The budget may change the definition of an affordable housing unit by raising the limit to Rs 65 lakh from Rs 45 lakh to boost sagging sales in a sector which has a multiplier impact on the economy by generating demand for critical inputs such as cement and steel and creating jobs.
Sources said several rounds of discussions on housing have been held, and incentives to buyers are likely in the budget that will improve bank credit, as well.
The sources said the ministry was considering a proposal to expand the benefit of an “affordable housing project” by raising the limit, which would be aligned with the reality of rising land costs.
Also, the sunset date of March 31, 2020 could be extended by two years. Increasing the limit on affordable housing would help more buyers get the benefit of lower interest rates.
Besides, there could be an increase in the annual household income criteria under the Pradhan Mantri Awas Yojana to be in sync with the higher prices.
The limit could be raised to Rs 18 lakh from Rs 12 lakh for middle-income group I (MIG-1) and to Rs 25 lakh from Rs 18 lakh for middle income group II (MIG II).
Anuj Puri, chairman, Anarock Property Consultants, said the Rs 2 lakh tax rebate on housing loan interest should be raised. Niranjan Hiranandani, national president, National Real Estate Development Council (Naredco), said, “Fiscal stimulus to the real estate sector would have a manifold effect on 269 allied industries with multi-dimensional impact on enhancing the GDP growth inclusive of employment creation.
Industry chamber CII has pitched for an increase in tax incentive to encourage investment. “With a view to boost real estate sector and to incentivise tax payers, interest deduction on loan taken for house property, which is currently capped at Rs 2 lakh needs to be increased to Rs 5 lakh.”
“Further the quantum of set off of losses from house property (self-occupied/rented) against other heads of income should be increased from Rs 2 lakh to Rs 5 lakh,” the CII said.
The ongoing liquidity crunch has severely dented the prospects of the sector. The creation of a Rs 10,000cr special window to provide last-mile funding to projects should address some of the problems. The support is available to non-NPA and non-NCLT projects.
“The current reality is that there are several real estate projects which might be currently NPA but are economically viable and only stuck due to absence of viable last-mile funding. It might therefore be more fruitful to include all economically viable projects under this scheme,” Ficci said.
Higher deficit
New Ficci president Sangita Reddy on Tuesday urged the government not to worry too much about the fiscal deficit and try to pump up the economy by increasing investments to arrest slowdown and accelerate growth.
“We need to infuse capital into the economy. The fact is that there is a slowdown of the GDP but to pump prime economy, adequate capital is really the need of the hour and therefore the preposition which we put forward is that we should not worry for a small expansion in fiscal deficit,” she said.
She said the government should find a mechanism to infuse Rs 1.5 to Rs 2 lakh crore into the economy as it would help spurring consumption.
With the slowdown in economic growth, the government will face difficulty in adhering to the fiscal deficit road map laid down in the fiscal responsibility act.
“With the increased consumption or purchasing power of people, investments and the overall sentiment of the corporate India will improve and this will create a virtuous cycle, which grows the GDP,” she said.
