Budget 2020: FM Sitharaman fails to make homebuyers happy

Budget 2020: FM Sitharaman fails to make homebuyers happy

Rajan Bandelkar, President, NAREDCO West and Director of Raunak Group commented that that the real estate sector had pinned high hopes

Nirmala Sitharaman, Finance Minister Nirmala Sitharaman, Finance Minister

The Indian real estate sector expected the moon. It got little. The Budget proposals included announcements around affordable housing but that wasn't enough to make either realtors or homebuyers happy.

One positive was an extension of Rs 1.5 lakh tax benefit on interest paid.

"For realisation of the goal of 'Housing for All' and affordable housing, in the last budget, I had announced an additional deduction of up to Rs 150,000 for interest paid on loans taken for purchase of an affordable house," Minster of Finance Nirmala Sitharaman said. "The deduction was allowed on housing loans sanctioned on or before 31 March, 2020. In order to ensure that more persons avail this benefit and to further incentivise affordable housing, I propose to extend the date of loan sanction for availing this additional deduction by one more year," she noted.

FULL COVERAGE: Union Budget 2020

A tax holiday is also provided on profits earned by developers of affordable housing projects approved by March 2020. "In order to promote affordable housing projects, I propose to extend the date of approval of affordable housing projects for availing this tax holiday by one more year," the Minister said. That's all that the struggling residential segment of real estate got.

Rajan Bandelkar, President, NAREDCO West and Director of Raunak Group commented that that the real estate sector had pinned high hopes. "The sector's key demands such as allowing restructuring of loans, extension of subvention scheme, raising the limit of Rs 45 Lakh for affordable housing, scrapping of capital gains on sale of properties, extending the timeline of capital gains, are not met with. This core sector drives demand in ancillary sectors and creates employment opportunities, too. Not addressing the key issues will worsen the future and make the going unviable. The government can still take steps to bring the sector back on the track before it is too late," he said.

Dr. Niranjan Hiranandani, MD of Hiranandani Group, commented that direction wise, this is a good Budget. "The FM has covered almost all major sections of the economy in her proposals. Having said that, I would say the amount allocated for proposals seems grossly inadequate. This is a concern," he noted. "Secondly, the proposals seem structured for medium to long term results. We do not see anything which would have an immediate impact, would kick-start the economy. Thirdly, the liquidity issue, which is a major challenge for the economy in general and real estate in particular, does not see any major relief," he added.

Commercial real estate segments, Hiranandani reckoned, could witness a boost because of announcements around data centres, hospitals and warehousing. However, these take time to fructify.

Sitharaman said that the government would bring out a policy that enables the private sector to build data centre parks throughout the country. She also proposed creating warehousing, in line with Warehouse Development and Regulatory Authority (WDRA) norms. More hospitals would eventually come up in smaller towns.

"Presently, under PM Jan Arogya Yojana (PMJAY), there are more than 20,000 empanelled hospitals. We need more in Tier-2 and Tier-3 cities for poorer people under this scheme," the minister said. "It is proposed to set up Viability Gap funding window for setting up hospitals in the PPP mode. In the first phase, Aspirational Districts will be covered, where presently there are no Ayushman empanelled hospitals. This would also provide large scale employment opportunities to youth. Proceeds from taxes on medical devices would be used to support this vital health infrastructure," she added.

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