Budget has roadmap to propel economic growth

The incentives and reforms announced in  sectors that majorly include taxation and urban-rural development will impact the home loan businesses.

Kapil Wadhawan        Last Updated: February 28, 2015  | 22:01 IST

Kapil Wadhawan, Chairman and MD, DHFL
The government through the Union Budget has laid down a prudent roadmap that will propel economic growth. The focus on fiscal consolidation and commitment to stabilise tax policies (rationalisation of direct and indirect taxes) will boost investor confidence as India emerges as a key investment destination.

The setting up of a Public Debt Management Agency (PDMA) will bring both India's external borrowings and domestic debt under one roof. Allowing foreign investments in the Alternate Investment Funds and doing away with the distinction between different foreign investments will open up various avenues of funding.

The Capital Account Controls policy that will clearly control capital flows as equity will be exercised by the government, in consultation with the RBI.

To encourage investments in realty and infrastructure sectors, the Finance Minister has rationalised capital gain tax regime for the sponsors of newly-created business structures, REITs and INViTs, which will help channelize both domestic and overseas investments into real estate and infrastructure projects in the country.

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This would provide much-needed relief to the infrastructure sector, due to the liquidity crunch and delay in completion of existing projects.

The housing-for-all initiative has been emphasised by the Finance Minister in the Budget. The government is committed to endeavour to have housing for all by 2022 by extending additional tax incentives on home loans to encourage people to own a home of their own. The Finance Minister announced that the government will be creating six crore units of rural & urban housing.

An additional Rs 4,000 crore was earmarked for NHB to increase the flow of cheaper credit for affordable housing to the urban/poor/EWS/LIG segment.

There is a vast section of the Indian population that does not have a house to live in. The ministry has shown a path of hope wherein they aim to boost urban and rural housing and infrastructure development. As the focus lies on affordable housing, there is enough room for further possibilities of incentives in the home loan sector.

To further add impetus, the deduction limit on account of interest on loan in respect of self-occupied house property was increased from 1.5 lakh to 2 lakh.

The Union Budget has also announced savings on tax exemption. The corporate sector in the country would be happy with the announcement of reduced corporate tax to 25 per cent over the next four years.

And for individuals, tax exemption of up to Rs 4.4 lakh is a positive that will enhance credit eligibility, thus encouraging home buying decisions. The tax exemption is a positive move for housing finance companies as well.

The incentives and reforms announced in other sectors that majorly include taxation and urban-rural development will impact the home loan businesses.

The fiscal target of 3 per cent as announced by the Finance Minister is practical while at the same time it balances the current growth needs of the economy. Making provisions to make India a tax-friendly investor destination will further add to the positive sentiment prevalent today in the country.

Overall, the Budget has reflected the vision of the current government and will lead the country on an upward growth trajectory and create inclusive prosperity.

(The author is Chairman and MD, DHFL)

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