Centre seeks a cure for real estate pain

Panel to find ways to revive stuck projects, save insolvent ones

- Gireesh Chandra Prasad & Rituraj Baruah

India is gearing up for a significant overhaul of its real estate insolvency framework, with the Ministry of Corporate Affairs (MCA) initiating high-level discussions across government ministries and regulatory agencies aimed at swiftly completing thousands of stalled housing projects.

The ministry is in the process of establishing an inter-ministerial committee charged with designing a blueprint of "commercially viable systemic reforms" to address the deep-seated distress in the property sector, two people aware of the development said. The central goal is to restore public confidence and accelerate debt resolution for insolvent developers.

The urgency stems from a crisis where vast sums of investor capital are trapped in delayed projects. An expert committee led by former G20 Sherpa Amitabh Kant noted in July 2023 that investments exceeding ₹4 trillion were stuck in over 412,000 stressed dwelling units across the country. That figure, based on data from the Indian Banks Association, is widely believed to have increased since then.

The MCA's move is a concerted effort to tackle a problem that has plagued India's financial and housing markets for nearly a decade. The real estate and construction sectors collectively account for a third of the roughly 8,500 bankruptcy cases admitted to the National Company Law Tribunal (NCLT) since 2016 under the Insolvency and Bankruptcy Code (IBC). Furthermore, real estate firms comprise 17% of all successful resolution plans approved to date, highlighting the sector's pervasive presence in the country's bankruptcy courts, according to data from the Insolvency and Bankruptcy Board of India (IBBI).