The Union Budget 2015-16 failed to deliver on the expectations of India’s ailing real estate sector though it contained some positives.
The industry was expecting clarity on smart cities, an increase in the limit of interest deduction on housing loans from Rs 2 lakh to at least Rs 5 lakh to spur home buying, subsidising interest rates, tax holiday on new affordable housing projects and industry status to the sector. “The Budget did not give us much because the wish list was very long,” said Harpreet Singh, partner—risk advisory services, PwC India. “We however did see some positives, like the benami transaction prohibition bill to tackle black money transaction in real estate. This will increase property valuation and bring in transparency into the sector.”
In line with the government’s housing-for-all policy, finance minister Arun Jaitley announced 6 crore housing units (2 crore in rural and 4 crore in urban areas) by 2020 without giving details on how this will be achieved. Jaitley also announced the setting up of an expert committee for legislation on making a pre-existing regulation to expedite approvals. Surabhi Arora, associate director, Research Colliers International, a real estate consultancy firm, says this is a step towards single-window clearance. “Because of delays in approval processes, most of the real estate projects currently face construction delays of up to 3 years. We hope to see a single-window clearance system soon,” said Arora.
Sachin Sandhir, global managing director, emerging business & MD, South Asia, RICS (Royal Institution of Chartered Surveyors) is disappointed that the Budget did not meet the sector’s long-pending demand for an ‘industry status’. “The industry status could have eased the flow of bank loans towards the sector already under a severe cash crunch,” he said.
Sanjay Dutt, executive managing director, South Asia, Cushman & Wakefield, said the real estate sector is more shocked than awed with the Budget. “The finance minister has missed an opportunity to use real estate sector as a trigger for economic growth,” he said. “We are disappointed with this year’s budget because except for REITs (simplification of REIT’s taxation) and curbing of benami transactions, there was no specific mention to the sector this time around, unlike the last Budget presentation.”