Integrated townships get much-needed access to ECB
A key measure by the government in its second stimulus package to the infrastructure sector has been allowing developers of integrated townships access to external commercial borrowings (ECBs).
The industry has received this measure positively as it believes the move will open up avenues for boosting not just the real estate sector but also associated infrastructure. Vinayak Chatterjee, chairman-Feedback Ventures and chairman-CII National Council on Infrastructure, has welcomed the move.
Sushanto Roy, head-Infrastructure & Housing, Sahara Prime City Ltd, developer of 217 Sahara City Homes, believes the package will improve general sentiment and act as a harbinger for the sector. “This will boost housing sector in tier II and III cities, where the future of real estate lies. Sahara will benefit from this package. It will give developers access to cheaper funds – the core issue today.”
Rohtas Goel, chairman-National Real Estate Development Council (NAREDCO) & CMD-Omaxe Ltd said, “We appreciate the steps to eliminate ceiling on ECB. This will facilitate access to funds and will permit development of integrated townships as an eligible end-use of the ECB, under the approval route of RBI.”
The industry has been demanding opening up of ECB for integrated townships for some time. Construction Week believes that tomorrow’s India will live in integrated townships and welcomes the government’s decision. However, more is required to be done for the infrastructure sector. For instance, ongoing and upcoming projects (public as well as PPP) require funds worth Rs100,000 crore. And as Chatterjee remarked, “Stimulus 1 and Stimulus 2 have addressed only Rs10,000 crore + Rs30,000 crore respectively.”
Equally, important is its implementation. “If there is going to be a third package, it must be a shake-up of the set-up as 80% of infrastructure is through public expenditure. And this implementation is known to be tardy.
Otherwise, no amount of stimulation will result in real-time action,” Chatterjee added in the same context.