High in Low-Priced Housing, Low in Real Sectors Expectations

The budget proposals presented by Pranab Mukherjee in Parliament on Friday Feb-26 has been received with mixed reactions by the Real Estate players. Whereas, FM has extended the much needed stimulus to the prospective buyers of low-price houses by extending the one percent interest subvention (subsidy) and earmarked Rs. 700 crore for it. Its beneficiaries include those who go in for putting their hands on housesremain Rs. 20 lakh or below.

Though, the proposals have spelt the interim relief of one more year from four to five years allowing the builders to complete the pending projects and can continue to claim deduction on their profits. However, the budget fell short of Real Sector’s expectations on opening up the sector to foreign direct investment (FDI). Also, the initiation of Real Estate Investment Trust (REITS) and Real Estate Mutual Funds (REMFs) have been kept on oblivion. Have these two steps been taken in right unrest, Real Sectors financial feed back would have been met easiear.

The sincere attempt of the FM to boost the real sector as a vehicle to provide the pace to economic growth and save it from recessionary phase the global economy find itself in deep crisis, Mukerjee has earmarked some major concessions to Realtors for their projects of housing for the poor strata of society. As the demands of houses in Indian market still out-strips the supply, the sector may fuel greater in economic upward mobility. The one percent interest subsidy available to the purchasers of the house will go a long way in promoting the real sector.

Moreever, FM penchant to carry forward the “Aam Aadmi Agenda” he has announced the sustenance of largesse to rural housing projects. Under this project the cost of per unit Rs. 45,000 in plain areas and Rs. 48,000 foe hilly area under Indira Awas Yojana would help the rural poor to be benefited for owning a house. Rs.1,000 crore earmarked for the project would help in mitigating the housing shortage of the rural people.

Mention may be made for the Rajiv Awas Yojana with a financial feed back of Rs. 1270 crore. If the state designs frame work for assigning property rights to slum dwellers, it can take advantage under the scheme. Under the tage of conditions attached with the project, on the joint public private partnership is eligible under the scheme. The main focus of the project is on realizing a slum- free India. How far the project would accure desired results is wrapped up in the womb of future. The menace of slums ever escalating urban centers, if not addressed to immediately, it would prove a major fatal to our peaceful living and thwart the further economic growth.

Developers would have expressed their happiness and showered kudos on Mr. Mukerjee for his decision to roll-back, though partially, the excise duly on cement and cement products which would help to minimize to some extent the in-put coasts on houses.

The Real Sector would ever continue to demands some major concessions, such as status of infrastructure to the sector and some more tax exemption under 80 IB. Actually, providing some financial benefits to the Real Sector, would help it to create more job opportunities resulting into youth to join their projects. Ultimately, a little stimulus to Real Sector which experienced a worst kind of phase during 2009, following demands of houses plumed to the lowest ebb, can recover fully from the economic meltdown and may prove to be a big engine for GDP growth in India.

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