Industry Reactions on Budget

Mr. Vipin Sondhi, Managing Director & CEO, JCB India
Finance Minister has presented a well-balanced and constructive Budget focusing on the most critical aspects of the economy, such as Infrastructure, Agriculture and Rural India. Budget 2017 will be remembered for many aspects, including being the first budget in which the Railways Budget was merged. From earthmoving and construction equipment industry’s perspective, we have witnessed the roads and highway sector leading the growth momentum, however, to really create sustainable growth, other sectors needed attention. With this budget the focus has broadened and now includes Railways, Agriculture and Real Estate. A record investment of Rs.3,96,135 crore for infrastructure, and 1.31 lakh crore for railways is a big booster to the economy. Thrust on agriculture sector with credit set at Rs.10 lakh crore will aid all round development.

Additional liquidity in the banking system due to demonetization, will finally lower borrowing costs and allow increased access to credit too. Surely, the massive push in these sectors with incentives for 'Make-in-India’ initiatives will lead to overall sustained growth. Broadly, the current budget will open up more avenues for further industrial proliferation and surely augurs well for the earthmoving and construction equipment industry.

Mr. Parveen Jain, President, NAREDCO
The Budget has now set in motion a series of structured reforms process for the housing sector. The announcements focus on the upliftment of the urban poor and the under privileged. Assigning infrastructure status to affordable housing gives the segment the necessary push for further growth. The aim to build 1 crore housing in rural areas by 2019 for the homeless aligns with the government’s agenda to build 2 crore housing by 2022. Affordable housing will now be able to receive liquidity support from pension funds and insurance firms, which are mandated to contribute significantly to affordable housing.

Mr. Amit Gossain, MD, Kone
With the constraint not to touch the indirect tax proposals, the Finance Minister has done the best possible in this year’s budget. With the clear agenda of TEC India to Transform, Energise and Clean India he has set his priorities for action. By granting Infra status to affordable housing he has managed twin gains of helping the developers to get favorable funding and the society at affordable prices keeping cost of funds at lower levels. This is a welcome step. Housing at all levels is so important for India that this can all come in priority lending which will have a very positive impact on Real Estate and hence economy as a whole. The proposal that 500 railway stations will be made “differently abled” friendly by providing lifts and escalators meets not only the social cause but gives business potential to the Elevator Industry. Reduction of Corporate Tax for SMSE by 5% is a welcome move but the promise of overall reduction has not been addressed. At least he could have shown a 1 - 2% reduction for other to show a signal of reduction. Amendment to labour laws and Negotiable Instruments Act for cheque dishonor will definitely help in ease of doing business.

Mr. Manish Bhartia, Co-owner & Managing Director, CDE Asia Limited
High Infrastructure spending through roads, railways, ports and affordable housing seems to be a priority for this government, which is pivotal for growth plans in India. Although we are not a direct beneficiary, we laud the government’s move to lower the corporate tax rate on smaller companies who are still adjusting their business model to suit the cashless economy. The prospect of timely implementation of GST is heartening and we eagerly look forward to the benefits it will bring to our marketplace.

Mr. Adarsh Hegde, Joint Managing Director, Allcargo Logistics Limited
The Union Budget 2017 with an agenda to transform, energize and sanitize India is reasonably balanced. Setting up 100 India-International skill centres will definitely address the issue of skilled labour. Another good move to offer tax relief to corporates is the carrying forward MAT for additional 5 years. The bold target of 2500 crore digital transactions for 2017-18 will transform the way India transacts. Implementation of end to end solutions by railways for some commodities and significant investment in development of national highways, are steps towards ensuring multimodal connectivity and better transport system. Initiatives like the Metro Rail Policy, development of railways, coastal roads, etc. aim to create job opportunities and boost infrastructure, however, there is not much clarity. These initiatives are welcome, given the logistics and transport sector’s dependence on road transport. However, we were hopeful of some incentives and investments especially in coastal shipping, given that India has a coastline of 7500+ kms and has been one of the priorities of the government in the last few years. Initiatives to boost port modernization, development of industries and industrial corridors, seem to have been given a miss.

Mr. Irfan Razack – CMD, Prestige Group & Chairman – CREDAI (National)
The Budget is outstanding. All sectors have been covered, especially the rural sector and the agricultural economy. This is a Government that translates their words into action. There has always been a focus on housing and infrastructure, so it did not come as a surprise to see such a large allotment made to the infrastructure segment. It is obvious that spends on infrastructure will in turn gear up and kick-start the economy all over again. Granting infrastructure status to affordable housing will give the developer access to more funds from banks. Additionally, the cost of finance will be much lower, which will help us build a better product at a reasonable price. Holding period for capital gains reduced from 3 years to 2 years is a big win. Since the Government is looking to eliminate black money from real estate, this will encourage land transactions with 100% cheque payments. Moreover, they have increased the base from 1985 to 2001 so ultimately the effective tax a person will pay on long-term capital gain, which is now two years, is probably 10%. People will not regret paying that percentage while selling their property for the full value. Joint Development Capital Gains Tax now only has to be paid on completion; this will encourage landowners to explore more joint development deals. There is also proposed tax relief for builders on unsold inventory.

The Budget has defined the limits for affordable housing of 30 and 60 sqm houses. Outside the 20 km radius for metros, one can make a 50 sqm house, whereas within the city the size of the house has to be smaller. The construction time is also more practical. This is to get Section 80-IA exemption and encourage more developers to get into the construction of affordable houses. the Government requires construction of an enormous quantity of affordable homes. This in turn will also eradicate unregulated growth of slums and give people an opportunity to live in good sanitary living conditions, which is another focus area of the Government. Everything is in alignment and I expect the Budget to work out well for all citizens.

Mr. Arun Lakhani, CMD, Vishvaraj Infrastructure
A big infrastructure push along with a substantial hike in provisions for the National Highways in the Budget is a major takeaway and I congratulate the Finance Minister for the growth oriented approach. A 25% higher capital expenditure is sure to give the economy a big growth momentum. Priority to doubling of farm income and rural development makes it a balanced and inclusive budget. The focus on rural sector, large allocation of Rs.3.96 lakh crore for infrastructure development and social spending are welcome moves. New dispute resolution mechanism for quick dispute settlements and abolishing FIPB will improve the ease of investing in India along with the push on digital that will bring in efficiency and eradicate corruption. Addressing arsenic and fluoride menace in 28,000 villages gives the budget a human touch, while reducing corporate tax rate by 25% for MSME and the move to curb cash donations for political funding are very good moves.

Mr. Neeraj Gulati, MD, Assotech Realty
The Budget has provided the much awaited relief to the real estate sector. Policy changes throughout 2016 have been helpful in making real estate more transparent as well as stronger. Giving infrastructure status to affordable housing is likely to result in increased participation from private players and improve capital inflow. National Housing Board (NHB) will also refinance individual loans worth 20000 crore in 17-18 offering capital relief to lenders. Providing tax sops to smaller businesses will also augment the purchasing power. Reducing tax slab of individuals will also propel investment in the sector.

Mr. Surendra Hiranandani, CMD, House of Hiranandani
I would term it as a reform oriented Budget where the expenditure is well directed towards economic growth and development, especially in the rural areas. The massive push for improvement in infrastructure including record capital expenditure for roads, railways will indirectly benefit the real estate sector in the long run. The move to grant infrastructure status for affordable housing will lead to higher participation by private players as they can have access to institutional funding and other government subsidies. Tax rebates for the salaried class will lead to higher disposable income and interest subventions; which can be a potential winner in the long run. However, the government should redefine affordable housing clearly keeping in view the different geographies in India.

Increasing the qualifying unit area for affordable housing from built up area to carpet area will lead to an increase of around 20% per unit for the end user. Also, increasing the time frame for completion to 5 years indicates that the government acknowledges the practical and operational difficulties faced by developers in this category.

The decision to tax capital gains on Joint Development Agreement upon completion is significant, however, more clarity is required to avoid litigation which is bound to happen given the current ambiguity. The tax break of one year post receipt of the completion certificate for unsold stock, and reduction of long term capital gains to two years will provide respite to investors and developers alike.

Deregulation will be the key to the success of various government initiatives. The government must also get the statutory authorities responsible for clearing the projects within the purview of law. Corporate taxes and dividend distribution tax remains the highest in the world, and we hope this is addressed in the future to attract more investments in the corporate sector.

Mr. Venkatesh Gopalakrishnan, President - Business Development & CIO – Shapoorji Paloonji Real Estate
The Government believes that the impact of demonetization is transient. The increased liquidity in the banking system and the increase in the net of taxable income for people and corporates, has resulted in the Government stipulating an aggressive fiscal deficit of 3.2% in 2017-18 despite the total increase in expenditure especially in the Infrastructure and Defence sectors where the outlay has been increased by 10% over the last year. In case the Government is able to follow through on the remonetisation inter-alias as per the plan, it will definitely impact the economic growth positively. Coming to the Real Estate sector, the moves including the reduction in the tenure of long-term capital gain tax from 3 years to 2 years, rationalization of capital gains JDA agreement, infrastructure status to the affordable housing segment and most importantly the SOPS inter-alia, the increase of the size of the affordable housing unit and enhancing the universe for the 60sqm stipulation in the segment, are all positive steps.

Mr. Anil Chaudhry, Country President and MD, Schneider Electric India
The Budget gave a clear indication of the government’s focus to achieve 'sustainable energy for all’, with two of its critical steps; firstly, the 25% increase in the outlay for key power schemes like Integrated Power Development Scheme and Deen Dayal Upadhyaya Gram Jyoti Yojna is expected to fast track the rural electrification drive of the Government, which is now planned to be completed by May 1, 2018. Secondly, by strengthening its focus on renewable energy forms with the inflow of another 20 GW in the next fiscal. This, however, will require investments in grid management and digitisation of the grid to ensure supply of quality reliable and safe power.

Mr. Rajesh Doshi, Managing Director, ACME Group
The biggest announcement is awarding Infrastructure status to affordable housing. Developers working on these projects will get access to lower cost funds and other benefits. The government has increased the time line of project to 5 years from 3 years. NHB refinancing 20,000 crore of housing loans will enable HFC and other institutes further lower the interest rates. The holding period for capital gains tax for immovable property is now reduced from 3 years to 2 years. This will help people who want to sell existing properties and upgrade.

N. Chandrasekaran, Chairman, Tata Sons
The FM ensured Indian economy remains on a growth path, combining fiscal responsibility with higher public investments to help accelerate inclusive GDP growth. By harnessing the power of digital, we can plan to bring in more rural India into the formal economy.

A Bhattacharya, Chairman, SBI
Electoral bonds are a novel idea for transparency in political funding. Curbing cash transactions over Rs.3 lakh will reduce cash intensity and help financial sector to broad base activities. Infra status to affordable housing is beneficial.

Chandra Kochhar, MD & CEO, ICICI Bank
In the Budget proposals, the thrust on e-transactions will increase the size of formal economy. The tax measures are aimed at improving mobilization by broadening the tax base and improving I-T administration.

Getamber Anand, President, Credai
We could not have hoped for anything better. The realty sector is thankful to the government for understanding the need to enable efficient supply of housing stock.

Sunil Rohokale, CEO, ASK group
Giving infrastructure status to low-cost housing opens up more avenues to raise capital domestically from insurance companies and pension funds.

Anuj Puri, country head, JLL India
Promoters of affordable housing projects will benefit from proposal of two-year extension from the earlier timeline of three years.