We sought the feedback of industry captains on the Budget, and found that overall there’s a sense of optimism
The Union Budget 2017 has revealed that sanitation is one of the top priorities for the government in the next financial year. Significant developments with respect to the Swachh Bharat Mission and sanitation in rural areas are expected, based on the proposed budget allocations in these areas. Increasing the sanitation coverage of funds under the Swachh Bharat Yojana from 42% to 60% for rural areas is a step in the right direction. The budget has proved that a constraint of funds will not impede infrastructure activities and the vision for a clean India.
The granting of infrastructure status to affordable housing is a welcome move to ensure the efficacy of the same. The decision can be expected to increase the allocation of resources for the sector, which in turn will boost the housing supply. The allocation of Rs 23,000 crore for the Pradhan Mantri Awas Yojana to reach the goal of one crore homes for the homeless by 2017 is one of the best points of the budget. The construction of more homes will provide an impetus to the sanitaryware industry, and increase the demand for products.
The increase in allocation of funds for MGNREGA, and target to increase the involvement of women under the scheme is commendable. As a result, more women will receive benefits from the scheme such as training and employment, especially in rural areas.
MD, Grohe India
It’s a great job by the FM in presenting a budget which is positive in many directions. Clearly the government has demonstrated its commitment to drive growth post the DeMo effect. Some of the good measures like doubling lending targets, highest ever infra allocation of Rs 4 lakh crore, 10 million houses by 2019, lower interest rates on rural housing loans, lower income tax for certain slabs and small businessmen will surely propel India to grow at twice the rate of global GDP growth.
Attracting more FDI in many sectors and abolishing FIPB will drive large investments into the country. With ‘Make in India’ taking bigger shape, the exports are bound to go up. This presents a good opportunity for many SMEs. As for public-private partnership (the PPP model), the budget presents many areas where this model can play a crucial role, especially in the infra sector. With the focused approach on the three legs of infra – Road, River & Railway – the budget offers tremendous scope to build a sustainable growth.
The all time high allocation of Rs 4 lakh crore in infra sector is bound to channel a lot of growth opportunities for downstream industries, thereby generating lot of employment. Nation building programs like this are sure to propel our growth for the next few years as there is enormous scope in our country.
MD, Roca Bathroom Products Pvt Ltd
The Union Budget 2017 announced a host of reforms and policies which are pro-growth, positively impacting consumers. The proposed deduction in income tax rate by 5% under the income band of Rs 2.5-5 lakh will help in strengthening the purchasing power of individuals and can also be seen as a step towards redistribution of wealth. The increased focus on infrastructure (with a record allocation of Rs 3.96 lakh crore), coupled with reduction in the holding period for long term capital gains for immobile assets from three years to two years, is likely to provide the much needed impetus to the real estate sector. With the reassurance of the Finance Minister on the roll out of GST, we are optimistic about the growth prospects of the industry.
MD &CEO, BSH Household Appliances
The overall budget is very encouraging for the industry. The steps announced by Finance Minister would help the industry to remain on growth track, especially the MSME and SME sectors.
We earnestly advise the slashing down of custom duty on membrane, which is an essential part of a water purifier. This move would definitely help domestic manufacturers like us; however, it will not only revive sagging customer demand and it will also uplift business sentiments.
Dr Mahesh Gupta
Chairman, KENT RO Systems Ltd
Infrastructure status to affordable housing comes as a landmark announcement for the consumers and the real estate industry. A longstanding demand of the sector, the government has realised that housing and infrastructure can be two pillars to increase GDP and accelerate economic growth.
Easy and dedicated access to institutional financing, and higher limit on external commercial borrowings will attract more investments and assure sustained growth of affordable housing in India, making it the core driving segment for real estate. On the other hand, long term financing at lower rates will reduce costs of construction for developers, allowing them to pass on benefits to consumers. The new status will increase the resource allocation for the sector, catalysing housing supply and reducing the supply gap.
This budget has brought us a step closer in achieving the mission of providing housing for all. Implementation of these schemes will be essential for its success. Clarity on the definition of ‘affordable housing’ will be useful. This is very beneficial for Tata Housing as a pan-India developer, which is currently developing more than 40 million sft of affordable housing.
Brotin Banerjee, MD & CEO
Tata Housing Development Company
Overall, the Union Budget 2017 augurs well for real estate, affordable housing and the infrastructure segment. The affordable housing sector is finally set to get infrastructure status. This was a long-awaited announcement. While we are yet to read the fineprint, this is indeed an important step to promote access to priority lending, thereby spurring supply of low cost housing units across various cities in India. Relaxation in area measurement as well as completion timelines to seek tax exemption are welcome steps. Further, the government has also increased allocation under the PMAY scheme. This will encourage home buyers and further boost participation from the private players.
The airport authority of land act amendment is yet another positive move which will allow development of land around the airports. This will further improve infrastructure and more importantly, increase funding for the development of the airports. This is over and above the record allocation made to the overall infrastructure sector.
In order to encourage greater fund flows into the economy, the FM has announced abolition of FIPB. While a clear policy outline is yet to be revealed, this is another positive step to liberalise FDI policy framework and ease regulatory hurdles in attracting investments.
The government has also been accommodative of the concerns of the real estate sector. The relaxation on long term capital gains, joint development agreements, tax rebates for builders will help reduce their tax liability.
While greater rebates were expected in individual tax rates, nonetheless the rebate for individuals earning upto `5 lakh will help increase their disposable incomes. This might help spur consumption and also have a positive impact on demand for housing.
Chairman India and South East Asia , CBRE
The Union Budget presented by Finance Minister is a progressive document whose working round the year will culminate into dividends in the following years. It is expected that implementation of GST this fiscal will add sizeable number of tax payers, giving leverage to the government to reduce bank lending rates and bringing down income tax slabs considerably.
Reduction of corporate tax to 25% for turnover upto Rs 50 crore will boost SMEs and small businesses in the country. Lending target under Pradhanmantri Mudra Yojna has been doubled and set at Rs 2.44 lakh crore, which will result in financial inclusion of the last mile trader and in turn will consolidate the retail market.
The creation of a Payments Regulatory Board in the Reserve Bank of India by replacing the existing Board for Regulation and Supervision of Payment and Settlement Systems will boost the digital payment landscape in the country.
Secretary General, CAIT
We are extremely excited about the government’s move to give infrastructure status to affordable housing, as this is the biggest boost to the real estate sector because it will make funding easier. This will also play a critical role in achieving the PM’s dream of ‘Housing for All’ by 2022 and increase the participation of private players in the sector. The industry, that was struggling the last couple of years on the number of product launches, will get a boost through this move.
Another interesting aspect is a reduction in corporate tax rate for MSMEs having revenues less than Rs 50 crore, to 25%. The government had introduced profit-linked income tax deduction for promotion of affordable housing, which was not well accepted because it had certain constraints and parameters which were not practical. But, by increasing the ambit of the scheme with a key announcement – of counting carpet area instead of built-up area, for affordable housing of 30 (metro) and 60 (rest of India) square meters – it will broadly increase housing sizes, and hence the scheme will now have a true impact on the sector. Also, the tax benefits period has been increased to five years, which was three years earlier.
The budget proposes to change the prevalent practice, and has clarified that the landowner entering into a joint development agreement for development of the property shall be subject to capital gains tax upon completion of the project. This is a significant change, because it will now make joint development agreements easier, which in turn will lead to increase in supply of projects.
Sandeep Singh Gaur
CEO, Sheltrex Developer
The government believes that the impact of demonetisation is transient. The increased liquidity in the banking system and widening of the tax net has resulted in the government stipulating an aggressive fiscal deficit of 3.2% in 2017-18. This is despite the total increase in expenditure, especially in the infrastructure and defence sectors where the outlay has been increased by 10% over the last year. In case the government is able to follow through on the remonetisation inter-alia as per the plan, it will definitely impact economic growth positively.
Coming to the real estate sector, the moves including reduction in the tenure of long-term capital gain tax from three years to two years; rationalisation of capital gains; JDA agreement; infrastructure status to affordable housing; and most importantly the SOPS inter-alia, the increase of the size of the affordable housing unit; and enhancing the universe for the 60 sqm stipulation in the segment; are all positive steps for the sector and will definitely help in giving the much needed push to the affordable housing segment.
President-business Development & CIO
Shapoorji Paloonji Real Estate
The budget has given the kind of momentum the Indian real estate needed at the moment. We were very hopeful for an increased focus on the affordable housing sector, and by giving it the infrastructure status as proposed in the budget, we expect to see active interest and participation from private players which shall result in quality projects.
The timelines for project completion for affordable residential projects have now been increased to five years, where developers will have more time to sell their inventory. The government’s existing scheme of qualifying size requirements for affordable housing has now changed from built up area 30/60 sqm to carpet area 30/60 sqm for projects. This new change will be worthwhile for builders and also attractive for the buyers. It is indeed a welcome move as the objective of ‘housing for all’ may turn into a reality by 2022.
Another welcome move is the reduction of the existing tax rate for income between Rs 2.5 lakh to Rs 5 lakh by 5%. The middle income group being a major contributor in the economic growth, this step was essential to boost growth in the demand for affordable houses. The tax relief given to developers on unsold stock is also going to be a change for the developers. This will mean that liability to pay capital gains shall come up only when the project is completed.
CEO, Raheja Homes Builders & Developers
The overall Budget has had good incentives for the real estate sector. Increase in government spending on infrastructure to Rs 65,000 crore will boost real estate space in metro and rural India. 2,000km of coastal roads will decongest metros and improve connectivity. The focus of our government on infrastructure will give a boost to the realty space in India.
Budget 2017 has been a boost to real estate. The FM has continuously emphasised the importance of infrastructure to drive demand in the country. The continued focus of increasing connectivity via new road, metro and coastal road projects will not only improve congestions in metros but will also have a positive impact on the periphery parts of the metros.
Income tax reductions from 10% to 5% for individuals earning between Rs 2.5 lakh to Rs 5 lakh per annum will help in financial inclusion in the system, thus increasing demand in the realty space. This will have a cascading impact to boost demand in the sector. Individuals who were outside the banking system earlier will all be included in the system, thus increasing consumerism in the country.
The government is focused on its target of ‘housing for all’ by 2022. Various incentives such as prolonging capital gains tax for developers, income tax incentives, interest subvention schemes, etc, will help drive demand for homes.
Vidip Jatia, director
The Union Budget is inclusive and progressive. It will put the country on track for vibrant economic growth in the future. We welcome the government’s step towards improving the existing road infrastructure, and the new metro rail policy is a right step to enhance connectivity and decongest urban areas.
Now, with affordable housing being provided infrastructure status, it will give an impetus to the Central Government’s mission of achieving ‘housing for all by 2020’. Further, change in the unit area from built up area to carpet area will bring more projects under its ambit, and extension of completion timeline from three years to five years is a welcome step.
Also, clarification on the taxability on JDA transactions arising only in the year of completion of the project is a big relief to the real estate sector.Relaxation on LTCG on immovable property by reducing the holding period to two years, and shifting of base year to 2001 for the purpose of indexation will bring down capital gain liability in the hands of the owner, and liquidity will improve.
MD, Salarpuria Sattva Group
A big infrastructure push along with a substantial hike in provisions for the National Highways in the Union Budget for 2017-18 is a major takeaway. A 25% higher capital expenditure is sure to give the economy a big growth momentum. Priority to doubling of farm income and rural development makes it a balanced and inclusive budget.
The focus on rural sector, large allocation of `3.96 lakh crore for infrastructure development and social spending are welcome moves. New dispute resolution mechanism for quick dispute settlements and abolishing FIPB will improve the ease of investing in India, along with the push on digital that will bring in efficiency and eradicate corruption. Addressing arsenic and fluoride menace in 28,000 villages gives the budget a human touch, while reducing corporate tax rate by 25% for MSME and the move to curb cash donations for political funding are very good moves.
CMD, Vishvaraj Infrastructure Ltd