With at least four states heading for elections later in the year, the focus has been on the economically weaker sections
Finance Minister Pranab Mukherjee has not paid much heed to most of the demands of the real estate sector. Instead, he has taken steps to make it easier for the aam aadmi to own a house. While not much has been offered to the mid-market segment, he has kept in mind the weaker sections of the society. This Budget has raised the priority sector home loan limit from Rs 20 lakh to Rs 25 lakh. Also, the interest subvention of one per cent on home loans up to Rs 15 lakh, up from the previous limit of Rs 10 lakh, will come as a relief to the lower income group.
People claiming tax benefits on interest payment up to Rs 1.5 lakh on home loans can breathe easy as this continues. Says Srinivas Acharya, managing director, Sundaram BNP Paribas Home Finance: “One per cent interest subsidy for loans up to Rs 15 lakh/cost Rs 25 lakh (earlier 10 lakh/20 lakh) and the continuation of tax benefit on interest on home loans up to Rs 1.5 lakh are positive moves for the housing finance sector and will fuel growth. The setting up of a mortgage registry to prevent frauds is also a positive move.”
The beneficiaries could be players like Unitech and Ansals, given their plans for budget housing.
While this is good news for the low-income segment, this will do nothing to ease the pain in the metropolitan cities, where real estate prices and, therefore, the demand for affordable housing, is the highest, says Anuj Puri, chairman and country head, Jones Lang LaSalle India.
With at least four states heading for elections later in the year, the focus has been on the economically weaker sections. Also, the proposal to create a Mortgage Risk Guarantee Fund under the Rajiv Awas Yojana will guarantee housing loans taken by economically weaker sections and low income group households and enhance their creditworthiness. Brotin Banerjee, CEO and MD, Tata Housing Development Company, feels the budget is positive.
Brotin Banerjee, CEO and MD, Tata Housing Development Company, says: “The investment-linked deduction to businesses which develop affordable housing under a notified scheme is also a welcome initiative.” However, like others in the industry, he also feels that the finance minister has not considered the real estate sector’s major recommendations, such as grant of infrastructure status, extension of tax exemption/tax rebate under Section 80 IB and facilitating external commercial borrowings. By removing archaic laws and bringing taxation to a reasonable level, the government could have certainly brought more cheer to the real estate industry.
