A Good Budget for Economy; Not much for housing sector: Niranjan Hiranandani

The Union Budget presented by Finance Minister Arun Jaitley has very little to offer for the sagging real estate sector in India, though on broader prospective, proposals on REITs and infrastructure investments would help in the long run, opines Niranjan Hiranandani, MD, Hiranandani Constructions Pvt. Ltd.

Niranjan Hiranandani

Commenting on the budget proposals for real estate in India, Hiranandani said, the past few months have witnessed a much improved real estate scenario driven by positive sentiments which was further augmented by RBI’s announcement to reduce interest rate.

The RBI was expected to introduce moves that would help reduce home loan interest rates for some months, and when it happened - it was a pleasant surprise, he added.

Expressing disappointment over the budget proposals, he said, “From a real estate perspective, a lot was expected – which sadly, wasn’t to be found in the Finance Minister’s Budget Speech.”

However, he also listed a few positive points for real estate sector from the finance minister’s budget speech. Clarity on rationalizing capital gains on REITs, Clarity on increasing housing stock to 2 crore houses in urban and 4 crore houses in rural areas, and Hike in investment in infrastructure by Rs 70,000 crore.

There are other ‘positives’ in the Budget Speech that will impact the economy, which in turn, will impact real estate, he said, adding, “For example, the abolition of wealth tax will attract more investors to invest in real estate.”

The individual tax payer will benefit to the extent Rs 4,44,200 from the indirect income tax exemptions announced, that in turn will be a positive as it has the potential to result in more home buying. Similarly, the announcement about setting up an expert committee for legislation on making a pre-existing regulation to expedite approvals, which will move towards the single-window clearance system, he opined.

Similarly, the proposal to rationalize capital gains tax for REITs and infrastructure investment trusts is a positive move, in line with expectations.  “The takeaway here is that it will help raise funds for commercial real estate, and will also be an alternative trading avenue,” explained Hiranandani.

“So overall, I would term the budget as a positive one, should have a good effect for the country’s economy,” he added.