Union Budget 2021 India: The realty industry needs additional measures to spur consumption.
Indian Union Budget 2021-22: With the Union Budget 2021 round the corner, there are expectations galore that the government will do its best to help revive the sectors and industries which have been hit hard by the Covid-19 pandemic. No wonder, real estate is also betting big on this year’s budget for revival of fortunes.
According to industry experts, apart from making necessary interventions through fiscal support, liquidity infusion as well as reform-driven investments in the initial leg of relief measures, both the government and the RBI have in recent months rolled out other critical measures like loan moratorium, one-time restructuring of corporate and personal loans, among others to help the sector.
“These measures and concessions have definitely helped in enhancing consumer sentiment, thus boosting consumption, resulting in increased traction in the real estate sector. However, while we have seen a continuance of recovery in the fourth quarter which started in Q3 2020, the actual market transaction volumes continue to be lower compared to the pre-Covid levels,” says Ramesh Nair, CEO & Country Head (India), JLL.
Therefore, in a bid to spur consumption, additional measures such as according ‘Industry status’ to the realty sector, making separate provision for deduction of ‘principal repayment’ on home loans, allowing 100% FDI in completed residential real estate projects through the automatic route, etc, are the needed.
Uddhav Poddar, MD, Bhumika Group, says, “We expect the government to allow for the availing of Input Tax Credit of GST charged on construction of rented property and utilize the same towards the payment of GST on the lease rentals. We also want the government to focus on infrastructure development of tier 2 and 3 cities and make these cities ready for the next round of urbanisation. We also expect the long-awaited industry status to the real estate sector as after agriculture, construction is the biggest job generator, and employs the largest number of workers. We expect Stamp Duty to be subsumed into GST to incentivize home buyers and the overall property market sentiments. Lastly, the government must intervene and resolve the NBFC and banking crisis, and make credit available for the real estate sector and specifically construction finance.”
Ashish Bhutani, MD, Bhutani Group, says, “We expect the government to come out with steps to address the liquidity issue, and fund allocation for infrastructure in the metro peripheral areas. The help would entail measures such as bringing the real estate sector in the banks’ priority list and extending industry status to the sector. We hope that the FM will make this Budget as one-of-its-kind Budget that can bring about the intended economic growth.”
Increasing the disposable income of homebuyers and setting up the single window clearance system are also on the wish list of developers.
Abhishek Bansal, Executive Director, Pacific Group of Malls, says, “The FM will be under pressure to address all aspects of life to ensure healthy economic growth. We hope that the Budget will help people to have more buying power by increasing their disposable income. The retail segment is looking at measures that could ease out the tax burden on people. Retail activity is one of the crucial aspects of the economy, and the segment would be eagerly waiting to hear about sops that could help it overcome the challenging times of the pandemic.”
Manoj Gaur, CMD, Gaurs Group, says, “After a challenging time in 2020, the sector has high hopes from the upcoming Budget. I feel it is high time that the government to give industry status to the real estate sector, which will help revive the sector. We understand that the FM has to make hard decisions to ensure that the economy takes the recovery route, so it is crucial to pay attention to real estate. The most important aspect is the timely approval of projects, which could be achieved through single window clearance that will help the sector deliver projects within the stipulated time.”
Developers are also looking for more fund for the sector under SWAMIH so that stalled projects could be completed on a priority basis.
Moreover, “the time limit of PMAY and the amount of subsidy should be increased so that the first time householders get time to buy first property and save more. Input tax credit (ITC) should be brought back in real estate to control cost. Under single window system, the project should get all approvals within the stipulated time so that the project cost can be reduced. Also, just as the builders do not increase the cost under RERA, the prices of steel and cement should be regulated nationally so that the construction cost is not affected,” says Subodh Goyal, Secretary, CREDAI Western UP.
Suresh Garg, CMD, Nirala World, says, “Section 80-IB of the Housing for All should be reintroduced, in which the construction of a flat up to 60 meters was completely exempted from income tax. This was a very good incentive for affordable housing. To increase the buying power of home buyers, the government should give full rebate to the home loan interest up to Rs 50 lakh. Input tax credit (ITC) in real estate has stopped but all other sectors are taking advantage. Therefore, real estate should get ITC to make the property affordable for home buyers.”
Enhancing spending on infrastructure projects both by government and PE funds is also vital.
“India is committed to spending $1.4 trillion on infrastructure from 2019-23 to have sustainable development of the country. In line with this vision and poor economic growth, it is extremely important that the government should enhance its spending on various infrastructure projects in transport, freight, railways, energy, etc. Also, PE funds should be encouraged to invest in infrastructure projects with better investor-friendly policies by the government,” says Prasoon Shrivastava, Founder & CEO, Zepth.