LACKADAISICAL TREATMENT TO REALTY SECTOR IN THE BUDGET

The period preceding to the presentation of the Union budget for 2012-13, was marked by unusual enthusiasm and expectations. More so, the realty sector that is reeling under the heat of negative buyer’s sentiments was expected some boosting measures which disappointed the sector including buyer and investors by the Budget offerings. The non-descript and a bland tepid-consideration of the realty by this year’s Budget proposals has further deepened the heat around buyers, investors and realtors.

As a matter of fact, during the last four/five years, the housing and commercial sector have been in the doll-drums as the rising input costs, debts, finance crunch, buyer’s not-so positive sentiments, etc have been pushing the builders to abandon their on-going projects. Not to adopt new projects of residential constructions, the builders were expecting some boosting shots by the Finance minister so that the realty sector could be brought out from the ICU.

It needs no elaboration to mention that the realty sector plays a very significance role in assisting the sagging economy of a country and put it on the rail. The collapse of South Korea economy triggered badly the entire nation’s psychology in 1990s. To ward off economic bad effects, South Korea had allegedly sold its two banks to US. With the money received by Seoul, they invested part of it in the realty sector. Resultantly, with in a very short period South Korea did revive it’s falling economic growth.

Not realizing this aspect, Finance Minister failed to give some tax cuts, making provisions for awarding cheap lands to the builders asking the banks to lower interest rates, etc

Actually, what India, at present, requires is the most significantly employment generation for skilled and non-skilled labors. Realty sector in its full bloom not only construct much sought after roofs over the heads of millions of newly emerging youths, it consumes cement, steels, concrete, river or mountain sands, etc. Thus assisting industries to review its slow working ive that may boost the financial growth, the realty sector in this mechanism may realize trickle-down of finances, a pertinent factor to revive the economy. Strangely enough, Finance Minister has ignored this sector. If given proper nursing, it could have assisted the Indian economy to move on a revival mode. Instead, Parnab Murkerjee, FM has without adopting some measures done much damage to the sector. The increase in service tax and excise duty may further enhance the cost ofr the construction of houses. The loan interests may further add to buyer’s woes as it would continue with hi9gher interests on loans to purchase houses. In the present Budget proposals, there is no change in home loans interest exemption limit which may further dump the buyer’s spirits.

But then, it was expectations that realty sector might be granted industry status which was not granted. If it was materialized, it would have brought down the borrowing cost for the developers which would have reduced the home cost.

However, some positive steps have been introduced by the FM. He has reduced tax of five per cent on ECB taken for affordable housing projects. Funds for rural housing projects have been enhanced form Rs. 3,000 crore to 4,000 crore. One percent interest sub-vension for house loans up to Rs 15 Lakh for homes priced up to Rs. 25 Lakh.

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