In a country where 95 per cent of the housing shortage of 18.78 million units is in the category of Economically Weaker Sections (EWS) and Low Income Group (LIG) housing, Finance Minister Arun Jaitley’s budget promises to create mass housing for these segments.
The Budget seeks to address the concerns of both home buyers facing rising interest payments by giving higher tax rebates and for developers seeking better funding alternatives.
For home buyers, the tax relief on home loan interest for self-occupied property has been raised from Rs 1.5 lakh to Rs 2 lakh. This is in addition to raising the overall ceiling for income tax deduction from Rs 1 lakh to Rs 1.5 lakh under Section 80C, which includes principal repayment on housing loans.
While the Budget earmarks Rs 7,060 crore for 100 “smart cities”, for LIG and EWS housing specifically, it allocates Rs 4,000 crore for urban areas and Rs 8,000 crore for rural areas. This would be made available through the National Housing Bank (NHB) in addition to the amount that the apex housing finance body mobilises through the market and disburses as individual home loans. Between July 2013 and June 2014, NHB disbursed Rs 17,500 crore.
RV Verma, former chairman and managing director, NHB, termed it a “pathbreaking Budget for addressing the critical issue of generating affordable housing”.
“It will have a multiplier effect in terms of its contribution to the gross domestic product and employment growth of ancillary industries,” said Verma, adding that incentives being provided for real estate investment trusts (REITs) and foreign direct investment (FDI) in real estate would broad-base funding avenues for the sector.