The real estate industry has reasons to cheer as Union Budget 2017 announced infrastructure status for affordable housing. Housing companies acknowledged the beneficial changes to the affordable housing segment as it would give a boost to housing construction for low-income groups.
Anuj Puri, Chairman and Country Head, JLL India, acknowledged the increased allocation to Pradhan Mantri Awas Yojana from Rs. 15,000 crore to Rs. 23,000 crore in the rural areas.
“This is very significant, because it will provide the vital budget housing segment with cheaper sources of finance including, but not restricted to, external commercial borrowings. Also, re-financing of housing loans by NHBs can give a leg up to the sector,” he said in a statement issued to the press.
However, Mr. Puri grudged the Budget missing out on giving any additional income tax incentives to first-time home buyers or providing higher tax savings on housing loans and house insurance premiums. The Budget did not raise house rent deduction limits as well.
A new Credit Linked Subsidy Scheme for the middle-income group with a provision of INR 1,000 crore in 2017-18 was announced. Also, extension of tenure of loans under the CLSS of Pradhan Mantri Awas Yojana (PMAY) was increased to 20 years from the existing 15 years. Mr. Puri observed that promoters of affordable housing projects will benefit from the cushion of two additional years for completing their projects, instead of the earlier timeline of within three years.
Brotin Banerjee, managing director and chief executive officer, Tata Housing Development Co, too hailed the affordable housing announcement and said that a long-standing demand of the sector had now been met.
“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,” he said. “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 resource allocation for the sector, catalysing housing supply and reducing the supply gap.”
Disinvestment
The government today said it will raise Rs. 72,500 crore through disinvestment of PSUs, including listing of three railway PSUs - IRCTC, IRFC and IRCON - and proposed merger and consolidation to create globally competitive public sector units.
Finance Minister Arun Jaitley said the government will put in place a revised mechanism and procedure to ensure time-bound listing of identified CPSEs on stock exchanges as listing will foster greater public accountability and unlock their true value.
“The shares of Railway public sector enterprises (PSEs) like IRCTC, IRFC and IRCON will be listed stock exchanges,” Jaitley said in his 2017-18 Budget speech in the Lok Sabha.
Fiscal 2016-17 is the seventh year in a row when the government would not be meeting the disinvestment target fixed in the Budget. Industry expressed its disappointment on the lack of any major announcements on the disinvestment front saying that it had hoped to see some targets being announced by the Union Finance Minister.
Former Revenue and Disinvestment Secretary Sunil Mitra said that there was little that was new in today’s budget on disinvestment of public sector enterprises. “One had expected some announcement on the strategic stake sale front” he said. Mr. Mitra is now the chairperson of the Bengal Chamber’s Economic Affairs Committee.
His views were echoed by T. V. Narendran, managing director, Tata Steel and Chairman of CII eastern region. “We would have liked some details on disinvestment,” he said.
(With inputs from Indrani Dutta in Kolkata)
