Views on FM’s second tranche of stimulus package announcement by industry experts

As far as real estate is concerned, the extension of the credit-linked subsidy scheme under PMAY- which offers an interest subvention on loans taken by the middle-class sections with an income of Rs6-18 lakh will definitely help sustain the demand for affordable housing, Kamal Khetan said.

May 15, 2020 08:05 IST India Infoline News Service

Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd
“It is impressive to note that the Government is using the lockdown period to make major reforms and corrections in the structural and important elements of the economy. As far as real estate is concerned, the extension of the credit-linked subsidy scheme under PMAY- which offers an interest subvention on loans taken by the middle class sections with an income of Rs6-18 lakh will definitely help sustain the demand for affordable housing. The allocation planned for providing basic rental accommodation under the PPP model is certainly a better way to improve the quality of living for urban migrants and poor in our big cities. Though details are not available, we believe these projects can boost construction activities and investments in real estate assets across India’s cities.”

Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani
Housing has always been a critical component of any economy. Government’s efforts to trigger pace and activity in the sector through a Rs70,000cr stimulus package is commendable. Extension of the Credit Linked Subsidy Scheme will encourage more demand and aid in clearing unsold inventory. The announcement to build rental housing complexes via public-private partnership will stimulate demand for raw materials, generate employment and thus provide a thrust to affordable housing. Overall today’s announcement will certainly alleviate stress to a certain extent from the sector. The sector is hopeful for a liquidity push which has been a prime concern for the sector.

Sanjay Chamria, VC & MD, Magma Fincorp
The measures announced today by the FM is a major confidence booster. The measures taken will bring back consumption of marginal farmers and give a leg up to the affordable housing segment. The Govt has made tremendous efforts and addressed the asset and liability side issues of NBFCs. However, in the case of some schemes announced earlier, like the PCG scheme while the intent was good, they hadn’t taken off, where only Rs10K cr was utilized and Rs90K cr is still pending. Thus while the schemes announced on the face of it are positive but we need to see the fine print for acceptability. Liquidity and funding for NBFCs will surely improve backed by the guarantee & PCG 2.0 and these measures will instill confidence in investors namely, insurance cos, MFs, banks other investors.

Ramesh Nair, CEO and Country Head (India), JLL
The second set of special economic measures were announced as a part of PM Modi’s ‘Self-Reliant India’ movement. These measures focused on resolving the problems of migrant workers, street vendors and farmers.

The Government of India is committed towards generating employment opportunities while ensuring that people across the nation get access to necessities such as food and shelter. ‘Housing for All’ has been a major focus of the Government and the affordable rental accommodation scheme for migrant workers and urban poor will go a long way in ensuring the same. Moreover, this availability of organised housing facilities will lead to decongestion of urban spaces by reducing unauthorized occupancy & encroachment and thus, facilitate better town planning.  

Additionally, the credit-linked subsidy scheme for the middle-income group (income of Rs6 - 18 lakh per year), which is now extended up to March 2021 will lead to an investment of Rs70,000cr in housing. Affordable and mid segment housing formed more than 50% of the new launches in major real estate markets in the past few years. The extension of this scheme coupled with attractive mortgage rates will improve consumer sentiments and boost demand for affordable and mid segment housing.

Sanjay Kumar, CEO & MD, Elior India
“Extension on the interest subvention till 31st May, 2020, sanctioning loans with low interest rates to the marginal farmers, refinancing worth 29,500 cr to the rural state, district and regional cooperative banks and the moratorium provided by the RBI will further strengthen the farmers in standing firm during this economic typhoon.

Having said that, the basic premise to address the demand issue lies in the conundrum of the agriculture economy. Farmers are expected to reduce their credit risk and as their income is hit, they are likely to reduce land acreage for vegetable crops. This will lead to consumers paying a higher price for the essential food. However, with uncertainty in job market, the middle income group is likely to make conservative spends higher leading to crash in prices materialising into volatility in prices.

The first two sets of announcement on the stimulus package focused rightly on the capital formation amongst the industries ensuring the commodity supply for consumption in the economy. What is now important to hear from the government, what comes as the fifth pillar in the Bharat – Demand. Without the demand stimulus, the scaling of consumption will not happen; translating into demand-supply disequilibrium.
We look forward towards the facilitation directed towards increment of demand that will be possible the reduction of tax on consumption and cutting down on GST rates.”

Ajay Kakra, Leader – food and agriculture, PwC India.
“The initiative boost credit of 2 lakh cr to increase coverage of 2.5 lakh farmers under KCC will surely increase the credit umbrella and help increase their liquidity issue given the acute cash crunch during Covid-19 situation. Additional emergency Working Capital fund of Rs30,000cr from NABARD can come very handy to farmers for managing post-harvest operations for Rabi or pre-season operations for Kharif season during the covid situation when the entire food supply chain is looking forward towards increasing liquidity.”

Vikas Jain, Senior Research Analyst at Reliance Securities
The key takeaways from the second round of stimilus are more labour driven for the migrant workers, markets are still awaiting some reforms for the corporate and consumers to benefit from the stimilus. We expect a weak to flat opening tomorrow"

Economist Prof K R Shyam Sundar, XLRI, Jamshedpur
The FM’s second tranche of relief measures have sought to address issues concerning generally the urban poor and more specifically the migrant workers and the street vendors. The biggest take-away and the only credible relief measure amongst the host of announcements made today is that migrant workers even without the ration card can avail 5 kg of rice or wheat and 5kg chana per family.

The FM has announced that this document-free free ration will benefit approximately 8 crore people.  During the announcement of measures during the COVID-19 times, when it comes to claimed beneficiaries numbers often easily run into crores! What are the sources of these data, especially when we do not have any scientific basis save the 2011 Census to even guesstimate migrant population save by extrapolations which will be based on some linear growth assumptions.  Even assuming that the government has credible database , does not this statistic reveal that 8 crore people have been rendered without a ration card and they must have been deprived of the rights of foodgrains promised under the first relief measure by the FM on March 26?  Could the government not have realised that such a huge measure of population that too vulnerable lot have been left out?

The rest of the measures such as affordable housing (that too on an untrustworthy PPP mode), potential statutory rights in the forthcoming Occupational Safety and Health and Working Conditions Code (OSHWC), a portable PDS system in the distant future (by March 2021), etc. do not constitute relief measures.

Interestingly, the existing Inter-State Migrant Workmen Act (the Act), 1979 and the proposed OSHWC Code requires every employer (in the Act, it was contractor) to “provide and maintain suitable residential accommodation to such worker during the period of their employment” (S.59, (iii) in the Code).  Then, where is the question of “affordable rental housing complexes” (ARHC) under the PMAY Scheme by several players? What happens to the statute then? Will the ARHC be used to deny accommodation by the employers?

Further, the Code should be strengthened considerably to make compulsory registrations of the inter-state migrant workmen from the original LOCAL place of origin and they must be issued smart portable e-operative cards and a portable set of documents including the PDS card.  The progress in these procedural aspects are far more important than these vague promises!

The street vendors will be far more disappointed than the migrant workers since they are just getting “easy access to credit facility” and that only “within a month” which means a working capital of ₹10,000 and this is said to benefit 5 million street vendors.

Should they not have been given credible forms of income support given they did not and could not sell their petty to somewhat decent wares on the streets and the allotted spaces since March 26? Why could not the government think of instant direct benefit transfer to stranded migrants and the 5 million street vendors and for the latter free ration if they have not availed for want of ration card under the PMGKY? Why is the government not talking of DBT of a fixed amount of say ₹5,000 which will in fact go back to the Business in the form of purchases and then possibly to the government at least a part of it as tax?

These toiling and suffering millions expected credible economic relief but all that they have offered apart from the delayed offer of free ration and promises that make little or no difference and these may or may not come even in the distant future, given the track record of implementation of promises. Finally, does it take a crisis of this vast magnitude for the government to wake up and recognise the “historically missing and invisible” migrant workers and despite having a statute like Inter-State Migrant Workmen Act (the Act), some four decades ago? 

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