Budget 2020-21: Measures on which government should focus upon to boost the Real Estate Sector
Real estate sector has gone through significant changes in the last few years, mainly during the first term of Narendra Modi as the Prime Minister of...
Real estate sector has gone through significant changes in the last few years, mainly during the first term of Narendra Modi as the Prime Minister of India. These changes have not only increased the transparency in the sector but have tried to add credibility to it.
The government took several key decisions to revive the realty sector and boost the consumer confidence but its impact was not seen in the residential segment, which remained stuck in relative pessimism in terms of sentiment and volumes.
However, positive and strong growth was seen particularly in the commercial leasing segment.
Colliers Research suggests that the commercial leasing business exhibited a strong trend as a total volume of 59 million square feet was leased in the top seven cities of the country in 2019. This number is better than the leasing activity of 2018, the year when 50 million square feet was leased in terms of volume. However, the residential sales in the top seven cities stood at 2,61,000 units against 2,42,000 units of 2018. But, around 6 lakh residential units remained unsold.
Real estate is one of the major contributors to India's GDP, around 10 per cent and is the second-largest employer in the country. Thus, the industry needs perking up so that it can deliver better.
At such a time, when the realty segment particularly the residential segment is mired by a slowdown or a situation where the buyers are not confident due to delayed projects across the country, the real-estate sector has some expectations from the Union Budget. The Union Budget 2020-21 will be presented on February 1, 2020, by the Finance Minister Nirmala Sitharaman.
What the Government can do to boost demand in the real state?
♦ It should address the sentiment of the home buyers making the probable buyers come out and decide to buy houses instead of postponing it.
♦ It should provide some tax benefits in the form of waivers on interest and principal of the loan and revise the income tax slab as it will help in boosting the demand.
♦ It should raise the current exemption limit of Rs1.5 lakh to a higher one for all buyers who buy a house during the FY 20-21. The exemption limit was raised to Rs3.5 lakh for affordable housing announced in Budget 2019.
♦ Stamp duty of the homes should be either abolished or merged with the existing GST rates. It will help in cutting down the costs of the customers.
♦ Generate cash flows avenues for the developers who are facing liquidity issues as the banks are reluctant while granting the loans to them.
♦ Single window clearance process should be implemented for clearance of real estate projects. The seamless approval process could help in faster execution of infrastructure and real estate projects.
♦ It should grant industry status to the overall real estate sector, which is a long pending demand of the developers of the sector.
♦ Home loan interest loan rates should be brought down as it will help in pushing demand and sales.
With all these, I expect that the budgetary decisions for the real estate sector would help in reviving the sector and bring growth. The government should aim at creating a positive sentiment and environment in the real estate sector for both homebuyers as well as the developer through its policies that will be announced in the Budget 2020-21.