India’s top builder is clamoring for unconventional policy measures to get the nation out of the worst economic slump in more than six years.
“When demand is as tepid as it is right now in certain parts of the economy and sentiment is negative, we need a bazooka to come out and change sentiment,” Abhishek Lodha, managing director at Macrotech Developers Limited (MDL), (formerly called Lodha Group) said in an interview with BloombergQuint.
Calls for authorities to unveil more steps have been gaining steam. India’s central bank has struggled to revive economic growth despite being the most aggressive slasher of rates among Asian peers. Government measures have also failed to spur growth.
“We have a lot of liquidity, but it’s trapped liquidity in the banking system,” Lodha said. “With the banking system unwilling to let liquidity out into the real economy, we need to break that log jam.”
Lodha group is the country’s largest residential real estate developer with sales of about ₹11,900 crore ($1.7 billion) in the twelve months ended March, according to the Grohe Hurun report. The company has about 40 ongoing property projects including Trump Tower in Mumbai.
India’s property market has been facing a slump in demand in the last few years after the government withdrew ₹500 and ₹1,000 notes overnight in 2016. Many buyers and sellers depend on cash transactions for evading taxes while purchasing property. A prolonged cash squeeze in the shadow banking sector, a key source of funds for developers, has also dented property-market sentiment.
“I don’t think there is any point in trying to fool ourselves. Definitely, there has been a meaningful correction in real terms,” Lodha said. Over the last four to five years, apartment prices “have been flat in nominal terms and probably 10%-15% down in real terms.”
In all, about 576,000 home property projects worth some ₹4.6 trillion are running behind schedule across seven big Indian cities, Anarock data show.