New Delhi: Government needs to look at the possibility of providing soft loans of Rs 10-20 lakh for purchase of houses to give a boost to the realty sector and investment cycle, says newly-elected Ficci president Harshavardhan Neotia.
"The push to real estate sector has multiplier effect. A case can be made out for soft loan (at subsidised interest rate) of Rs 10-20 lakh for low and middle income group housing," Mr Neotia told PTI in an interview.
The government, he added, could think of giving special incentive to first time buyer of dwelling units with a view to prevent misuse of subsidy by speculators.
Also, Mr Neotia suggested there could be some arrangement between the banks and the builders to encourage low cost housing and ensure that the tax incentives reach the genuine beneficiary.
Mr Neotia, chairman of Kolkata-based Ambuja Neotia Group, took over as Ficci president last month. Operating through several companies, the Ambuja Neotia Group covers the entire spectrum of the real estate industry including housing, hospitality, healthcare and education.
"For every Rs 100 you invest in making an apartment or a small housing, you spend about Rs 60 on materials and Rs 40 on labour and together between labour and out of the money that you pay, Rs 24-25 goes to government by way of excise, customs, sales tax and VAT, cess on labour."
"If this money is subsidised, it can hugely expand housing in the country. It will help in fulfilling the objective of 'Housing for All' and huge consumption of 200 building materials like latch, bed, fan, light etc used in making house," he said.
He said the investment in the real estate sector can start a "huge cycle" of growth and economic activity. He further said that the housing sector can be developed wherever there is adequate infrastructure like motorable road, public transport, hospitals and schools.
Housing, which is considered as one of the key sectors to promote growth by increasing demand for steel and cement, besides creating additional jobs, is going through a difficult phase.
According to a report, the National Capital Region has witnessed country's highest unsold inventory figures at almost 1.70 lakh units.