Union Budget 2025: SWAMIH Fund 2’s ₹15,000 Cr Allocation to Address Stalled Housing Projects

The Union Budget 2025-26, presented by Finance Minister Nirmala Sitharaman, has set a strong foundation for resolving some of the critical challenges in the real estate sector, particularly in the affordable and mid-income housing segments. Among the key announcements was the allocation of ₹15,000 crore for the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund 2, which is aimed at accelerating the completion of stalled housing projects across India.

SWAMIH Fund 2: A Strategic Move to Address Stalled Housing Projects

The SWAMIH Fund 2 has been launched to provide financial assistance to stalled housing projects that have faced delays due to financial or regulatory hurdles. A major concern in India's real estate sector has been the inability of many developers to complete projects, leaving homebuyers in limbo, particularly in the affordable housing space. The newly allocated ₹15,000 crore is intended to speed up the completion of approximately 100,000 housing units across the country.

The fund is structured as a blended finance facility, combining public and private sector contributions. The government’s role in providing financial support, along with the involvement of banks and private investors, is expected to bring in diverse resources to tackle the issue of incomplete housing projects. This model also aims to reduce the financial burden on homebuyers and developers alike.

Impact of the First SWAMIH Fund

The initial phase of the SWAMIH Fund was launched in 2019 with the aim of offering priority debt financing to projects that had stalled due to financial constraints or other operational issues. The fund has successfully raised ₹15,530 crore and has made a significant impact on the real estate sector. A substantial portion of the fund has been allocated to distressed and brownfield residential projects registered under the Real Estate (Regulation and Development) Act (RERA), with a particular focus on affordable and mid-income housing.

Under the first fund, around 50,000 housing units were successfully completed, with keys handed over to homebuyers. With the launch of SWAMIH Fund 2, the government aims to complete an additional 40,000 units in 2025. This will not only help ease the financial stress of middle-class families who are currently paying both home loan EMIs and rent but will also provide them with much-needed housing solutions.

Support for Middle-Class Homebuyers

Finance Minister Nirmala Sitharaman emphasized that SWAMIH Fund 2 would provide relief to homebuyers who have been facing significant delays in receiving possession of their homes. This initiative is expected to improve the overall confidence in the real estate market, especially among middle-class families. Many of these families had been caught in the uncertainty of stalled housing projects and were struggling to manage financial commitments.

The scheme is expected to be particularly beneficial for homebuyers in smaller cities and towns, where affordable housing projects have been affected by the lack of financing. The completion of these units will not only help in fulfilling the housing aspirations of middle-class families but also create a ripple effect, boosting consumer confidence and stimulating demand in the real estate sector.

Industry Reactions to SWAMIH Fund 2

The announcement of SWAMIH Fund 2 has been met with positive reactions from real estate developers and experts. Amit Goenka, Managing Director and CEO of Nisus Finance, lauded the fund, calling it a potential game-changer for stressed developers. Goenka pointed out that the financial liquidity provided by the fund would enable developers to complete their stalled projects, which in turn would help in restoring the confidence of homebuyers.

This initiative is seen as a much-needed intervention in the sector, as it addresses both the immediate financial challenges of developers and the long-term aspirations of homebuyers. Real estate stakeholders also believe that this move will provide much-needed stability to the sector and help generate greater demand for affordable housing.

However, some experts, including Niranjan Hiranandani, co-founder of the Hiranandani Group, have expressed concerns over the limited scope of action for the affordable housing sector as a whole. While SWAMIH Fund 2 focuses on completing stalled projects, there remains the larger issue of rising land prices and construction costs, which have made it increasingly difficult to build affordable housing in metro areas.

Challenges in Affordable Housing Development

While the SWAMIH Fund 2 will provide immediate relief to stressed projects, the long-term challenge of affordable housing development remains. Stakeholders such as Pradeep Aggarwal, founder and chairman of Signature Global, have pointed out that the availability of affordable homes in major cities continues to be a concern. In many metro cities, the rising costs of land, labor, and materials have made it difficult for developers to deliver projects at affordable prices.

Furthermore, the issue of regulatory hurdles and approval delays also continues to plague the sector. Experts have called for a more holistic approach to addressing these challenges, which includes streamlining approvals and creating favorable policies for developers working in the affordable housing space.

Importance of SWAMIH Fund 2 for the Real Estate Sector

SWAMIH Fund 2 is expected to have a substantial impact on the completion of stalled housing projects in India. By addressing the immediate financial constraints faced by developers, the fund will help restore some stability to the market. It will also alleviate the pressures on homebuyers who have been waiting for years to move into their homes.

However, while this initiative is a positive step, experts argue that more comprehensive reforms are needed to address the systemic challenges faced by the affordable housing sector. Rising construction costs, land acquisition issues, and regulatory delays must be tackled for the long-term sustainability of affordable housing development in India.

The allocation of ₹15,000 crore to SWAMIH Fund 2 in Union Budget 2025 is a significant development aimed at addressing the challenges of stalled housing projects, particularly in the affordable and mid-income segments. With the potential to complete around 40,000 housing units in 2025, the initiative is expected to provide much-needed relief to both developers and homebuyers.

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