Real Estate and Infrastructure Resolution

Indian Institute of Management, W. P. No. 2019-09-01

8 Pages Posted: 3 Oct 2019

See all articles by Jayanth Rama Varma

Jayanth Rama Varma

Indian Institute of Management (IIM), Ahmedabad

Sebastian Morris

Indian Institute of Management, Ahmedabad - Economics

Date Written: September 01, 2019

Abstract

We propose a mechanism that uses the financial markets to mobilize the resources of a large population of investors, to revive the impaired assets in the real sector in India today. This should also allow the economy to escape from the strangle hold of the “doom loop”, in which the financial sector, the infrastructure and real estate sectors and the economy in general through their feedback effects on each other, portend to take the economy deeper into the recession. The mechanism where the government covers the left tail risk in infrastructure and real estate, has the potential to revive these assets to the benefit of the home buyers, users and the public, with the government earning a handsome return, while being fair to the developers as well. With such a mechanism in place, in the future, developers would know that using distressed public value to their advantage would not be possible in the future.

Keywords: Real estate, infrastructure, recession, India, asset –reconstruction, financial sector, asset-impairment

JEL Classification: G2, G1, K2, H8, O2

Suggested Citation

Varma, Jayanth Rama and Morris, Sebastian, Real Estate and Infrastructure Resolution (September 01, 2019). Indian Institute of Management, W. P. No. 2019-09-01. Available at SSRN: https://ssrn.com/abstract=3459339 or http://dx.doi.org/10.2139/ssrn.3459339

Jayanth Rama Varma

Indian Institute of Management (IIM), Ahmedabad ( email )

Vastrapur
Ahmedabad, Gujarat 380 015
India

HOME PAGE: http://www.iimahd.ernet.in/~jrvarma/

Sebastian Morris (Contact Author)

Indian Institute of Management, Ahmedabad - Economics ( email )

Vastrapur
Ahmedabad 380015, Gujarat
India
+917966324805 (Phone)

HOME PAGE: http://faculty.iima.ac.in/~morris/

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