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RBI advises states to focus on affordable housing to boost sagging economy

Press Trust of India / Mumbai 03 Aug 17 | 02:48 AM

The Reserve Bank on Wednesday asked states to put in place a time-bound, single-window system for faster clearances to affordable housing projects to help give a leg- up to the sagging economy.

Slow clearances to such projects are "coming in the way" at the state level, RBI Governor Urjit Patel said, describing the Pradhan Mantri Awas Yojna (PMAY) for affordable housing as a "very important initiative which has the potential for a very strong growth impulse".

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"I think we need a time-bound single-window clearance," he told reporters after unveiling the third bi-monthly monetary policy review of the current financial year.

After a 10-month pause, the Reserve Bank today cut benchmark lending rate by 0.25 per cent to over 6-year low citing reduction in inflation risk, a move that will lower interest on home, auto and corporate loans.

The repo rate, at which RBI lends to banks, is now down to 6 per cent, the lowest in more than six-and-a-half years.

Affordable housing schemes, along with clearing infrastructure bottlenecks and reinvigorating sagging private investments, hold key to boosting economic growth, Patel said.

"I think a fair number of pieces of the jigsaw in that context are already in place," he said.

GDP grew at a much lower 6.1 per cent in the March quarter of last fiscal, 2016-17, due to note-ban and experts feel that GST roll-out from July 1 is set to put further stress on it.

According to reports, the realty sector is wary about GST, and introduction of real estate regulator at the state level is resulting in project slowdowns.

"The MPC (monetary policy committee) is of the view that there is an urgent need to reinvigorate private investment, remove infrastructure bottlenecks and provide a major thrust to the Pradhan Mantri Awas Yojna for housing needs of all," the RBI said in the policy review.

The government and the Reserve Bank are working in close coordination to resolve large stressed corporate loans and recapitalise public sector banks within the fiscal deficit target. These efforts, it said, should help restart credit flows to the productive sectors as demand revives.

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