The Union Budget 2018 focusses primarily on rural infrastructure development, agriculture, promoting growth of Micro, Small & Medium Enterprises as well as improving connectivity across the country. India’s economy is already on a fast-paced growth path, with the recent implementation of favourable policies. These reforms and policies have also had a positive impact on the real estate sector with consumer and investor sentiment improving.
Against this backdrop, and with the intention of focusing on ease of living, this year, the government has channeled its efforts into strengthening agriculture and the rural economy, providing good healthcare support for the economically weaker sections of society, infrastructure creation and collaboration with states to provide more resources for improving quality of education in the country. Read | Highlights — All major announcements of the Union Budget 2018
As highlighted in earlier Budgets, robust infrastructure development has the potential of boosting the overall economy. To this end, the government this year, tripled the fund allocations for infra development, allocating nearly Rs 6 lakh crore for FY19, for a more agile urban connectivity. Some of the infrastructure initiatives proposed include the expansion of the sub-urban railway networks in Mumbai and Bengaluru, the redevelopment of 600 railway stations and improvement in regional connectivity by connecting 56 unserved airports and 31 unserved helipads in the country. Additionally, the government announced its objective of completing 9,000 km of highways this year which will have a positive impact on the country’s trade movement.
The real estate sector too had something to cheer about. The announcement to set up a dedicated fund under the National Housing Bank will provide a much-needed thrust to the segment, including increase in demand and supply. This dedicated fund will receive capital inflows from priority sector lending shortfall and fully serviced government authorised bonds. Coupled with the pre-Budget announcement of GST for affordable and low-cost housing being rationalised from 12 per cent to 8 per cent, the segment is expected to witness an uptick in demand and supply in the future.
To ensure that ease of doing business reforms are implemented at state-level and yield better results, the government has identified over 350 basic business reform actions that states will take up on a mission mode and constructively compete with each other to attract more investments.
From a taxation point of view, the increase in standard deductions to Rs 40,000 per annum will help individuals have more disposable income which could be channeled towards higher investments into real estate. With the focus being towards taking care of the elderly in our country, the Finance Minister announced several reforms targeted towards this segment of society including increase in exemptions of health insurance premiums, increase in investment limit under the Pradhan Mantri Vaya Vandana Yojana and increasing in the interest income limit from deposits with banks and post offices.
It was hoped that this year’s Budget would finally address the need to put in place single window clearance and accord infrastructure status to the real estate sector. These were two significant tasks which would have promoted easier transactions, removed delivery delays and also encouraged funding into the sector. Though these issues remain, clearly, this year’s Budget has focused its efforts towards strengthening the country’s agricultural and rural sectors, two significant contributors to India’s economy.
Fund under the National Housing Bank
* The real estate sector too had something to cheer about. The announcement to set up a dedicated fund under the National Housing Bank will provide a much-needed thrust to the segment, including increase in demand and supply. This dedicated fund will receive capital inflows from priority sector lending shortfall and fully
serviced government authorised bonds
* Coupled with the pre-Budget announcement of GST for affordable and low-cost housing being rationalised from 12 per cent to 8 per cent, the segment is expected to witness an uptick in demand and supply in the future