Sunday, March 3, 2013

Budget - Real Estate.

“The budget may have failed to live up to the expectations but one can’t shy away from the fact that this is a responsible budget. At this point, it is difficult to gauge whether this union budget would succeed in propelling the growth engine of the Indian economy to newer heights. However, couple of reforms announced is a welcome move. Prima facie it looks positive for the real estate sector at large.

Infrastructure has received a major thrust, especially transport and energy segment. The steps to increase funding for roads, highways and other infrastructure will surely add more terrain on the Indian realty map taking tier 2 and tier 3 cities on new growth trajectory.

Opening up of the ‘External Commercial Borrowing’ (ECB) window for affordable housing will ensure better capital availability for developers of low-cost housing and boost the overall sector which is characterized by low margins. The service tax exemption in low cost group housing will help the sector. Affordable housing segment has received the push in this budget yet lot needs to be done.

The government has encouraged the home buyers by giving additional deduction of interest of up to Rs 1 lakh in 2013-14 to the first time home buyers taking housing loan of up to Rs 25 lakh. There’s a scope of improvement in the interest subsidy to boost the housing sector. 

The imposition of 1% TDS on property worth more than Rs. 50 lakh will not only control speculation, but will also bring about improved reporting and accountability in high-value housing transactions. The government’s move of injecting more money in the market by providing  stimulus of Rs. 6000 crore and Rs. 2000 crore to rural housing and urban housing respectively, will further support the growth of the sector by increasing the liquidity.”


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