Budget 2017 seems to have agood and positive impact on the day-to-day lives of the masses with respect to up-gradation in the standard of living. The total allocation for infrastructure is a whopping Rs 3,96,135 crore in 2017-18. This is very good news for the real estate sector, as the correlation of infrastructure with real estate growth is a well-established fact. ‘Affordable Housing’ will be given infrastructure status, which is likely to result in increased participation from private players.
The Modi government had earlier announced interest subvention scheme for housing loans. The combined impact the earlier initiatives and budget reliefs will provide a much awaited boost to the real estate sector. This will be coupled with the surplus liquidity in banks due to demonitisation, that will allowthem to reduce their lending rates on home loans.
The emphasis is now on low-end economically priced housing for all. When we talk of economically priced housing, we are talking of use of cheaper products for construction of such tenements. For flooring in such housing schemes, generally it is seen that waste marble strips are used to save on costing.On the other hand, when it comes to high-end luxury products, one can see that the Budget may certainly have a negative impact on sales of the same due to various basic restrictions imposed, eg limiting cash transaction up to Rs 3 lakh only.Surely this will have wider ramification on expensive watches/cars/jewellery and other household goods which now cannot be purchased across the counter by paying cash.
Within the wooden flooring industry, we can see that the Budget will not actually impact laminated wooden flooring or low end solid wood/engineered flooring. However, there may be a strong impact temporarily on sales of high-end wooden/engineered flooring with price tags above Rs 600 per sfttill such time HNIs come to terms with cashless and cheque systems of payment.Wooden flooring prices may not be impacted, due to no change in customs duty barring fluctuations in foreign exchange which usually play spoilsport.
The author is country manager-Indian subcontinent at Junckers.