Government Says REITs to Start Functioning Shortly

New Delhi: The Finance Ministry on Monday said it expects newly-created business structure REITs (Real Estate Investment Trusts) to start functioning shortly, a move which will give a boost to the realty sector.

“As regards investment in housing sector, the REITs structure we positioned in this year’s Budget… I would expect some of the REITs to start functioning very shortly,” Economic Affair Secretary Shaktikanta Das said.

In order to provide fillip to investments in realty sector, Finance Minister Arun Jaitley had in Budget rationalised capital gain tax regime for the sponsors of REITs.

REITs, an investment avenue on the lines of one in developed markets like the US, the UK, Japan, Hong Kong and Singapore, can be listed and trading would be allowed in units of REITs like any other security on stock exchanges.

Asked if banks need to lower interest rates to boost housing sector, Mr Das said interest rate is a decision of individual banks. “There has been an increase in the FII, FPI limits for GSecs. I am sure banks will see the overall situation and take a call (on interest rates)”.

Following 0.50 per cent cut in rates by the Reserve Bank of India last month, State Bank of India has effected maximum reduction in base rate (0.40 per cent), while some banks are yet to cut.

As regards subsidy expenditure, Finance Secretary Ratan Watal said the government is looking at implementing the direct benefit transfer scheme in kerosene and food.

He further said the government is looking at interest subvention scheme and may provide subsidies as capital support to sectors like textile, which are facing problems.

“Overall, expenditure on major subsidies as a percentage of GDP has come down from 2.5 per cent of GDP in 2012-13 to 1.6 per cent of GDP in 2015-16,” a Finance Ministry statement said.