Union Budget 2021 India: For a major part of the year, the home construction sector reeled under the impact of the pandemic and the problems of labour shortage as well as supply chain issues are still being overcome.
By Sanchit Gaurav,
Indian Union Budget 2021-22: There were a lot of expectations and market exuberance a year ago. However, the COVID-19 pandemic has drastically changed the landscape of construction in India. For a major part of the year, the home construction sector reeled under the impact of the pandemic and the problems of labour shortage as well as supply chain issues are still being overcome. Given the current scenario, the needs of the home construction industry have changed to certain extent compared to 2020. Industry operations are gradually being resumed, and as the national economy gets back on track, there is a pressing need for the home construction and maintenance industry to contribute to the development of the country. A key trend that has emerged in recent times and is likely to gain stronger momentum in the year ahead is the surge in demand for home renovation, maintenance and interior services sector. The work-from-home shift which was envisaged as a temporary arrangement to keep the operations running during the lockdown is now increasingly becoming a long-term shift. The pandemic fear has ebbed, but, the risks continue and social distancing as well as other such measures means that people will continue working remotely. This has in turn made home owners are opting for revamping their home interiors to accommodate a proper home office. Wherever space is available, people are extending their homes or getting them redesigned to meet the need of home office, gym at home and study area for children etc. A lot of people have opted for creating indoor gardens and walking spaces after public parks became unsafe due to the pandemic especially for the elderly and young children. These services are now going to contribute a greater share of the overall home construction and development revenue for the companies. Thus, reducing the tax structure and liabilities on such services and offering incentives/tax benefits to companies that provide financial input to their employees to create home offices can be beneficial for the sector’s growth.
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Technology is a key enabler of development and in the wake of the pandemic, we are seeing a major transformation in the way processes are run and managed in the construction sector. The government has envisaged digitization and ICT driven infrastructure solutions through a number of initiatives. What augurs well for the home construction sector in 2021 is that there is a lot of pent up demand and plethora of projects that got delayed or put on hold during the pandemic outbreak. The potential is so enormous that it is expected that the Indian construction sector will be the third largest in the world by 2025. A major benefit that the Indian market can avail is the growing international trend of moving the supply chains away from China which is currently the leading force in construction materials domain. In this direction, it is hoped that the government will take steps to unveil policies and initiatives which would benefit the Indian construction sector and the consumers.
The pandemic’s impact is likely to be felt in terms of pricing of construction projects as the availability of materials has become more challenging due to the restrictions and we hope the government to take steps to ease the situation. We also expect the government to continue with steps such as providing interest subsidy, reducing GST rates, etc. in the upcoming budget.
In the absence of governmental support, the pandemic impact could undo the gains made by the Indian construction industry in the recent years in terms of the market size and also as a source of employment. However, with the government regularly revealing plans to boost growth in the infrastructure and construction sectors, we are confident of seeing the sector receiving a boost in the budget to be announced. Another major challenge that the real estate sector is facing that it is still not accorded an industry status. By formalizing it as an industry, the government can help in creation of a high impact construction ecosystem comprising of suppliers, vendors and developers or home construction companies.
These are some of the key expectations from the upcoming Union Budget, and we anticipate the government’s support with immediate effect. The economy needs every bit of support and enabling the Indian construction sector will have long-term benefits and can also bring down the fiscal deficit.
(The author is Founder and CEO, Housejoy. Views are personal and do not reflect the official position or policy of Financial Express Online.)