Township builders may get more time for foreign funds
The Economic Times, April 13, 2009, Page 9
Borrowing Period May Be Extended Till Year-End
Gireesh Chandra Prasad & Deepshikha Sikarwar, NEW DELHI
COMPANIES such as DLF, Unitech and Parsvnath that build integrated townships are likely to get six more months to raise foreign loans with the government thinking of extending their foreign borrowing facility lapsing in June to the end of the year. Integrated townships comprise houses and other urban amenities like commercial premises, hotels, resorts, roads and bridges built in an area of at least 100 acres.
The decision is expected to be taken at the forthcoming review of the external commercial borrowing policy scheduled in June. The proposed move comes at a time when township developers are unable to find financiers for their ongoing projects as lenders across the world tend to avoid risky customers, particularly, in an emerging market like India. Although the government opened the foreign borrowing window for developers of integrated townships in January 2 this year as it sought to stimulate the economy, RBI data show that hardly any developer could access foreign debt in January or February. The government believes that the facility should be in place for at least a year to make a meaningful impact, said an official who asked not to be named.
The facility was available till May 2007, when the Reserve Bank of India, which operates the foreign borrowing policy, withdrew the facility to prevent ‘excessive’ foreign fund inflow into the real estate sector that was witnessing sharp appreciation in prices. The facility was re-introduced this January as the government sought to address the liquidity crisis faced by companies following the global financial meltdown. The government has also noticed that construction labourers, who lost jobs because of the problems faced by the sector, have started signing up for jobs under the national rural employ guarantee scheme — the largest job guarantee scheme anywhere in the world, for which Rs 30,000 crore was spent last fiscal, almost double the amount originally budgeted, a government official said.
As per government definition, integrated township includes housing, commercial premises, hotels, resorts, city and regional level urban infrastructure facilities such as roads and bridges and mass rapid transit systems. Development of land and providing allied infrastructure forms an integrated part of township development.
The Economic Times, April 13, 2009, Page 9
Borrowing Period May Be Extended Till Year-End
Gireesh Chandra Prasad & Deepshikha Sikarwar, NEW DELHI
COMPANIES such as DLF, Unitech and Parsvnath that build integrated townships are likely to get six more months to raise foreign loans with the government thinking of extending their foreign borrowing facility lapsing in June to the end of the year. Integrated townships comprise houses and other urban amenities like commercial premises, hotels, resorts, roads and bridges built in an area of at least 100 acres.
The decision is expected to be taken at the forthcoming review of the external commercial borrowing policy scheduled in June. The proposed move comes at a time when township developers are unable to find financiers for their ongoing projects as lenders across the world tend to avoid risky customers, particularly, in an emerging market like India. Although the government opened the foreign borrowing window for developers of integrated townships in January 2 this year as it sought to stimulate the economy, RBI data show that hardly any developer could access foreign debt in January or February. The government believes that the facility should be in place for at least a year to make a meaningful impact, said an official who asked not to be named.
The facility was available till May 2007, when the Reserve Bank of India, which operates the foreign borrowing policy, withdrew the facility to prevent ‘excessive’ foreign fund inflow into the real estate sector that was witnessing sharp appreciation in prices. The facility was re-introduced this January as the government sought to address the liquidity crisis faced by companies following the global financial meltdown. The government has also noticed that construction labourers, who lost jobs because of the problems faced by the sector, have started signing up for jobs under the national rural employ guarantee scheme — the largest job guarantee scheme anywhere in the world, for which Rs 30,000 crore was spent last fiscal, almost double the amount originally budgeted, a government official said.
As per government definition, integrated township includes housing, commercial premises, hotels, resorts, city and regional level urban infrastructure facilities such as roads and bridges and mass rapid transit systems. Development of land and providing allied infrastructure forms an integrated part of township development.
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