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| By Pankaj Kumar Jain, Managing Director, KW Group |
Real estate sector is in
dire need of budget stimulus to fight the slowing growth. It needs such
provisions in the upcoming budget that immediately bring relief to all the
industry stakeholders. Apart from easier project financing avenues to the
announcements towards boosting infrastructure across the regions, the industry
is expecting the budget to also increase the income tax deduction limit on home
loan to boost real estate demand.
In the backdrop of sluggish growth and persistent low demand
scenario, the real estate sector is very optimistic about the upcoming budget
and hopes it will include provisions to provide immediate relief to all the
industry stakeholders. While the entire
real estate sector is undergoing stagnation phase due to a clear lack of
buyers’ movement in the market, it’s time to generate demand to save the
industry from falling into a vicious circle of negative growth. Moreover, due
to unavailability of easier project financing avenues, all industry players are
facing a lot of difficulties while planning to launch any new project.
While in the last couple of budgets most of the expectations
raised by the industry remained unfulfilled and there have been deep
disappointments over various long awaited policy issues, we have a lot of
expectations riding on the upcoming budget. We expect the upcoming budget to
hold provisions to restore the faith of the stakeholders. The budget must
include the long-awaited measures like introduction of dedicated Single Window
Clearance system for speedy clearances and approvals of the projects. For the
homebuyers, we expect the budget will include additional income tax deductions
at least for the customers buying housing units under affordable segment. We
suggest the upcoming budget must raise income tax deduction limit on home loan
and the value limit of affordable house must be enhanced from current Rs 45
lakh to at least 60 lakh.
The current input tax mechanism under GST has been an area of
major concern for the real estate developers engaged in the construction of
affordable housing projects. Hence, we also look forward to some encouraging
announcements on this front in the upcoming budget. We also expect the upcoming
budget should allocate funds for creating well-equipped infrastructure across
the country. Lack of infrastructure is a major cause of worry for the real
estate sector operating in tier-II-III cities. Hence, we hope the honourable
finance minister will surely announce some measures in this budget to
accelerate infrastructure development. Such initiatives will also provide
affordable land parcels for budget housing development. We are equally hopeful for the government to
announce a specific mechanism to regulate the cost of key raw materials like
cement and steel in the upcoming budget.
Moreover, the entire real estate sector should immediately be
granted industry status to make it eligible to avail finances from banks on lower
interest rates. Such an arrangement will be truly helpful in addressing the
liquidity issues of the industry, besides helping in completion of various
stalled projects. The increased bank funding will definitely turn out as a much
needed encouragement for the developers struggling to deliver affordable
housing projects to meet their commitments to support PM Modi’s ambitious
Housing For All by 2022 initiative.
Another long awaited demand of the industry is Subsuming of
stamp duty within the ambit of in GST. If GST includes stamp duty there will be
an immediate increase in demand, at least in the emerging real estate markets
across the country. We need a large-scale budget stimulus to fight slowing
growth. Needless to say, the upcoming budget has presented an opportunity for
the government to look favourably on the plight of the real estate sector which
has assumed greater significance as second largest employer after agriculture.
For the time being, we all have kept our fingers crossed in expectation of the
platter of positive announcement that the upcoming budget may bring for the
growth of real estate sector. In a nutshell, the honourable finance minister
must pay attention to increasing the disposable income of the consumers while
for the industry she must bring provisions to make available easy financing to
expedite project development. In a nutshell, we expect the upcoming budget to
inject fresh wave of cheer into real estate sector that’s currently facing
gloomy scenario.
