The Union Budget 2022 need to increase home loan interest deductions to Rs. 5 lakhs, enhance quantum of real estate stress fund up to Rs 125,000 crores, and offer the sector an industry status to spur growth and accelerate job creation in the country, says Niranjan Hiranandani, Managing Director of the Hiranandani Group.
Hiranandani told Moneycontrol on Budget 2022 that incentivising and subsidising the real estate sector would have a multiplier effect on 270 allied industries and aid job creation.
He said the sector and the home buyers are expecting an enhancement in the cap of Rs. 45 lakhs on the affordable segment in metro cities for availing benefits, and sought that extending the credit linked subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojana (PMAY) till March 2023 will be beneficial.
Hiranandani, who is also the vice chairman of the National Real Estate Development Council (NAREDCO), further said that additional government spending on infrastructure creation, and formalisation of labour laws would be net positive for economic growth and for arresting falling jobs.
Here is an excerpt of what Hiranandani said he and the sector is expecting from the Union Budget 2022 to spur economic growth and boost employment.
For the home buyers: Increase in home loan interest deduction up to Rs 5 lakhs, long-term capital gain tax on sale of house property should be charged at 10%, and Individual tax should be rationalised at 25 percent (to spur demand).
For the developer: Enhance quantum of stress fund up to Rs 125,000 crores, permit External Commercial Borrowing (ECB) to avail cheap credit, increase standard deduction on rental housing from 30% to 50% to improve rental yield on residential asset and tax on notional income from rental stock should be removed to encourage surplus rental housing creation.
For the industry: Enhance the cap of Rs 45 lakhs on the affordable segment in metro cities up to Rs 1 crore to extend the benefit of affordable housing schemes to a large number of home buyers, and encourage more players to enter the segment. Also, extend the benefit of the PMAY and CLSS scheme up to March 2023.
On boosting real estate to push job creation: Fiscal stimulus like stamp duty waiver, lowering of ready reckoner rates, low interest rates will augment home buying demand and improve sales velocity. Incentivizing and subsidising the real estate sector will have a multiplier effect on 270 allied industries and additional job creation.
The annual Budget in offing should consider policy stepping up measures, liquidity booster dose, foster favourable investment climate, rationalise the taxes and boost innate demand. Long pending demand to grant Industry status that will enable the sector to avail long and low-cost finance will be truly a game changer.
Economy and Employment: It’s a known fact that the Indian economy has been facing headwinds pre pandemic, muted investment, subdued demand, prolonged job crisis, and slowing economic growth.
As the fog of COVID-19 crisis is getting clear with Immunisation and healthcare management, Industry pegs high hopes on Government to focus on reeling issues of jobs and economy.
Large number of workforces still falls under the informal economy, which will increase, with a rise in gig workers. Thus, formalisation of labour laws is imperative to arrest falling jobs and accord right employment numbers.India being a consumption driven economy, measures to bolster demand will accelerate the economic cogwheel inclusive of job creation. All-inclusive growth measures like additional government spending on infrastructure creation, multi modal transit corridors…and tax incentives will lead to an uptick in job creation and help revive the sagging economy.