In a quest to increase transparency and accountability, the Union Budget has outlined several pro-poor, pro-agriculture and pro-infrastructure initiatives. While the inclusion of Railways, Civil aviation and Water transport was anticipated to be categorized under ‘Infrastructure’, interestingly the Finance Minister also considered ‘Affordable Housing’ under his commitment to drive promising infrastructure in India. Although “industry status” was not bestowed on the real estate sector, the Union Budget listed several measures to improve transparency and accountability in real estate in India.
Granting infrastructure status to affordable housing, besides making funds easily available for financing affordable housing projects will also encourage private players to make investments in this segment. This will result in competition and better options for the middle and lower middle class citizens aiming to buy their first homes. Since the country’s banking system is set to support this initiative by lowering lending rates even further, it will drive demand in rural and urban markets. This move can be anticipated to ease the present inventory pile-up situation across Tier 1 cities to some extent.
Land ownership challenges have long plagued this country and led to a substantial increase in the number of litigation cases. Digitisation of land records is a progressive step by the government towards launching a centralised system that would automatically reduce the litigation on title thereby enhancing the speed at which properties can be transacted. Abolishing the Foreign Investment Promotion Board (FIPB) will provide necessary impetus for FDI inflows across industries, especially real estate sector. Real estate contributes 15% of the country’s GDP. Relaxation in tax rates and necessary policy amendments are vital to ensure the government’s promise of a better infrastructure, better governance and smarter cities.
Shrinivas Rao
CEO - Asia Pacific, Vestian Global Workplace Services