Budget 2019 India: Over the last few years, the Indian realty sector has undergone a huge transformation. From being an un-organized, financially stressed sector to a much-organized, transparent and buyers-friendly one, today the implementation of stern policies and reforms by the government has revolutionized the sector like never before. These reforms helped instil trust and confidence amongst home buyers and saw an increase in the competitiveness and maturity of the real estate market by ushering in greater transparency and good Corporate Governance.
With real estate being one of the major contributors towards Indian GDP growth, it acts as an important growth driver for the Indian economy. In order to strengthen it further, the government shall announce encouraging moves as well as infrastructural developments that can attract foreign investments into the sector and help in huge employment generation. The chocking liquidity is perhaps one of the major reasons that are hindering a smooth and steady growth for this sector.
Here, the Government can announce an increase in the limit of financial funding by banks and NBFCs. This will help in vitalizing the sector to a great extent. Reforms such as RERA, GST, and schemes such as ‘housing for all’ have added the much-needed momentum to the market. It has not only improved the buyer’s confidence but has also added remarkable numbers.
Since the real estate industry had its own share of turbulence in the form of the NBFC crisis and the consequent liquidity crunch faced by some of the marginal developers last year, one of the most critical steps that this budget can take is to increase the finance limits for NBFCs. The definition of affordable housing has been now enlarged with increase in carpet area stipulations to 60 sq mts in metros and 90 sq mts in non-metros, alongside the GST rate on affordable housing projects has also been slashed to 1% with no input tax credit (ITC).
This elimination of input tax credit is a good impetus for the industry and a clear benefit for home buyers of under-construction properties, driving sales under this category will witness improved traction. The Government’s focus on infrastructure development has been motivating for the industry, as the real estate industry depends on faster infrastructure and road building, putting more emphasis on this will help improve the sector.
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The major expectation from the union budget is that it must fulfil the age-old demand for industry status that will help developers in getting loans, furthering the cause of constructing more residential/commercial units. Recognising the contribution of the real estate sector, in terms of economic growth and providing employment, ensuring further transformational changes for the overall good governance of the country needs to be the mandate of the hour. As the mid-income housing draws focus and attention to the national agenda of Housing for All by 2022, the objective being to gear up the economy further; we are confident that the re-elected Government will strive towards creating a favourable environment for business, commerce and industry.