Govt takes steps to boost realty sector

In an effort to boost the cash- starved realty sector, the government today allowed the developers of integrated townships to borrow funds from overseas and also asked states to release land for low- and middle-income housing schemes.

"GoI will work with state governments to encourage them to release land for low- and middle-income housing schemes," the government said. The announcement forms part of its second stimulus package to minimise the impact of global financial crisis.

Besides, the government also relaxed norms on external commercial borrowing (ECB) for dealing with the problem of liquidity crunch faced by the developer community.

The government said "all-in-cost" ceilings on ECB would be removed by RBI.

"To facilitate access to funds for the housing sector, the 'development of integrated township' would be permitted as an eligible end-use of ECB, under the approval route of RBI," the government said.

Earlier, as part of the first stimulus package announced last month, the public sector banks lowered home loans up to Rs 20 lakh and the government recognised the housing sector as an important employment generating field.

The demand in residential segment has declined in the last six months on account of high interest rates on housing loans and steep rise in property prices in the last 2-3 years.

In recent months, though some realty developers announced housing projects for mid-income section of the society, due to high land costs, many projects could not take off.