The Indian government has initiated significant steps to address the massive crisis plaguing the country's real estate sector. The Ministry of Corporate Affairs has begun inter-ministerial discussions to establish a dedicated committee that will formulate policy reforms aimed at speeding up the completion of stalled real estate projects across the nation.
A Comprehensive Rescue Blueprint
According to sources familiar with the development, the new committee will include representatives from various ministries and regulatory bodies. The panel is tasked with creating a commercially viable systemic reform blueprint specifically designed to tackle distress in the real estate sector. This initiative aims to not only expedite stalled projects but also revive insolvent developers and make the debt resolution process more efficient.
The committee will feature members from the Ministry of Law, Ministry of Housing and Urban Affairs, the National Institute of Urban Affairs, the Insolvency and Bankruptcy Board of India (IBBI), and the Department of Financial Services, among other experts. The formalities for establishing the committee are currently underway, with a preliminary meeting having already occurred last week.
The Scale of the Crisis
The urgency for such intervention becomes clear when examining the staggering numbers involved. An expert committee led by India's former G20 Sherpa Amitabh Kant revealed in July 2023 that investments exceeding ₹4 trillion were stuck across 4.12 lakh stressed dwelling units in the country, citing figures from the Indian Banks Association. These numbers have only grown since then.
The situation is particularly severe in the National Capital Region, which accounts for more than half of these stalled units—approximately 2.40 lakh apartments or houses. The massive scale of stuck investments and incomplete projects has severely eroded public confidence in the real estate sector, which the new reforms aim to restore.
Multiple Approaches to Resolution
The committee will explore several innovative solutions during its six-month tenure. One key proposal involves expanding the scope of the Special Window for Affordable and Mid-Income Housing (SWAMIH) Fund to include real estate projects undergoing bankruptcy proceedings. This fund, originally introduced in 2019, was designed to complete affordable housing projects that are stuck.
In the FY26 budget, Union Finance and Corporate Affairs Minister Nirmala Sitharaman announced a new version of the scheme with ₹15,000 crore funding to complete an additional 100,000 homes. This is in addition to the 50,000 homes already completed under the scheme and another 40,000 expected to be completed this calendar year.
Other proposals under consideration include strengthening judicial capacity and infrastructure of tribunals, setting up dedicated National Company Law Tribunal (NCLT) benches for insolvency resolution, and enabling project-wise insolvency resolution. The committee will also examine early registration of real estate projects with local revenue authorities for better protection of homebuyers.
Expert Perspectives and Challenges
Ashok Haldia, who chaired an expert group on real estate debt resolution, emphasized that better coordination between proceedings under the IBC and the Real Estate (Regulatory and Development) Act (RERA) would significantly improve outcomes. He suggested providing special concessions for stalled projects, such as additional floor area ratio, to generate extra funds for completion.
However, homebuyers' representatives have expressed concerns about some proposed solutions. Abhay Upadhyay, President of Forum for People's Collective Efforts, argued that project-wise insolvency resolution might not benefit distressed homebuyers and could allow developers to avoid using revenue from viable projects to complete unviable ones.
The corporate affairs ministry's initiative comes in response to a Supreme Court direction in a recent case related to home buyers (Mansi Brar Fernandes Vs. Shubha Sharma and others). With real estate and construction accounting for a third of the 8,500 bankruptcy cases admitted in NCLT since 2016, the success of these reforms could have far-reaching implications for India's economy and millions of affected homebuyers.
