It is certainly a relief that after years of procrastination, the government has decided to amend the foreclosure laws so that the housing finance companies to lend without fear and create liquidity from the secondary market transactions.

The tax exemption on the income income generated from built-up areas may not translate into actual benefit for the developers as the government has not extended the dates for this incentive. The tax benefit can only be enjoyed up to March 31, 2001. This, I feel, is a limited facility as housing projects require time to come up and sale of real estates only come at the second stage.

The increase in the ceiling limit on housing interest from Rs 30,000 to Rs 75,000 is a step in the right direction although the ceiling should have been much higher.

Thedoubling the deprecition rate to 40 per cent on investments made by corporate employeers will be extremely helpful to tap the latent purchasing capacity of the corproate sector. This essentially means that when the employer buys a house for the employee he will get depreciation of 40 per cent on his cost. The net effect will be that more companies will invest in this direction and more employees will get houses. Amending the foreclosure norms is very important for the lending institutions to get possession from defaulting borrowers more effectively. This will also enable financing to be made easier and will, therefore, allow more funds to flow into the housing sector. The RBI and the NHB should be able to work out amended norms with a definite timeframe.

Once the financial insitutions are confident that they will recover the loans, then it will be easier for them to raise funds from the secodnary market. The finance minister has also promised to provide the basic shelter requirements to all within the next10 years. The government has taken the need of the masses into consideration, which is a good sign.

The net effect of the budget on the housing sector would be that fianances will be cheaper and easier to get.

--As told to Manju AB