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Soon after major disruptions caused by the COVID-19 pandemic, the Indian economy has rebounded at a rapid pace. In fact, the current state of the Indian economy is even better than the pre-pandemic one, indicating a healthy growth. The RBI is believed to have played a major role in this economic recovery, by mitigating the large-scale crisis.
The main factors which helped in this recovery are the policy rates, global conditions, foreign exchange, markets and liquidity conditions. The RBI has already slashed the repo rate and the reverse repo rate by 115 basis points since March. This led to lower interest rates and lending rates, thus helping individuals and industries alike.
However, despite this healthy recovery, the Indian economy still does face other hurdles. Bank credit growth has declined severely. It had already been weakening in the pre-pandemic months and the lockdown only intensified the crisis. In fact, it is recommended to reach as low as 0-1% this fiscal year, making it the lowest credit growth in several decades.
The IL&FS default, which occurred back in 2018 also caused several problems in the Indian economy. It had resulted in a liquidity crisis for the NBFCs and indirectly affected various industries and the economy as a whole. However, considering the crisis that the Indian economy faced due to the pandemic, the revival is still quite impressive.
The regrowth of the Indian economy also helped several key industries, including the real estate sector. The revival to pre-pandemic standards which took place in the economy has also been mirrored by the realty sector, with a significant boost in property sales. Real estate markets across the country, including the metropolitan cities as well as Tier 2 cities have witnessed this revival.
Many of the potential property buyers were so far just fence sitters waiting in hope of lower prices. The slashing of the interest rates came as a perfect opportunity for them. With much lower stamp duty charges and home loan interests than usual, they rushed to buy properties. Naturally, this provided the developers with a much-needed boost in sales.
Due to the current economic situation, obtaining loans has become relatively easier as well. Apart from helping homebuyers, this has also allowed the developers to ensure adequate finances for their projects. The overall economic condition in India is in favour of the growth of the real estate industry. Considering the fact that this sector contributes heavily to the GDP of the country and employs a major portion of the society, the revival of the real estate sector would also be beneficial for the economy.
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