By Nitin Bavisi, CFO, Ajmera Realty and Infra India Ltd.
The RBI today increased the repo rate by 50 bps, the quantum of the rate hike was on the upper end of the market expectations. The central bank has also tweaked its policy stance to withdraw the accommodative policy, ending the easy liquidity policy.
The RBI inflation trajectory above 6.5% is a cause of concern, but the big announcement was raising the limit of loans for the State Co-operative Banks and District Central Co-operative Banks to the housing sector. The housing sector is a capital-intensive business, these measures will address the growing need for affordable housing, providing easy and higher limits with enough funding avenues for the projects. It will improve credit flow to the sector and also act as a boost for housing projects in the rural areas, thereby ensuring the recovery in all pockets of the country.
While developers expect rationalization of increase in key input cost like steel and cement, coupled with interest rate reversal in home loan from a decade low rates may help the real estate sector to remain in the stable price regime.
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