Finance Minister M Nirmala Sitharaman
Finance Minister M Nirmala Sitharaman
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Mumbai: Across the economy, industries have expectations from the country’s budget, usually most end up feeling ‘it could have been better’. This time around, there’s a surprise: From the perspective of ‘direction’, the first budget of the decade actually looks like a good one. The Finance Minister has covered almost all major sections of the economy in her proposals, which is good. Having said this, I would also add that the amount allocated for most of the proposals seems to be rather inadequate, this is an area of concern.

Real estate had high expectations from the Budget - obviously, there is a feeling of the Budget being good, but real estate having been let down. Rental housing, which the industry had expected to be ‘in the list’, was missing. When the Budget speech is analysed, it seems to be largely about medium and long term solutions; while for the economy in general and real estate in particular, the immediate need was for ‘quick fixes’, which would enable bringing real estate back towards sustainable growth.

While the Hon’ble Finance Minister in her Budget proposals did have positives for affordable housing as also data centres, the feeling one gets is that she could have given more options to real estate, which would have enabled it play its part in not just creation of property, but also boosting GDP growth and providing jobs – as also in dealing with the economic slowdown.

For real estate, the wish list began with some rather old issues – and even a few of the several long- standing wishes being addressed would have been welcomed. Topping the list is granting of the industry status, single-window, time bound permissions and clearances, among others. More recent topics included a one-time roll-over. Also, tax on unsold inventory as also tax levied on individual investor for notional income on second or third home. Similarly, offset of loan interest from income. Then, positive moves as regards developer subvention as also RERA to be declared as a single body for customer grievances. These are issues which real estate needs if it is to successfully meet the challenges it is facing; even the aspects of liquidity crisis and delayed/ stalled projects were not mentioned in the Budget proposals.

Putting more money in the hand of the tax payer by reducing the taxation rate is obviously positive; and one expects the impact to be visible soon. The attempt to create disposable surplus in hands of the citizen by restructuring of income taxation rates comes with a rider: the relief for income taxpayers will be optional; the Fin Min did not specifically mention anything about tax rebates in the new structure. So, we wait for the fine print on this.

Among the positives, we saw infrastructure development leading the list when it comes to the government’s efforts at fueling economic growth. The focus on infrastructure development will have a positive, multiplier effect on the economy as also on real estate. Similarly, the shifting of Dividend Distribution Tax (DDT) to individuals instead of companies will result in corporates diversifying or expanding their business. This will also make India attractive for investors, possibly boosting investments. This should translate into good news for commercial real estate.

The proposal to set up an international bullion exchange at IFSC in GIFT City, which will lead to better price discovery of gold, create more jobs and enhance India’s position in such market was a welcome announcement, as was the shifting of Dividend Distribution Tax (DDT) to individuals instead of companies. This will result in corporates diversifying or expanding their business; should translate into good news for commercial real estate. It will also make India attractive for investors, possibly boosting investments.”

(Dr. Niranjan Hiranandani President (Nation), NAREDCO; President ASSOCHAM and MD, Hiranandani Group)

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