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HOUSING
'Housing for all' pushed the economy by 3.5% Formula One to encash
Prime Minister Narendra Modi's ambi- "This indicates an increase in the con- $15.45-million guarantee
tious project 'Housing For All' has the struction sector's gross value added
potential to push up the country's (GVA) by Rs 2,14,286 crore which will by Jaiprakash Associates
economy by 3.5 per cent by 2022 with increase the size of the Indian economy
sectors supplying crucial Formula One is seeking to encash a
inputs to the construction by 3.5 per cent in FY16. $15.45-million guarantee by debt-
industry being the biggest The direct impact is esti- laden Jaiprakash
beneficiaries, says India mated to be 1.52 per Associates on the
Ratings. cent and indirect impact ground that it
1.98 per cent," India hadn't paid the
According to the report, Ratings's Chief Economist sport's organiser
sectors like cement, iron and steel, and Head Public Finance Devendra the money that had been contractu-
which supply crucial inputs to the con- Pant said. ally agreed upon. The company said
struction industry, are expected to be the amount is caught up in tax liti-
the biggest beneficiaries of the Hous- The central government will provide a gation and hence can't be given.
ing for All (HFA) programme. grant for slum households to the Bernie Ecclestone-led Formula One
states, central assistance directly to has moved the Bombay High Court
The agency estimates the cost of con- households and interest subvention. in pursuit of the payment.
structing 20 million houses during Therefore, the overall fiscal impact is
FY16-FY22 will be around Rs 2,14,286 estimated to be 0.16 percent of GDP The contract between the two runs
crore per annum. in FY16, the report added. out this year with no visibility on
whether the Indian Grand Prix, kicked
Property buyers to benefit as major amendments to off with much fanfare at the
real estate bill cleared Jaiprakash-owned Buddh International
Circuit in Greater Noida in 2011, will
The Union Cabinet has approved vari- scheme, so the builders do not invest return to the Formula One calendar.
ous amendments to the contentious a large portion of the money thus
Real Estate bill, introducing provisions raised for other projects. It would also The UK-headquartered Formula One
for depositing 70 per cent of the act as a safeguard against uncertainty World Championship Ltd (FOWC) en-
project cost by builders into an escrow over a project in the event of the tered into a contract with a subsid-
account and punishment for iary of Jaiprakash Associates Ltd to
violations of the proposed builder backing out. organise the event between 2011
law, meeting key opposition and 2015. The India GP has been
demands. The real estate bill ap- held in 2011, 2012 and 2013.
proved by the previous UPA
Reaching out to the opposi- government had provided Jaiprakash had furnished the guaran-
tion, the Cabinet, in its meeting for deposit of 70 per cent of tee, which is in the form of a standby
chaired by Prime Minister Narendra the funds raised from buyers into the letter of credit (SBLC), in order to set
Modi, approved a string of amend- escrow account but it was reduced to up the business. Formula One wants
ments to the Real Estate (Regulation 50 per cent by Rajya Sabha's select to invoke the guarantee and move
and Development) Bill, 2015, aimed at committee which examined the bill. the money to a designated bank in
protecting the interest of the buyers The UPA bill had a penal provision for the UK.
and promoting investments in the sec- violations, which was not there in the
tor while ensuring transparency. one brought by the Modi government. The court has allowed an extension
of the guarantee, which was expir-
A key amendment is the provision for Another major change approved by ing on December 1, to March 31,
depositing 70 per cent of the money the Cabinet includes equal rate of in- 2016. This can be extended further
received by the builders from buyers terest to be paid by promoters and by mutual consent in case the tax
for a project into an escrow account, buyers in case of default or delays. The dispute is still unresolved, the court
especially created for the concerned provision was earlier tilted in favour of has said.
the builders.
BANKING FINANCE | JANUARY | 2016 | 21
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