By Ravindra Sudhalkar
Union Budget 2019 India: The first budget of the Modi 2.0 government is expected to be a keenly watched event. While the Modi 1.0 government had undertaken strong reform initiatives in its previous term, the economic reset in terms of transforming the real estate market and providing housing to urban and rural poor will need giant strides. That said, the most critical issue required to be addressed by the government in the upcoming budget will be easing the liquidity crunch in the sector. One step in this direction would be to allow NHB to refinance all housing finance companies. Currently, various HFCs do not get refinance as there are numerous criteria to be met for eligibility. Refinance can be extended to all HFCs under the condition that the funds provided are utilized solely for affordable housing.
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Second, the entire real estate and construction sector must be granted industry/infrastructure status to facilitate low-interest credit. Infrastructure status has been granted to affordable housing to ensure lower borrowing rates. But the whole real estate & construction sector is reeling with such problems that would require a booster shot.
Third, we must take this moment to acknowledge that the government in its interim budget had proposed various direct and indirect benefits for buyers by easing out taxation policies. GST rates were also reduced by doing away with the input tax credit. However, further steps can be considered to reduce the tax burden. This list includes bringing stamp duty within the purview of GST to reduce the tax burden on the buyers. Further, rationalizing or doing away with registration charges, as well as stamp duties for affordable housing units should be considered.
Last, there is also an urgent need to curtail red-tape by allowing single-window clearances. Single window clearance is essential to streamline and fast track the project approval process such as clearing title of land and timely clearances and permissions from the government. This would be specifically beneficial for the affordable housing segment as it would help limit the gestation period and the associated costs.
The author is ED & CEO, Reliance Home Finance. The views expressed are the author’s own.