New Delhi: Finance Minister P Chidambaram on Saturday said he has asked Indian Bankers Association (IBA) to form a committee to advise the government on tackling the slowdown in the housing demand.
He listed various issues facing the real estate sector but expressed confidence that these can be solved.
"I have requested IBA to appoint a small group to tell me how to resolve the problems of demand for housing one side, incomplete housing projects on other side and completed housing segment which are lying vacant on the third side. Its a conundrum, but I think it can be solved," Chidambaram told reporters after a meeting with chiefs of state-owned banks.
He said the housing segment posed "complex issues", and cited an example: "I was told 5 lakh housing units remained vacant in Mumbai, I don't know its right or wrong, it may be wrong by factor of 10 percent or so. But you know that is capital which is blocked, cement, steel, labour..."
Interest costs have increased significantly in the past couple of years, as the Reserve Bank has cut policy rates just once (in April 2012) after as many as 13 hikes since March 2010 to contain inflation. High interest rate regime has hit the industry hard and slowed down the demand.
Realty giant DLF's Chairman K P Singh had recently said that RBI's monetary policy should not stunt the growth of the real estate sector and uninterrupted access to affordable finance is vital for this business.
At present, there is shortage of about 25 million housing units in the country.
According to Confederation of Real Estate Developers' Association of India, an apex body of the organised real estate developers, funding gap in housing will be around USD 70 billion in the next five years.