Budget 2014-Complete Analysis

Abhay Kumar, CMD, Griha Pravesh Buildteck Pvt Ltd

“The foremost requirement that is a necessity for the real estate sector to actually thrive and be a significant contributor to India’s economic growth is industry recognition. To be officially recognized will sort many of the problems that mire the industry and streamline and organize the activities. There is also a need for a regulatory body that will oversee the activities of the sector. It will enable companies to adhere to principles and disciplines, bring in transparency and consequently build a credibility that will make the sector investment friendly. In the short run, the budget needs to address the concerns of home loans to boost demand and tax sops. We also recommend providing incentives to green building projects to attract more developers to walk on this line. Finally, to reduce the delays in projects we wish that a single window system for all clearances through a regulator or some other body is introduced which is beneficial for both the developers and the buyers”

Nikhil Jain, CEO, Ramprastha Group

“Given the sluggishness in the economy in the last few years, the forthcoming Union budget is very important across industries and all expectations are attached to it. Being a part of the real estate fraternity we expect that the budget will bring in reforms to improve the market sentiments in the form of extending the limit of tax exemption for home loans from the current Rs. 1.5 lakhs to Rs. 5 lakhs. Further it is expected that the government will take steps towards reducing the borrowing cost from the banks and introduce policies benefitting the real estate sector. Besides this we expect the government to take steps towards providing the long awaited infrastructure status to the real estate industry and take action towards amplifying FDI limit in real estate.”

P Sahel , Vice Chairman – Lotus Greens Developers Pvt. Ltd

“Considering the lower growth rate of the economy in the last few years, the forthcoming Union budget is very critical and every industry sector is pinning hopes on it. Being a part of the real estate industry we hope that the new budget will bring in reforms and roll out more friendly policies, some of these could be reforms for allocation of funds to developers at lower rates, incentivising developers who are adapting practises for sustainable developments etc. For an overall boost to the industry, the government should consider increasing the tax exemption limit for interest amount payable on home loans. Also introduction of single window clearance system and steps towards providing the infrastructure status to the industry will further benefit the sector.”

Brotin Banerjee, MD & CEO, Tata Housing

“Tata Housing Development Company views the Union Budget 2014-15 as an opportunity to address pertinent and long prevailing issues in India’s Real Estate sector. Swelling cost of construction, high finance cost, lack of availability of serviced urban lands, absence of single window approval system, slow reforms and dawdling pace of growth in infrastructure significantly curtail the growth of the sector.

Excise duty reduction on cement and steel will lower project costs and expansion of the interest subsidy on loans will boost developers’ interest in this segment. Moreover, tax measures such as increasing the limit of interest deduction on home loans will provide necessary motivation to consumers to increase buying activity and revive demand in the value and affordable segment.

While the new government has announced a clear mandate in terms of ‘housing for all’, and will therefore need to come up with a detailed affordable housing policy. However, to tackle the massive housing requirement of urban India in an effective and speedy manner, the new housing policy should look to suggest some viable methods for making affordable housing possible in public-private partnership (PPP) mode.

The government also needs to look into providing additional incentives such as tax concessions and more income tax relief to buyers of affordable housing units. Developers of affordable housing can also be incentivised in various ways, such as income tax deduction, reducing duties. Government should consider providing specific tax holiday benefits for affordable housing projects like 80IA to provide further impetus to the sector. While the government had taken a commendable step by allowing External Commercial Borrowings (ECB’s) for affordable housing, easing norms for the same will allow for greater access.”

Neeraj Gulati, MD- Assotech Realty Pvt Ltd

“India is going through a phase of urban agglomeration, wherein metropolitan cities are been overcrowded and cluttered due to an unprecedented scale of urbanization. It would be interesting to note that the Real Estate Sector today is no longer just a materialistic piece of existence, but is a piece of investment which resonates a sense of aspiration and security.

To accommodate these masses real estate is must to proliferate in adjoining areas for which it is necessary to agglomerate the untapped domain for development at large. This market has enormous potential and is developing at a rapid space across all verticals in real estate.

With globalization at its peak and with new government at the center clubbed with rapid space development in retail and commerce, real estate is bound to proliferate. Again, with a behemoth growth in urban infrastructure and real estate, the city has also to overcome some stumble blocks in its continuous growth process. The hurdles such as labour shortage, implementation of land acquisition policy, ambiguity pertaining to land title, overlapping of laws and channelization of a streamline process for approvals through a single window to define the steps for adhering to the norms vested with multiple statutory bodies existing. The scope of the interest rate subsidy for loans for affordable housing should be amplified and broadened to include a wider price band of homes to benefit buyers, especially those in the lower income group. The idea to institutionalize the real estate sector and encourage 100% FDI across levels would help in widening the route for accessing fund for development and mobilization which is at a standstill situation.

Thus for a sustainable real estate environ to dwell, it is essential that the government bodies are well structured which would play an important role in building a strong foundation for a sustainable and secure ecosystem. It is only through these positive measures and intent that the Real Estate Sector in India can grow and thus present its total capitalization for the growth towards the national economy as a whole.”

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