The Union Budget 2020 presented by Hon’ble Finance Minister, Smt. Nirmala Sitaraman has brought mixed reviews and reactions from different sectors and industries. When it comes to the real estate market in India, which is currently in the midst of challenging times, there have been noticeable macro shifts that have challenged the realty sector (RERA regulation, Demonetization). Besides, the demand-supply gap has always been an issue with most of the key real-estate markets such as Mumbai, Bengaluru, Gurugram and other tier 1 and tier 2 cities. However, the big funding challenge came in 2018 after the IL&FS fiasco.
In this budget, the Government retain its focus on affordable housing but did not announce specific measures to revive demand. The announcements made are unlikely to be enough for revitalizing the real estate market.
There are precisely two announcements made by the Finance Minister during her budget speech:
1. Tax holidays on profits earned by developers on affordable housing projects to be approved by 31st March 2020 and proposed to be extended by one more year for availing the benefit.
2. For the individuals – Ms Sitharaman proposed to extend the additional deduction of ₹1,50,000 for interest paid on home loans taken for buying affordable homes by one more year. In her last budget, the minister had increased the interest deduction to ₹3,50,000 for houses priced below ₹45,00,000 as against ₹2,00,000 earlier for loans, until 31 March 2020.
In my view, the budget 2020 is silent on our key demands for a revival of the sector. It’s only about affordable housing however many other things which could help to trigger the sector are not being addressed. Like, a little attention is paid towards better rental housing policy or something around unsold luxury housing stock or maybe a key relief in the form of rollover of loans?
Previous year we did see a ray of hope from the government like 25,000 Cr. alternate investment fund for the last-mile funding of stalled housing projects.
Though the tone of budget 2020 is in a positive direction but it failed to announce much-needed stimulus to restart the journey towards dream $5-trillion economy.
Our sector is labour-intensive and needs liquidity, tax reforms and few radical changes in policies that are completely ignored. This year is going to be a very vital year for the positive growth of the industry and maybe we can hope for the best from Budget 2020.
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