India's real estate sector has been witnessing a prolonged period of weak sales, resulting in a sharp decline in its contribution to the country's Gross Domestic Product (GDP). The sector witnessed a slump after banks restricted lending activity post the NBFC crisis in 2018 and subsequently aggravated in 2019 due to an acute demand crunch.
Not just the real estate sector but a large number of other industries indirectly related to the sector have also faced the jolt of low demand. In a scenario where growth in key sectors has remained subdued, incentivising real estate sector could help the government in turning the table.
Shishir Baijal, Chairman and Managing director, Knight Frank india, said the sector is "struggling to find its feet" due to lower funding options. Baijal said "This poses a very real existential threat to developers today. The recent creation of an Alternative Investment Fund (AIF) to aid the completion of stalled residential projects and the relaxation of GST rates earlier this year shows the government's will to aid the beleaguered sector".