Raising the FII investment cap on infra bonds is the best

Written by fe Bureau | Updated: Mar 1 2011, 07:21am hrs
PRADEEP JAIN,Chairman, Parsvnath Developers

I thank the finance minister for giving due importance to the second largest employment generating sector of the Indian economythe real estate sector. For the real estate and infrastructure sectors, there are at least six major influencers.

The hike in the priority home loan limit to R25 lakh from R20 lakh will help the lower income group of buyers who plan to buy a home through bank loans. In last years Budget it was directed that every bank has to maintain 20% of its loans to this priority section, this is definitely a boost for the sector as it will increase demand. Liberalising the existing scheme of interest subvention of 1% on housing loans by extending it to housing loans upto R15 lakh where the cost of the house does not exceed R25 lakh is definitely a giant leap as it will boost the demand for affordable housing.

The allocation of R58,000 crore to Bharat Nirman projects and the proposal to set up a mortgage risk guarantee fund for rural housing is a very good move towards rural development. As the project also includes development of rural housing, this allocation is going to help the developers in setting up quality housing projects in rural parts of India.The creation of an infrastructure debt fund will certainly help us in securing regular flow of funds for our ongoing and new projects. The plan to raise the investment limit for foreign institutional investors (FII) in corporate bonds raised by the infrastructure sector up to $25 billion is the most important step taken by the finance minister in this Budget. This will solve the funding problem of the entire sector up to a great extent.

As the government has proposed a cut in the excise duty on cement and steel, it will further help real estate developers in cutting input costs.