Subsidies can't be essence of survival: FM Arun Jaitley to realty sector

By Saloni Shukla

Real Estate developers should not aim at surviving only on subsidies and interest rate subvention but should be ready to face market dynamics also, finance minister Arun Jaitley said here in Mumbai today.

"Essence of your industry (real estate) cannot be that I can survive only on subsidies." Jaitley said while speaking to a congregation of builders and bankers.

Real Estate sector is facing trouble for the last three years with sales at an all time low and unsold inventory at an all time high. Despite this real estate prices in most parts still remain in the unaffordable category.

Jaitley also pointed out that interest rate hardening had adversely impacted the real estate sector but high interest rates were a pre-requisite to keep inflation under control for a sustained period of time.

Raising hopes of further rates cuts, finance Minister Arun Jaitley also said that hopefully the downward movement in interest rates is here to stay. "The RBI has also at least on four occasions taken positive steps as far as the rates are concerned. Hopefully, this movement is there to stay?." Jaitley said.

He also added that given the current global price structure he was hopeful that India would be able to keep inflation under control.

The RBI has reduced the repo rate by 125 basis points so far this year. While banks have ?managed to transmit only 60-70 per cent of the total cut to its customers.