The Union Budget 2018, presented in Parliament on Thursday, focusses primarily on agriculture, rural infrastructure development, improving connectivity across the country, as well as promoting the further growth of small-scale industries.
Against the backdrop of fast-paced economic growth, implementation of policies and improvement in India’s investment scenario, the government declared its intention to shift focus from ease of doing business to ease of living.
This it has aimed to do by concentrating on the strengthening of agriculture and the rural economy, good healthcare for the economically weaker sections of society, infrastructure creation and working with States to provide more resources for improving quality of education in the country.
The robust development of physical infrastructure continued to be in focus in this year’s budget as well with the government allocating nearly ₹6 lakh crore for FY19; tripling from ₹1.81 lakh in FY15.
Some of the initiatives proposed include the expansion of the suburban railway networks in Mumbai and Bengaluru which will aid urban connectivity.
The redevelopment of 600 railway stations, improvement in regional connectivity with UDAN expected to connect 56 unserved airports and 31 unserved helipads in the country and development of 9,000 km of highways and inland waterways will have a positive impact on the country’s trade movement.
The real estate sector too had something to cheer about. With the objective of spurring increased demand for affordable Housing, the finance minister announced the setting up of a dedicated fund for the segment under the National Housing Bank.
This will be funded by priority sector lending shortfall and fully serviced government-authorised bonds. This move, coupled with the pre-Budget announcement of the Goods and Services Tax for affordable and low-cost housing being rationalised from 12% to 8% will provide a boost to the affordable housing segment both from a demand and supply perspective.
Finance Minister Arun Jaitley has also provided that no adjustment shall be made in cases where the circle rate value does not exceed 5% of transaction value, to minimise hardships in real estate transaction. This has addressed the existing anomalies between circle rate and real property value.
More disposable income
From a taxation point of view, the increase in standard deductions to ₹40,000 per annum will help individuals have more disposable income. This could well be channelled towards higher investments into real estate.
With the focus towards taking care of the elderly in our country, the finance minister has announced several reforms targeted towards this segment of society including increase in exemptions for health insurance premiums, increase in the investment limit under the Pradhan Mantri Vaya Vandana Yojana and increase in the interest income limit from deposits with banks and post offices.
States to compete
To ensure that ease of doing business reforms are implemented at a State level and that they yield better results, the government has identified more than 350 basic business reform actions that States will take up in mission mode and constructively compete with each other to attract more investments.
The Indian government’s continued push to digitisation with increased allocation to the Digital India programme to ₹30.73 billion is a step towards reinforcing the establishment of a cashless society.
For the first time ever, artificial intelligence, machine learning, Internet of Things and 3D printing have found their way into the government’s budget, which proclaims focus towards a more advanced and innovative ecosystem.
While the Budget has sought to establish a robust digital infrastructure, it was hoped that this year’s budget would finally address the need to put in place a single-window clearance and accord infrastructure status to the real estate sector.
Though these issues continue to remain, this year’s budget has focused on strengthening the country’s agricultural and rural sectors, two significant contributors to India’s economy.
(The writer is Chairman, India and South East Asia, CBRE)
