Indian real estate sector is a key contributor in the economy and has multiplier impact on allied industry as well as overall economy. The sector, in a way has a direct bearing on every person’s life – be it the house we stay in, workplace where work, commercial complexes/ shopping malls for leisure etc.
The government has proposed in the Union Budget 2011-12 that low-cost housing loans up to Rs 15 lakhs will be eligible for 1% interest subsidy. The existing interest rate subsidy is on loans of Rs 10 lakhs where cost of house was Rs 20 lakhs. Under budget proposal, norms for cost of house have been also raised to Rs 25 lakh. So, next year, home buyers will get 1% interest subsidy on loans up to Rs 15 lakh where cost of house was up to Rs 25 lakh. Priority sector lending for housing loan limit is raised to Rs 25 lakh for vs. Rs 20 lakh.
The increase in upper cap is welcome but it does not make much sense for tier-1 cities as cost of the flats is already beyond possibilities. The real estate companies will focus on tier-2 &3 cities where cost of land is still within Rs. 500 psft. The tier -2 & 3 cities will get the boost from this budget. In metro cities like Delhi, there is no option available in this budget except in some remote suburbs such as NOIDA- Extn, Greater NOIDA, Ghaziabad etc.
What are missing in this budget?
1. The cost of real estate should be reduced by reforming and adopting multipoint strategy. Some of the items to be worked upon are
- · Reduction in building material cost which means price control on cement, reform in building material imports
- · High stamp duty is a major cause for honest citizen to turn their money as black money, this fact is accepted by or FM too. But there is no provision to reduce the stamp duty and make it uniform across the country
2. The rising interest is another very important concern of customers but no step is taken to resolve this concern
In short real estate industry is not given a due importance in this budget which will not only affect the real estate industry, but also common man and nation’s economy too.
This post is personal opinion of
Mr. Avdhesh Goel FCA, ACS, AICWA
Jt. Managing Director,
Earth Infrastructures Ltd
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