sector faces huge challenge in post lockdown period. This sector is the second largest employer of skilled and non-skilled workers and mostly banks upon migrant workers from across the country. Reorganising the work force at a time when migrant labourers are hell-bent to reach their home states will be a real tough task.

This sector faces worst ever liquidity crisis with cash flow virtually coming to a halt as the customers faced with livelihood uncertainty will find it really difficult to get installment payment on time. Due to delay in construction work, the project cost is expected to go up by 10% to 20% with additional bank interest, administrative overheads and material cost etc.

The stimulus package to be announced in details by union finance minister, Nirmala Sitharaman hopefully will make provision for waiving the interest on project loan for at least the lock down period due to Covid-19, enhance the loan amount by 20% to 30% to complete the project on time, slash the GST slab, Registration Charges etc.

Mr Tripathy is the Chairman of Confederation of Real Estate Developers Association (CREDAI), Odisha.