The real estate sector is one of the key drivers of India’s economic growth, contributing about 7% to the GDP and employing over 50 million people. However, the sector has been facing several challenges in the past few years, such as liquidity crunch, regulatory hurdles, high input costs, low demand, and the impact of the Covid-19 pandemic. The upcoming budget, therefore, is a crucial opportunity for the government to address the issues and provide a much-needed stimulus to the sector.
The real estate industry has some specific expectations from the budget, which can help revive the sector and boost the overall economy. Some of these are:
-Industry status: The real estate sector has been demanding industry status for a long time, as it would enable easier access to institutional credit, lower interest rates, and tax benefits. The industry status would also help streamline the approval processes and reduce the project delays and cost overruns.
-Tax incentives: The real estate sector seeks more tax incentives for both developers and homebuyers, such as extension of the tax holiday for affordable housing projects, increase in the deduction limit for interest on home loans, reduction in the GST rates, and rationalization of the stamp duty and registration charges. These measures would enhance the affordability and attractiveness of the real estate sector and spur the demand and supply.
-Infrastructure development: The real estate sector also expects increased budget allocation for infrastructure development, especially in the urban areas. The government should focus on improving the connectivity, mobility, and livability of the cities, by investing in roads, highways, metro, airports, smart cities, and urban renewal projects. This would not only improve the quality of life of the citizens, but also create new opportunities for the real estate sector.
-Affordable housing: The government should continue its focus on the affordable housing segment, which has a huge potential and demand in the country. The government should extend the benefits of the Pradhan MantriAwasYojana (PMAY), such as subsidy on interest rates, tax exemption, and extra carpet area, to more beneficiaries and regions. The government should also launch a new scheme for the middle class, who are currently living in rented premises or substandard conditions, to enable them to own their own houses.
-REITs and InvITs: The real estate sector also hopes for more support and incentives for the Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs), which are emerging as attractive vehicles for raising funds and unlocking value in the sector. The government should ease the regulatory norms, tax implications, and listing requirements for these instruments, and encourage more participation from domestic and foreign investors.
In conclusion, the real estate sector needs an urgent attention from the government in the budget, as it can play a vital role in the recovery and growth of the Indian economy. The government should adopt a holistic and long-term approach, and introduce measures that can boost the confidence, liquidity, and demand in the sector. This would not only benefit the developers and homebuyers, but also the ancillary industries, such as cement, steel, and construction, and create more employment and income opportunities for the people.
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