Do you see the cut in corporate taxes triggering sustained growth in the economy?

Many feel that there should have been measures on the demand side. Should there have been a cut in personal tax rates?

The tax cut is expected to widen the fiscal deficit. Do you think interest rates can come down with a higher deficit?

How is the demand for housing?

What will happen to builders stuck with these expensive projects?

What about HDFC’s fund to take over stuck projects?

HDFC Capital

has committed most of the $1.1 billion raised for real estate. What are your plans?

Any development on HDFC Bank succession...

NEW DELHI: Given the slowdown in real estate in metro markets, HDFC has transitioned into an affordable housing financier. In an interview with TOI, HDFC chairman Deepak Parekh speaks of what will drive housing. Excerpts:It is a great achievement as our tax rates are comparable to Vietnam, Singapore, Cambodia and Thailand. We have been losing manufacturing of textiles to some of these markets because of our higher tax rates. Fresh investments can now come into India. It will also bring down prices as the only way to increase sales is to bring down prices.They have just increased the tax rate on higher-earning individuals. It is difficult to bring down individual taxes. The government has done it in a much neater way. We need to build up confidence among investors as our macro fundamentals are already strong. Interest rates are low, the rupee is stable, oil prices are settling back and we have a cushion of 11 months of import cover.Maybe the drop in interest rates in the next round is only marginal, but the chances of rates going up are not there. If there is growth, you can have a slightly larger fiscal deficit when demand is low. Moreover, the government has approved several public sector undertakings including Air India for sale.There is good demand for affordable homes. We have financed 1.1 lakh affordable homes under the credit-linked subsidy scheme. Hyderabad is turning out to be the new Bangalore. Deloitte has taken up 10 lakh square feet in one location. Similarly, Xerox, Facebook and Amazon have also taken up spaces. We expect demand for housing there. The government is doing its best to support the industry with this subsidy for buyers and tax-free status for builders, and now the last-mile funding. But we have to get over the past sins of buying land at high prices and building luxurious apartments.I have met a few funds that specialise in buying ready-made projects. If the developer is desperate, they may be able to get a 30% discount for buying the property in bulk. These fund managers are willing to sit on it and sell individually when markets return because in the US and Europe the yields are very low and a 4-5% return is good for them. Right now, they are buying commercial, but they have started looking at residential.There was a proposal where we would have a special situation or a stressed fund. But stressed fund investors are looking at 20-25% return and I don’t think in India any stress fund can get those returns.The UAE government is keen to support Prime Minister Modi’s vision of housing for all and, in furtherance of that, we are talking to them for additional funding. One or two other investors have also shown interest. Both the National Infrastructure Investment Fund and HDFC can put in more. We are talking to the Abu Dhabi Investment Authority for the third fund. We are looking to earmark technology for mass housing from the third fund. In Mexico and other parts of the world, the slum and rehabilitation process can be built very fast using new technology and prefab material.We know we have a responsibility, the board, the nomination, remuneration and compensation committee has a responsibility, and HDFC as the largest shareholder are aware of our responsibility. We will find a suitable candidate at the right time.