Repo rate cut brings no cheer to infra, realty

Repo rate cut brings no cheer to infra, realty
Highlights

Gadde Rajalingam, president of Vijayawada Builders Association termed the RBI decision as an eyewash. “Banks might attempt to push their reserve funds in to market, which may lead to reduce in interest rates.

Amaravati: Reserve Bank of India’s (RBI) decision to reduce Repo rate by 25 basis points failed to bring cheer in realty and infra sectors. Though banks and financial corporations are likely to reduce interest rates, the ground reality is so dull that the development got hardly noticed.

Builders and financial analysts opine that there would not be any substantial growth in the realty sector following RBI decision, as the sector was yet to recover from the impact of demonetisation and GST. “Even if the banks reduce interest rates, customers are not ready to come forward in the current financial conditions,” they said.

Gadde Rajalingam, president of Vijayawada Builders Association termed the RBI decision as an eyewash. “Banks might attempt to push their reserve funds in to market, which may lead to reduce in interest rates.

But, the ground reality of the sector is that 1,000 flats are remained unsold in the two cities of Vijayawada and Guntur for the last one year. The annual turnover of infra sector, which used to be Rs 1,000 crore has gone down to Rs 100 crore. GST and demonetisation are main culprits,” he added.

CREDAI state president Siva Reddy opined that the banks might reduce interest rates on housing loans from 9.25 per cent to 9 per cent or 8.75 per cent. “It will have little impact on the markets,” he estimated. He said the buyers should pay 18 per cent GST on plots purchase.

“Market trends are negative and the tax burden totally stopped realty. Even if the banks reduce interest rate, GST burden will dominate the business by depriving customers,” he said.

Akkaiah Naidu, former president of Charted Accountants of India, Vijayawada chapter, said the decision of RBI was welcome move but the market needs some more time to come back to normalcy.

Krishna District Document Writers Association president NGSV Narayana said that Vijayawada city, which used to generate huge income to stamps and registration department, has seen steep fall in the registrations. “The number of transactions dropped from 15,000 a year to 4,000,” he noted.

By Patibandla Srinivas

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