At a time when India’s economy is going through one of the worst periods of slowdown, all eyes are set on the upcoming Union Budget 2020-21 to be presented on 1st February. With growing unemployment and subdued demand, expectations across sectors are galore; especially from the real estate industry which undeniably contributes to over 8% of the GDP and is the second-largest employer in the country.
With inflation rising and GDP growth slipping to its lowest in the last decade, the Central Bank and the government will have a tough road ahead to manage the economy. While the government would want to keep interest rates low in order to boost demand, the Central Banks may start hiking interest rates as a tool to manage inflation. It will be interesting to see what decision is taken by the Central Bank regarding interest rates on 6th February post the budget.
The residential real estate sector which has been struggling for a while now is expecting developer and investor-friendly measures from the budget. Project delays, which have been the biggest fallout of the ongoing liquidity crunch, have severely dampened buyer sentiment. With a likelihood of higher interest rates, the government should come up with specific plans to boost the purchase of homes given that this sector is largely debt-funded from both the developer as well as a consumer perspective. Enabling banks and NBFCs to provide liquidity to developers will keep supply, especially of high demand ready-to-move-in homes healthy.
The personal tax relief will result in an enhanced take-home salary is without a doubt at the top of the wish-list prior to any budget! But apart from that, for a salaried home buyer, the tax advantage that a house purchase provides, plays a huge role in the psyche – sometimes even more than lower interest rates. Hiking the tax rebate on home loan interest paid, increasing the ‘loss from property’ set-off limit, are some of the measures that would have a direct impact on demand for housing especially in the affordable and mid-segment categories.
All segments of the economy are looking forward to further ramping-up of the government’s ongoing efforts towards boosting growth in manufacturing, infrastructure and construction sectors in the upcoming budget.
With inflation rising and GDP growth slipping to its lowest in the last decade, the Central Bank and the government will have a tough road ahead to manage the economy. While the government would want to keep interest rates low in order to boost demand, the Central Banks may start hiking interest rates as a tool to manage inflation. It will be interesting to see what decision is taken by the Central Bank regarding interest rates on 6th February post the budget.
The residential real estate sector which has been struggling for a while now is expecting developer and investor-friendly measures from the budget. Project delays, which have been the biggest fallout of the ongoing liquidity crunch, have severely dampened buyer sentiment. With a likelihood of higher interest rates, the government should come up with specific plans to boost the purchase of homes given that this sector is largely debt-funded from both the developer as well as a consumer perspective. Enabling banks and NBFCs to provide liquidity to developers will keep supply, especially of high demand ready-to-move-in homes healthy.
The personal tax relief will result in an enhanced take-home salary is without a doubt at the top of the wish-list prior to any budget! But apart from that, for a salaried home buyer, the tax advantage that a house purchase provides, plays a huge role in the psyche – sometimes even more than lower interest rates. Hiking the tax rebate on home loan interest paid, increasing the ‘loss from property’ set-off limit, are some of the measures that would have a direct impact on demand for housing especially in the affordable and mid-segment categories.
All segments of the economy are looking forward to further ramping-up of the government’s ongoing efforts towards boosting growth in manufacturing, infrastructure and construction sectors in the upcoming budget.
