FM gives due importance to realty sector: Pradeep Jain

Pradeep Jain, Chairman, Parsvnath Developers Limited spoke about his impression of the Budget.

The Union Budget 2011-12 has given major attention to the infrastructure sector and to real estate sector and for the same I thank the finance minister for giving due importance to the second largest employment generating sector of Indian economy: real estate sector. The market has welcomed the reduction of fiscal deficit target. For the real estate sector & infra sector, there are at least six major factors:

 1) Priority home loan limit raised to Rs 25 lakh
This will certainly help the Lower Income Group of buyers who plan to buy a home through bank loans. As in last budget it was directed that every bank has to maintain 20% of its loans to this priority section, this is definitely a boost for the sector as it will increase demand.

2) Interest subvention of 1% on housing loans raised to Rs 15 lakh
Interest subvention is basically an interest subsidy given by the government on loans. Here, a subsidy of 1% on loan upto Rs 15 lakh on a housing costing not more than Rs 25 lakh is definitely a giant leap so as to boost the demand for affordable housing.

3) Allocation of Rs 58,000 cr to Bharat Nirman projects
This is a very good move by the union government towards rural development of our country. As the project also includes development of rural housing, this allocation is going to help the developers in developing quality housing projects in rural parts of India.

4) Creation of infra debt fund to boost infra funding
It has become a very tough task to get loan from banks for the infrastructure projects. Also, after the latest scams, banks are now reluctant to lend to this sector. This infrastructure debt fund will certainly ease the entire procedure and will help us in securing regular inflow of fund for our ongoing and new projects. 

5) Plan to allow FII limit in infra bonds up to $25 bn
For the entire infrastructure sector, I think this is the most important step taken by the Hon’ble finance minister. This will solve the funding problem of the entire sector up to a great extent.

6) As the government has also proposed a cut in the excise duty on cement and steel, it will further help the developers in cutting input cost of the construction. However, much more was expected to accelerate supply of affordable housing stocks. Also, government should not deflect from declared policy of tax exemptions, which gives wrong signal to investors in such projects.

There is nothing on 80 IA and 80IB of IT Act, which was expected. Also 30% to 36% of total value of a flat comprise of tax. We expected the government to announce special schemes for affordable housing giving relief. We also expected relief and clarity through amendments for 80 IB (Housing) and 80 IA (IT Park). Supporting middle class through increasing deduction on home loan interest to Rs 2.5 lakh was expected but this also did not come.

The government may, therefore, review the steps on the above so that benefits on SEZs, 80 IA, 80IB, increase in deduction of home loan interest to Rs 2.5 lakh etc., are considered.

At the end this can be said that the Union Budget is more growth oriented and will definitely help the Indian economy record a double digit growth.