Industry rolls out Pre-Budget 2021-22 wish-list
The viewpoints of Industry leaders are given below:
Aditi Nayar
Principal Economist, ICRA on Indian Economy
In FY2022, sharp fiscal tightening should be avoided by both the Centre and the state governments, as it would temper the much-awaited economic recovery. In any case, revenue normalization would ease the fiscal strain in the coming year. A revenue deficit of 3.5% of GDP and a fiscal deficit of around 5% of GDP for the Government of India (GoI) may allow enough space for prioritizing health expenditure, vaccine rollout as well as capital spending, based on the revenue rebound that is widely expected in FY2022. Given the continuing uncertainty, tax changes should be avoided at this juncture, in our view, and the focus should instead be on maximizing disinvestment proceeds.
The Fifteenth Finance Commission's (15th FC's) recommendations on revenue sharing and fiscal deficit targets, the borrowing permission to be granted by the GoI, and the extent of improvement that can be realised in their own tax revenues, will guide state fiscal trends in FY2022. A fiscal deficit target of 3.5% of gross state domestic product (GSDP) for the state governments for FY2022, may allow them to prioritise a portion of the capital expenditure that had to be deferred during the pandemic and provide some funds towards projects under the National Infrastructure Pipeline (NIP).
With the fiscal deficit pegged at Rs. 11.1 trillion in FY2022, we expect net G-sec issuance to be placed at Rs. 9.0 trillion. Assuming that 90% of the states' estimated fiscal deficit of Rs. 7.8 trillion is funded by SDL, suggests a net issuance of Rs. 7.0 trillion, resulting in a total dated market borrowing of Rs. 16.0 trillion for FY2022. Adding the redemption of G-sec and SDL indicates substantial gross borrowings of Rs. 20.5 trillion in FY2022, which would continue to exert upward pressure on yields.
Himanshu Chaturvedi
Chief Strategy Officer - Tata Projects Ltd.
"As per the last Economic Survey, India needs to invest $1.4 trillion on infrastructure as it aspires to become a $5 trillion economy by 2024-25. India fundamentally needs better and augmented infrastructural amenities to support its economic growth and uplift the lives of its citizens. This massive investment requirement presents the potential for infrastructure sector in years ahead. During last year, as Covid-19 battered Indian economy and affected livelihood, Government of India provided liquidity support to the Construction Industry by modifying contractual payment terms and faster settlement of dues. This facilitated quick rebound of the industry and return of migrant labour to the project sites. As the second-largest employer in-country, providing employment to 51- mn people, construction sector not only provides livelihood but also acts as force multiplier by pulling up other industries and economy.
With Covid-19 impact still being faced on the economy and a much higher growth required in FY22 to make up for the lost year FY21, we would expect Government to continue supporting construction sector by advancing projects under National Infrastructure Pipeline for implementation, easing payment terms and settling old dues & disputes. Better liquidity with the industry will help it in contributing with earnest in nation-building and support MSME which depends significantly on the industry. We expect higher allocation for important infrastructure segments such as Integrated Water Resource Management, Housing, Railways, Metros, Highways, Airports and Energy. We are enthused by the "Make in India" initiative and various sector-specific Production Linked Incentive Schemes. These will require modern industrial infrastructure facilities and associated infrastructure, providing further fillip in the construction sector."
Sudarshan Lodha
Co-founder, Strata
"Considering the real estate sector is the second-largest employer in the country and directly or indirectly, accounts for approx.10 per cent of the GDP, it deserves serious attention in the upcoming budget. Within realty, the commercial real estate has been a watch-out sector for investors both overseas and back home owing to its strong fundamentals and resilience. The government should therefore consider measures to further encourage more NRI investments in the country. For instance, considering a reduction in the income earned from long-term capital gains would be helpful.
Owing to fractional platforms, affordable commercial realty is now a reality in India and therefore for retail investors intending to invest in commercial assets, the government should consider a higher exemption limit. Alternatively, since both the interest incomes as well as dividend earned by investors are taxable as per their slab rates, the government should consider a waiver of tax on dividend. These measures will help boost retail sale which in turn can offer a huge impetus to trade and economic activities. Considering personal loan is expensive, the government should also bring in a policy whereby retail investors can avail a loan seamlessly from banks at a reasonable interest rate for investment in commercial assets through fractional route.
Besides, it is important to address investor sentiments while addressing the challenges being faced by developers. For instance, considering a stress fund can help generate cash flow for developers thereby helping build the supply side of the industry. Alternatively, encouraging banks and NBFCs' to lend to commercial real-estate projects or take over and restructure stalled projects will also go a long way in kick-starting the economy. Similarly, properties that are not sold but developed for leasing, GST at 18 per cent should be reconsidered as it is a huge liability for the developers as it pushes the cost of construction and poses further challenges in the wake of a liquidity crunch.
Additionally, the Government should also consider incentivizing alternative asset classes such as warehousing, SEZs', data centers and co-working spaces to build momentum on both the demand and supply side."
Nilesh Shah
Chairman and MD, Atlas Integrated Finance Ltd
"At Atlas Integrated Finance Ltd, we have identified some sectors which can help India solve its falling GDP and unemployment problem if those sectors get the necessary support from the government in this Budget. We think the necessary exemptions in the below sectors will pave the path for a resounding growth of the economy"
Housing Sector: Housing is a sector that helps in creation of both direct jobs (construction workers, carpenters, plumbers, engineers etc.) and indirect jobs (in cement, steel, paint, power and many of the ancillary industries associated with housing.) in India. There is a large level of unsold inventory in cities like Mumbai, Delhi NCR region, Bangalore, Pune, Chennai etc. As per section 24 of the Income-tax Act 1961, an assessee is eligible for interest deduction of only Rs.2 lacs on the interest paid on housing loans. An increase in this ceiling limit should incentivise home buyers. This coupled with the reduction of stamp duty charges below 5% can give a boost to the housing demand and lead to record high registrations as seen in Maharashtra as on Dec 2020.
Automobile Industry: The automobile sector has witnessed seen a lot of problems due to reduction in demand, cost increase due to regulatory changes due to emission and safety norms, insurance, premium for five years and road tax registration increase have led to almost 30 to 40% price increase in the various automotive segments. Some of the steps like reduction of the GST tax rates to 18%, introduction of the incentive-based vehicle scrappage policy to scrap over 15-year-old commercial vehicles, local sourcing of automobile parts and EV incentives for electric vehicle buyers are some of the triggers for a boost in the demand in this sector.
Travel and Tourism Industry: There have hardly been any positive announcements or stimulus announced by the government to support the travel and tourism space that was beaten down due to the pandemic outbreak. The sector needs a revival plan starting with a reduction in GST to 5%, infrastructural developments, creation of tourism sites into world-class tourist destinations, along with easing the visa approval process
Bhushan Nemlekar
Director, Sumit Woods Limited
Looking forward to this Union Budget, the residential segment of the realty space is expected to grow if the Government can include expansion of the current income tax benefits available for home-buyers, increase the interest deduction to 3 lacs from 2 lacs currently especially for the first-time buyers. The budget could consider further steps to improve affordability which will boost the affordable housing segment and contribute to the Government's 'Housing for All' initiative. In order to continue attracting investor interest, the sector would be expecting measures for removing taxation related inefficiencies including considering some relaxation in GST and should also introduce input tax credit on under-construction properties that would further stimulate the sector.
Sankey Prasad (FRICS)
CMD (India) at Colliers International India
Given the prolonged impact of the pandemic on the Indian economy in general and the real estate in particular, we urge the Government to offer a special package with a mid to long term horizon for the real estate sector to recover and embark on a sustainable growth path. This package should consider not only affordable and mid segment housing, but also other asset classes such as commercial offices, SEZs, IT parks, industrial parks, warehousing & logistics parks, and organised retail developments, amongst others because the sector is an ecosystem that thrives on cohesively. Piecemeal incentives are not letting the sector develop holistically across the country as it is facing multiple issues at multiple since the global financial crisis in 2008. Further, besides seriously considering the stakeholders demand to lower GST rates and implement ITC for commercial leasing and overall construction activities, the government should also offer better incentives to the sector to ensure that asset development is not restricted to only the major metros but spread out to the tier two, three and even tier-four cities and towns.
Navin Makhija
Managing Director, The Wadhwa Group
To mitigate COVID-19 disruptions, the Government has shown adequate support by bringing in reforms in policies and announced some slew of relief measures to revive the economy. The reduction in stamp duty before the festive season by the State Government was a very important move which gave a much-needed boost to the sector. The world resurrecting to the pandemic of Covid-19 has learnt the value of healthy living as customers too realized the importance of a well-planned, well designed and a well-ventilated home more than ever before. We immediately saw sales volumes coming back to normal due to a boost in the consumer sentiments on the back of all-time low home loan interest rates, good festive offers, relaxation in GST and reduced stamp duty.
The forthcoming budget will be crucial in terms of Government reforms and it is believed that the Government will take appropriate measures to spur consumer demand. More tax sops and higher relief on the home loan rates will woo the homebuyers and investors to buy a property. Additionally, interest rates on housing loans should be reduced to benefit a broader segment of homebuyers, including first-time buyers. Also, the income tax benefit for housing should not only be for residential purchasers alone rather it should also be extended towards commercial purchasers as well.
Ashwin Reddy
Managing Director, Aparna Enterprises
"Despite the current challenges, the building material industry is one of the few, which are on a faster recovery and in fact the sector poised to witness 5% to 10% growth in 2022. However, to achieve this, there should be greater efforts from the government in the upcoming budget. Union Budget should focus on fastening infrastructural development and infusing more capital into this segment. The government should introduce policies like single window clearance, uniform taxation, structured interest rates and quick implementation of schemes announced under "Atmanirbhar Bharat" program. This will improve the overall ease of doing business in the segment and open up new avenues of opportunities for the industry. The budget should also look at introducing new financing channels both from regular banking routes, NBFCs and private equity. Financing alternatives should be made available for all tenures – short, medium and long term. Additionally, reduction in income tax rates will increase consumer spending potential and this in turn can improve the growth prospects of the industry."
Annuj Goel
Managing Director, Goel Ganga Developments
"Moreover, in the wake of rising construction costs, the government should consider a reduction in taxes on raw materials used in the real estate sector because these are the essential building blocks of the realty domain. Also, the real estate sector expects the government to reduce stamp duty and GST as well." "Further, we expect an increase in deduction limit under Section 80C of the Income Tax Act in the interest of homebuyers. Also, tax benefit should be given on the interest component of the home loan paid on under-construction properties. As of now, this holds valid only for ready-to-move-in properties." "In addition, we want the government to come up with more policies for real estate sector as this government has a huge focus on making India a self-reliant nation with its Aatma Nirbhar Bharat and Vocal for Local like campaigns."
Ankush Kaul President (Sales & marketing)
Ambience Group
The industry expects multi-prong measures to be announced to help revive the real estate sector. Measures including RBI's repo rate cut of 140 bps, resulting in a fair lowering of interest rates, a six-month moratorium on EMIs, monetary and fiscal assistance to real estate companies at the project level brought some operational efficiency in the latter part of 2020. But the sector needs additional consideration and continuing impetus to boost demand in 2021.
The government also needs to focus on strengthening the consumers' capacity by way of more efficient tax rebates and increased tax reliefs to prospective homebuyers. Development firms are already tackling the challenges of liquidity to complete on-going projects. Moreover, with homebuyers looking primarily to invest in ready-to-move properties, under-construction projects are being neglected. In such a scenario, there is a need to boost demand for under-construction homes as well. Developers seek a waiver on GST for under-construction homes. The present GST rate on under-construction properties is 5% minus the Input Tax Credit benefit for premium homes. A waiver on GST will reduce the overall burden on developers and making the property value more viable and the pricing competitive.
Kaushal Agarwal
Chairman, The Guardians Real Estate Advisory
The year 2021 in many ways, is expected to be the year of hope and revival. The real estate sector, like other businesses, is looking forward to many positive, innovative and path-breaking announcements in the budget this year. The budget to follow, more than ever before, needs to focus on pulling out the economy from one of its worst falls ever. For the real estate sector the 20% deviation from the circle rates announced by the FM last year until June 2021 for homes costing up to Rs.2 crore, should not be time-bound and needs to be extended for all real estate asset classes. The 1% GST for affordable housing needs to be extended for the entire sector until Dec 2023.
Deviation of 20% from circle rates should be extended across the sector and not limited to homes costing up to Rs.2 crore. The same will allow developers to offload the massive build-up of unsold inventory costing more than Rs.2 crore. Currently, the major part of the unsold inventory is ready-to-move-in and falls in the luxury category. There couldn't be a more opportune year to accord industry status to the Real Estate sector as a whole; currently the same has been accorded only to affordable housing. This is a long-pending demand and can help developers raise funds at lower costs. The government needs to push the well-capitalized NBFC's to extend liquidity to the real estate developers who availed of the moratorium scheme during the lockdown. The same can have an adverse impact on the supply side if not addressed in the budget speech this year. Separately well-capitalised NBFC's and banks should be pushed to extend credit and liquidity to the players in the sector who have good equity left in their stuck projects. The government after the decent success of its SWAMIH fund should announce several more funds that can help target specific real estate verticals that need liquidity support and high capital infusions like township developments and large format business parks. The additional tax benefit for home loan interest announced in the previous budget now takes the tally to 3.5 lacs (Section 24 (b) & 80 EEA) for homes worth 45 lacs circle value. The same needs to be extended for homes costing up to Rs.1 crore to benefit the middle-class families residing in Metro cities.
Himanshu Jindal
CFO, Orientbell Tiles
We believe that Real Estate and construction activities in general have remained subdued for a prolonged period. Liquidity crunch and slowdown in demand have plagued the sector in the recent past adversely impacting associated sectors including building products like tiles.
Covid-19 and the unprecedented lockdown further complicated the situation, especially for the ceramic industry. Q1FY21 was a literal washout and most of the players struggled to stay afloat running considerable losses.
While the Finance Minister did offer a timely relief by rolling out incentives to support the overall economy, considering that most of the industry participants are not still out of the woods.
Input credit for the Real Estate Sector – Despite the welcome step of reduction in GST for the real estate sector in FY20, the absence of input credit mechanism for taxes paid against raw material supplies makes the entire system inefficient and may result in leakages for the exchequer.
Stricter Laws around payment delays/defaults – Payment delays/defaults even from some of the larger construction houses/real estate developers has become a norm impacting working capital cycles. While IBC is a great reform to take legal recourse against defaulting customers, enforcement is still lengthy, complicated and costly.
Increased incentives for home buyers – Incentivizing the ultimate buyer by offering enhanced tax incentives or lowering the tax rates could also add the required fuel for energizing the sector. In the past, there was no cap on interest deduction on borrowed capital for the purchase of house property. The present Goods and Services Tax (GST) rate on under-construction properties is 5 per cent minus the ITC benefit for premium homes (>Rs 45 lakh) and 1 per cent for affordable homes (
Reliefs sought for the ceramics industry
Tiles today virtually resonate with the "Swachh Bharat" campaign initiated by the Prime Minister a few years back. However, despite the "essential" use of the product in sanitation and housing which has now become more relevant post-Covid-19, the current GST rate of 18% is way more than the desired 12% - a request which the government can consider. The government should also consider including Natural Gas under the tax regime, which at this point, is not considered for inclusion. Natural gas is approximately 18 – 20 % of the total cost and is one of the cleanest sources of fuels.
Amar Kaul
Chairman & MD, Ingersoll Rand India Limited
"This year's budget will have high expectations from every section of the society, especially given the adverse impact of the Covid-19 pandemic. While pick up of activity in India's manufacturing sector towards the end of 2020 offers some respite highlighting how both the government and businesses are working in tandem to get the growth back to normal, we still have a long way to go.
Embracing digital transformation and enhancing critical data skills of the entire workforce is helping companies to gain competitive advantage. The upcoming budget can prove to be a game-changer for Skill development, given that we are constantly talking about talent crunch in new-age skills across top and bottom of the pyramid. Budget focus towards new-age skills will address educational and societal shortfalls of the country's youth with new-age technology and skills which are market-relevant today."
Prem Kishan Dass Gupta
Chairman & MD, Gateway Distriparks Ltd.
"Budget 2021 we expect strong support and initiatives for the EXIM industry which will help in increasing volumes. The year 2020 has disrupted and challenged the logistics sector in different ways. However, the logistics sector still serves as one of the key economic growth drivers because of its thriving infrastructure and improved connectivity.
We hope the budget will have enhanced allocation to the Indian Railways for completion of the Western Dedicated Freight Corridor (DFC) project at the earliest so that the industry can benefit from the new rail infrastructure at this time when the focus is to increase manufacturing in India. This will immensely benefit ports, exporters, importers, shipping lines, container train operators and other consumers of Rail transport.
As a Logistics company, we are looking at the government's increased investment in infrastructure, which will provide further impetus to boost the overall economy."
Kamlesh Patel
CMD, Asian Granito India Ltd
Tiles industry seeks the inclusion of natural gas in the GST regime, incentives for export and bringing tiles and sanitaryware in the 12% GST slab are the main expectations of the tiles industry from the upcoming Budget. Natural Gas cost is one of the major cost components for the tiles industry and keeping it out of the GST regime is placing the tiles industry at disadvantage, as such, it is high time that it should be brought under GST. As a matter of fact, tiles and sanitaryware industry is an integral part of infrastructure and resonates with key government initiatives including Swachh Bharat Abhiyan, Make in India and Housing for All and bringing it in the 12% GST slab from 18% currently will provide a much-needed boost and also help in building affordable houses.
Dr S Vasudevan
CMD, Ozone Group
"The real estate industry is one of the bellwethers of India's economy and contributes more than 8 per cent to the Indian economy employing more than 30 million people. It is an important industry as it has a ripple effect on other ancillary sectors. Therefore, any measures taken to uplift the sector will have the potential to revive the overall economy.
Over the years, the industry has been working towards fulfilling PM's vision of 'Housing for all by 2022'. The Government has also taken proactive measures that are commendable, but given the present market conditions, the industry needs more focused measures to further bolster demand in 2021"
The industry's expectations from the Budget includes the setting up of a regulatory authority especially for the cement and steel sectors to check price spiral thereby curb the rise in construction cost and instances of cartelization. The Government should adopt a uniform policy across all states in the reduction in stamp duty for various instruments related to real estate transactions, for the next 18-24 months as the move would definitely encourage the homebuyers to buy housing units. Reduction in premiums for TDR, FSI etc. to enable more cost-effective and cheaper products for all end-users and also the reduction in GST across all sectors of real estate, to bring down the overall property cost and push demand.
Chintan Sheth
Director, Ashwin Sheth Group
Budget 2021 will be crucial for the real estate sector with a series of developments across industries. The real estate sector faced multiple challenges due to reverse migration, stoppage of work, travel restrictions and less disposable income with potential buyers. However, the recovery has been a positive one, to say the least with profitable sales growth in the residential front due to the festive season, attractive schemes, and the consumers' assertive outlook to restart looking for homes. Moreover, government reforms like reduction in stamp duty, the extension of the project completion deadline, RBI Monetary Policy Committee's decision to extend the co-lending scheme for NBFCs and HFCs led the industry on the path of recovery and boosted market sentiment further.
We are optimistic about the amendments and wish the budget addresses some of the critical issues, such as:
· Speeding up infrastructure development to improve connectivity to various emerging micro-markets · GST waiver on under-construction projects for under-construction residential development · Ease in the cash flow and capital generation options that will support the developers to complete the construction working in time
Paul Wallett
Regional Director, Trimble Middle-East and India region
"After a year like no other, the construction industry is looking forward to a sustained recovery and for that, it is eagerly looking forward to an impetus in the forthcoming budget. For a majority of construction players, the increase in infrastructure spending, as well as demand for affordable housing in the year 2021-22, will be a key driver for business growth. We also expect the budget to give a flip to the digital transformation process, and provide a competitive advantage for the industry. The sector further hopes for easy liquidity and a relief in indirect taxation."
Sanjay Dutt
MD & CEO, Tata Realty and Infrastructure Limited
"Set against the backdrop of the pandemic, Budget 2021 will be crucial in determining the long-term growth of every sector. In order to revive the economy, we hope that the Government is able to efficiently implement Covid-19 vaccination, stimulate demand and accelerate job creation related initiatives and continue the thrust on infrastructure development. While last year's budget certainly had some highpoints, it, unfortunately, did not address numerous issues that the real estate sector has been facing for a while. With the government trying to revive the sector through initiatives like maintaining an accommodative stance on repo rate, a six-month moratorium on EMIs, SWAMIH fund, stamp duty reductions in Maharashtra and stimulus 3.0 package, we sincerely hope that Budget 2021 too brings some much-needed relief to homebuyers as well as developers. As the sector's growth relies heavily on the upcoming financial amendments, we look forward to measures for course correction, like granting industry status to the real estate sector and a single-window clearance mechanism for faster completion of projects. One GST, One or No Stamp Duty regime and reduction in registration charges across States are some of the other recommendations which will make a significant difference to the cost of a project and will definitely encourage home buyers to invest. RERA implementation should also be given more emphasis to protect the interest of all stakeholders.
The sector has been stressed for the past few years; the pandemic surely aggravated the problems but now there are some green shoots of recovery visible. Promoting the growth of the sector could have a multiplier impact on the economy. For this to happen, we anticipate reforms for affordable housing, joint development and encouragement of foreign investment in completed residential properties. Another major problem that we hope to be addressed is liquidity in real estate, For Eg. REITs are a viable solution since they enable investors to diversify their portfolio. Increasing the deduction for interest on housing loan to at least Rs 5 lakh and GST waiver for under-construction homes would also help in boosting the demand in the sector and attract potential buyers."
Rahul Singla
Director, Mapsko Group
"The Union Budget for 2021-22 is a much-awaited document to revive the economy amid COVID-19. The end of 2020 has already witnessed an uptick in residential sales and the Budget should strive to accelerate the pace towards growth. Conducive measures such as rationalization of GST in under-construction homes, tax incentives on the purchase of second homes and reduction in stamp duties and registration charges will boost sentiment and push sales. Priority should also be given to infrastructural development that will have a cascading effect on real estate development."
Ravish Kapoor
MD, Elan Group
"Commercial real estate has emerged as a resilient segment in the past few years. The upcoming Budget has instilled optimism to reinvigorate it further. A futuristic budget proposing the rationalization of GST with input credit provision will be a great start to boost commercial real estate. Similarly, the push towards infrastructural development and speedy completion of projects will propel real estate. The granting of the 'industry' status to real estate will ensure access to easy credit, ease liquidity, and stimulate the cash inflows into the sector."
Sanjeev Chandiramani
COO, Ruparel Realty
"Being one of the largest contributors to the GDP of the Indian economy, the real estate sector has been instrumental in bringing back the economic growth and stability of the nation. We welcome the Central and State Government's support of incentivizing the sector by reducing the repo rate, extending the Credit Linked Housing Subsidy Scheme, slashing the GST rate for under-construction affordable homes etc. However, the sector is looking forward to liquidity support from the Government through relaxing the fundraising norms and providing alternate investment funds such as the SWAMIH investment fund to facilitate stressed and stalled projects.
Considering the growing demand for affordable housing, there should be a synchronization of state affordable housing policies with central policies to increase compliance in the procedures. We would request the Government to provide additional funds to incentivize affordable housing projects. Furthermore, this segment should be capped to Rs. 90 lakhs in metro cities and 75 Lakhs in mini-metros to boost home buyer sentiments. Additionally, the individual tax brackets that currently provides home loan benefits up to Rs. 1.5 Lakh for principal payment and Rs. 2 Lakh for interest payment, it should be increased up to 5 lakhs each that will encourage home buyers to pay their loans faster. The 20% deviation from the circle rates announced by the FM last year until June 2021 for homes costing up to Rs. 2 crores, should not be time-bound and needs to be extended for all real estate asset classes. With the pandemic situation for the entire year, we believe that the Income Tax Holiday should be extended to March 2022 as it will encourage developers to build more affordable projects. Along with this, the 1% GST for Affordable housing needs to be prolonged until Dec 2023 and the stamp duty should also be exempted.
Considering that the developers have leapfrogged into the adoption of advance technologies for construction and delivery the government should work in tandem to provide a sturdy housing micro-finance system, single-window clearance for approvals, ease of land availability and more allocation of funds to push the affordable housing segment.
There is a lot that can be done by the government and we are hoping that we will get to witness this in the budget this year. The recent talks about easing the FDI rules should be implemented, long term capital gains should decrease from 20% to 10%, input goods GST should be capped at 12% as cement which is essential for real estate is at 28% and other essential materials like wires, tiles, steel etc. are at 18%, the second home levy should be given on notional income and we are also hoping to see a revival of the NBFC and banking sector to ease the prevailing liquidity issue.”
Vikas Chaturvedi
CEO, Xanadu Realty
"Real estate in India is on a path to recovery since the initial wave of pandemic-induced lockdowns, thanks to short-term measures such as the reduction in repo rate by the RBI and the subsequent decrease in home loan interest rates. However, to ensure that the sector continues to register strong growth in the long run, the government must make certain policy interventions to revitalise market demand and support players operating in the space. Reduction in GST on construction materials will help bring down costs further. Extension of GST reduction benefits to ancillary industries will automatically lead to support to the Real Estate industry. From a buyer's point of view, income tax relief such as increasing the deduction on Principal repayment under 80C for home loans will prove beneficial to the sector. Measures such as relaxing stamp duty on property purchase and reducing the income tax on owning a second home will also boost consumption. Furthermore, the industry could use establishing more funds for the developers to initiate new large-scale projects for creation of residential townships and business parks, like the SWAMIH Fund is for the stalled affordable housing and brown-field projects. Implementing these measures will boost confidence amongst both consumers and real estate developers, enabling the sector to build on its robust FY 2020-21 Q3 performance and accelerate its recovery, which is extremely crucial to the economy where Real Estate can be a nearly 7% contributor to the GDP."
Published on:
28 January 2021
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