Like every other sector, builders too have their own wish lists for Union finance minister Nirmala Sitharaman. Topping that is her granting industry status to the real estate sector in the upcoming interim budget, which would improve access to loans.
They also want some provisions made to reduce the interest rates on project finance and that construction materials be clubbed in a lower bracket of the goods and services tax (GST).
Sitharaman will present the interim budget on February 1.
Here are key expectations of the real estate sectors from the budget:
Industry status and single-window clearance
Pradeep Aggarwal, founder and chairman of Gurugram-based developer Signature Global (India) Ltd, said that the sector hopes for transformative measures that will invigorate it.
“Acknowledging the pivotal role real estate plays in the nation's economic growth, our foremost expectation is the long-overdue grant of Industry status to the sector. This recognition will not only catalyse investments but also streamline regulations, fostering a more conducive environment for sustainable development,” Aggarwal said.
He added that the government should institute a single-window clearance system to expedite approvals for projects. This streamlined process will mitigate bureaucratic hurdles and will pave the way for expeditious project execution, he said.
S K Narvar, group chairman of the Noida-based Trident Realty, echoed his thoughts. “If real estate is given industry status, developers will have easier access to loans with lower interest rates and easy financing options from institutional investors,” he said.
Aman Trehan, executive director, Trehan Iris, a largely Delhi-NCR-focused developer, agreed, saying that industry status to the sector would enable developers to obtain financing at lower rates. The single-window mechanism is also of significant import for the sector, and the government should address it in the upcoming budget, he said.
Push for affordable housing
According to a study by property consultancy ANAROCK, the affordable housing category saw a decline in overall sales to approximately 20 percent of the overall pie in 2023 from over 30 percent in 2022. Hence, developers expect a boost for this category.
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“We are seeking a redefinition of affordable housing. The limit for affordable housing should be raised from 90 square metres, in terms of space, and Rs 45 lakh in the case of pricing. It will be a much-needed intervention as considerable demand exists in the affordable housing segment,” Manoj Gaur, chairman and managing director, Gaurs Group, a Ghaziabad, Uttar Pradesh-based developer, and chairman of the Confederation of Real Estate Developers' Associations of India (CREDAI), told Moneycontrol.
Narvar of Trident Realty voiced similar expectations and said that the government should consider revising the definition of affordable housing, both in terms of value and size, to cater to a large population that has returned to their hometowns and to boost housing demand in new markets.
Aggarwal of Signature Global also urged the government to extend the benefits of infrastructure status to the affordable housing segment to boost the sector's affordability and accessibility, aligning with the government’s vision of 'Housing for All'.
Fiscal measures to boost the sector
Aggarwal said that to alleviate cost burdens, the sector advocates for a reduction in GST rates on construction materials to the single digit, fostering affordability without compromising on quality. At present, GST on construction material such as cement and iron bars range between 18 percent and 28 percent.
“We urge the government to cultivate a more congenial funding ecosystem for the real estate industry," he added.
Trehan said that to boost the housing segment, the government must look into individual tax benefits and maintain lower interest rates. “The developer community is urging the government to facilitate project financing by directing the RBI (Reserve Bank of India) to reduce interest rates on project finance. The budget should continue to emphasise measures to encourage consumer spending and investment to strengthen the retail space segment," he said.
Narvar added that the real estate industry is optimistic that the upcoming budget will take steps to accelerate growth momentum. “The budget should include a fiscal stimulus and personal tax relief by increasing the tax rebate on home loan interest rates from Rs 2 lakh to Rs 5 lakh. This will be a significant boost for millions of first-time homebuyers,” he said.
Gaur said that the real estate sector has pinned high hopes on the forthcoming budget and it is looking for the reintroduction of the interest subvention scheme to revive mass housing.
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