Finance minister Yashwant Sinha announced a string of sops for the housing sector ranging from higher tax benefits to injection of liquidity by earmarking higher percentage of banks' incremental deposits for housing loans. Banks and NBFCs were quick to respond to the budget by slashing interest rates on housing finance and lauching new mortgage products.

If the budget fails to get through and the Government opts for a vote on account, the sentiment is bound to suffer even though some of the industry watchers feel the "reforms" in housing sector are "irreversible" irrespective of which party is running the show.

Eminent housing expert Anil Harish said:"Since the budget was well received by the public, I think taht any new Government that comes to power (if at all) will try to retain the essence of the budget. The general mood is still upbeat and nobody has really thought of the eventuality of the budget not being passed. Even the banks have started releasing three per cent of their incremental deposits to the housing sector."

HDFC regional manager Suresh Menon told The Financial Express: "The scrips of housing finance companies initially rose as an immediate reaction to the budget. However, this had nothing to do with the effect the sops would have on the company. The scrips have now come back to realistic levels. Anyway, the budget proposals would not have a great impact on the overrall loan disbursals as property purchases are not impulsive decisions."

According to Maharashtra Housing Industry president and Hiranandani Contruction managing director Niranjan Hiranandani, "Anxiety is rising and the housing industry and the real estate sectorwill be psychologically depressed if the budget is not passed."

The greatest disappointed will be related to the plans to amend the foreclosure laws. "After waiting for 12 years, the Government finally had the guts to take a decision in this regard. Nobody can predict on the fate of the Urban Land Ceiling Act," Hiranandani said.

The general feeling is that the tax-related incentives may be cancelled and consequjently individual customers will not be in a hurry to avail the loans to get an annual exemption up to a limit of Rs 75,000. The loan disbursals may be effected to some degree, sources said.

Corporates, which waited to avail of the 40 per cent depreciation on the profits, may now postpone plans to invest in employees quarters. The comapanies my revert back to 20 per cent depcretiation.

"Developers, who would have benefited from income tax exemption under Section 801A for all projects where residential premises would measure about 1500 sq ft, would now go slow on the projects," said Harish.

MBalachandran of Goldstar Properties felt that if the budget is not passed the housing industry will be deprived of all the incentives. "The two important issues are the Government's plans to amend the foreclosure laws and the repeal of the Urban Land Ceiling Act. The amendment to the foreclosure laws would have gone a long way in getting adequate funds for the housing sector," he said.