Coronavirus outbreak: A 21-day lockdown may have cost India Rs 8 trillion

The sectors that have been most impacted are transport, hospitality, and real estate

The world’s biggest lockdown that shut a majority of the factories and businesses, suspended flights, stopped trains and restricted movement of vehicles and people, may have cost the Indian economy Rs 7-8 trillion during the 21-day period, analysts and industry bodies said. With the intent to contain the spread of Covid-19, Prime Minister Narendra Modi with effect from March 25 announced a nationwide complete lockdown that brought as much as 70 per cent of economic activity, investment, exports and discretionary consumption to a standstill. Only essential goods and services such as agriculture, mining, utility services, some financial and IT services and public services were allowed to operate.

Stating that the pandemic came at the most inopportune time for India whose economy was showing signs of recovery after bold fiscal/monetary measures, Centrum Institutional Research said the country again stares at the possibility of low single-digit growth for FY21 (April 2020 to March 2021).

“Nationwide complete lockdown is likely to shave off at least Rs 7-8 trillion,” it said. Acuite Ratings & Research earlier this month estimated that the lockdown will cost the Indian economy almost $4.64 billion (over Rs 35,000 crore) every day and the entire 21-day lockdown will result in a GDP loss of almost $98 billion (about Rs 7.5 trillion). The rapid spread of Covid-19 has not only disrupted the global economy but also triggered a partial shutdown in many parts of India from early March and an almost complete shutdown from March 25…Read More Here

$14 bn loans to builders under severe stress, may result in default: Report

“Over 62% or about $58 billion of the total loan advances ($93 billion) to Indian real estate by banks and NBFCs/HFCs is currently completely stress-free,” Anarock said in a statement

Loans worth $14 billion provided to real estate firms by banks, NBFCs and housing finance companies (HFCs) are under “severe stress” and facing issues of debt servicing, according to a report.

“Over 62% or about $58 billion of the total loan advances ($93 billion) to Indian real estate by banks and NBFCs/HFCs is currently completely stress-free,” Anarock said in a statement. Another 22% (about $21 billion) is under some pressure but can potentially be resolved. The stress on this segment is largely on recovery of interest and not on principal amount.

“$14 billion (or merely 16 per cent) of overall lending to Indian real estate is under ‘severe’ stress, meaning that there has been high leveraging by the concerned developers who have either limited or extremely poor visibility of debt servicing due to a combination of factors,” the consultant said.

HFCs accounted for the largest share of total realty loans equalling 38 per cent, followed by banks at nearly 34 per cent share while NBFCs (non-banking financial companies) have 28 per cent share (including loans given under trusteeships).

“Of these, banks and HFCs are much better placed with 70 per cent and 65 per cent of their lending book in a comfortable position. However, it also comes as no surprise that nearly 58 per cent of the total NBFC (non-banking financial company) lending is on a watchlist,” it said…Read More

Govt’s Rs 25,000 cr realty push: Here’s why most analysts remain cautious

The Union Cabinet has approved the setting up of an AIF to revive around 1,600 stalled housing projects across top cities in the country.

Despite the government’s move to set up Rs 25,000 crore alternate investment fund (AIF) for the real estate sector, most analysts remain cautious and suggest the benefits will take time to flow in for the beleaguered players. That apart, there could be still be execution challenges. In a post market-hours announcement, the Union Cabinet on Wednesday had approved the setting up of an AIF to revive around 1,600 stalled housing projects across top cities in the country.

“The delay in the on-ground deployment of the stress fund gave rise to severe apprehensions about the main issues – that of stuck and delayed projects – that had remained unaddressed so far. The timeline for setting up this fund and its actual implementation is quite critical,” said Anuj Puri, chairman, ANAROCK Property Consultants.

As per ANAROCK’s estimate, a total of 5.76 lakh units (launched in 2013 or before) across budget segments are stuck in various stages of non-completion in the top seven cities. The Mumbai Metropolitan Region (MMR) alone, they estimate, has nearly 2-lakh units where the construction / completion has been delayed since then, which is valued at Rs 2.34-trillion. A recent report by Citi had pegged the total amount stuck in stalled projects across seven major Indian cities (Bengaluru, Mumbai Metropolitan region (MMR), National Capital Region (NCR), Ahmedabad, Hyderabad, Kolkata and Pune) at Rs 80,000 crore.