by Mr. Rakesh Reddy
The real estate sector has witnessed many transformative reforms like RERA, GST, and relaxation of FDI over the past few years. These reforms have revived consumer confidence and laid the foundation for massive growth prospectus. The real estate sector expects the union budget to take supportive measures that will further improve the momentum the industry has gained.
Granting of infrastructure status to the entire real estate sector is one of the most pressing expectations the industry has from the union budget. In fact, granting infrastructure status on affordable housing has witnessed many reputed developers launching projects in the affordable segment. Giving the entire real estate sector industry status will have a similar impact. It will aid them to avail financing at lower interest rates. As a result, more and more projects will become operational and eventually become affordable for the homebuyer.
Another area that the budget should look into is the liquidity crunch caused due to the NBFC crisis. The budget should recommend a recovery road map and create a favorable environment for ECB (External Commercial Borrowings). Further, the budget should earmark more funds and continue its thrust on infrastructure development as well as housing for all initiatives. They should also explore providing incentives to players who are venturing into new asset classes in real estate like affordable housing, warehousing and logistics, co-working spaces, co-living spaces, and light industrial spaces.
The sector also looks forward to a streamlined approval process with Single Window Clearance. This will ensure project approvals to be processed more quickly, resulting in reduced construction costs, thereby substantially reducing property costs.
Furthermore, the interim budget had announced many initiatives like extending benefits under Section 80-IBA of the Income Tax Act, TDS exemption on rental income and tax exemption on notional rent, etc to encourage home buying; the upcoming budget should raise the threshold of these incentives. They should revise the income tax slabs and reduce the overall tax expenditure. This will enhance the ability of the salaried class to invest in real estate. Expanding the availability of income tax deductions for home buyers can encourage new buyers and widen the market opportunity.
India’s real estate sector is one of the fastest-growing in the world. It is also the second-largest employment provider in the country, next only to agriculture. The sector is expected to employ over 60 million people and reach USD 180 billion by 2020 comprising 11% of the GDP. We are hopeful that the union budget will propose initiatives that will speed up the growth of the industry.