The new government’s maiden budget claims to contain reform measures to revitalize growth and drive engines of the economy burgeoning again. Will this growth oriented budget withstand the test of time? There’s no denying it’s a common budget, yet it’s difficult to prophesize at this moment. However, couple of reforms announced is a welcome move. It is positive for the housing sector, though the focus is clearly on affordable segment.

The government has encouraged the home buyers by widening Housing loan interest exemption U/s 24 B from Rs 1.5 lakh to Rs 2 lakh coupled by personal tax exemption slab raised to the level of 2.5 lakhs per annum. The latter will definitely boost investor’s sentiments in the real estate sector.

Real Estate Investment Trusts (REITs), Infrastructure Investment trusts and granting pass through status for taxation is a welcome and essential step for successful implementation of REIT’s in India. It will help in easing liquidity requirement for developers, paving way to raise easy capital and also provide access to retail investors to benefits from regular income and appreciation benefits from real estate. This is bound to give the much needed fillip to the sector.

The government is focused on the vision of developing and modernizing with the introduction of smart cities. To make this dream a reality, the finance minister announced allocation of Rs 7,060 crores in the current fiscal for development of the smart cities and 7 new industrial cities. This will drive real estate development in these pockets and create newer markets.

Infrastructure has received a major thrust. The steps to increase funding for roads, highways, airports, power and SEZs will surely add more terrain on the Indian realty map taking tier 2 and tier 3 cities on new growth trajectory.

Source: Lokesh Shastri