The real estate industry has welcomed the measures announced by the finance minister towards boosting demand and strengthening the economy
The real estate industry has welcomed the measures announced by the finance minister towards boosting demand and strengthening the economy. The announcement of an additional outlay of Rs 18,000 crore for PM Awaas Yojana (urban) is a step in the right direction towards fulfilling the vision of 'Housing for All', which will lead to generating employment along with supporting other industries, having a multiplier effect on the economy, said Anshuman Magazine, Chairman & CEO - India, South East Asia, Middle East & Africa, CBRE. "Income Tax relief for developers and home buyers will encourage transactions and attract first time homebuyers. In addition to this, the infrastructure debt financing support announced by the government in the form of Rs 6000 crore equity will attract more investments in infrastructure development. All these measures will collectively improve India's competitiveness and will go a long way in boosting the initiative to build a ‘Self Reliant’ India,” Magazine said.
Dr. Niranjan Hiranandani, President, NAREDCO, and Assocham said FM's announcement about additional funding of Rs 18,000 crore for PM Awaas Yojana-Urban will add to the sparkle this festive season. "This is over and above the Rs 8,000 already allotted this year, and will translate into more homes for home seekers, more employment opportunities as also good business for suppliers and industries peripheral to real estate and construction,” said Hiranandani.
Commenting on Atmanirbhar Bharat Package 3.0 announcement by the Finance Minister, Shishir Baijal, Chairman & Managing Director, Knight Frank India said: "Today’s stimulus measures will aid job creation and infrastructure development in the country. Recognition of real estate as a core sector, creating ancillary industry demand and employment, and enhanced Pradhan Mantri Awas Yojana – Urban allocation, will boost the housing demand in the country. Besides, the increase in circle rate and transaction value threshold from 10% to 20% will remove a transaction hurdle and save tax thereby increasing the opportunity for unbridled property purchase activity.”
Ram Naik, Executive Director, The Guardians Real Estate Advisory said the FM’s announcement of an increase in the difference between the so-called circle rates and the agreement value, will lead to a further rationalization of prices in the sector, especially in the premium or mid-income housing segment. "The move can be attributed to the concerns raised by developers about their inability to reduce or offer lucrative prices because of the tax liability that would accrue as a result of price reductions. But on the other hand, the major part of the unsold inventory in metro cities is upwards of Rs 2 crore and fall in the Rs 4.75 to Rs 12 crore range. A blanket announcement without the capping would have lead to cheers for developers across the sector and the customers, this Diwali,” Naik said.
Farshid Cooper, MD, Spenta Corporation said while the initiatives provided earlier had set the wheels moving and few state Governments had also reduced the stamp duty to give added benefits, the circle rates in cities like Mumbai were still creating a barrier for homebuyers to make the purchase. "With this announcement of increasing the differential between the circle rates and agreement rates (20% from 10%), the affordable residential housing segment is surely expected to witness an uptick, and buyers can make an informed decision which will eventually help them to save their taxes. Additionally, Hon. FM’s impetus to the PMAY-U will help create housing demand in Tier II & III cities and employment in allied industries," Cooper said.
Krish Raveshia, CEO of Azlo Realty, said the real estate prices in many pockets of India have remained subdued, declined in some cases, a higher difference will help address this issue. “The additional Rs 18,000 crore spending under PMAY will help funding for stuck housing projects. The move is likely to help completion of nearly 12 lakh housing units, create 78 lakh jobs.”
Other Measures
India Inc. and sector experts have also welcomed the Finance Ministry’s new Aatma Nirbhar Bharat Rozgar Yojana and have termed the same as 'a good step' towards supporting the formal sector which is struggling with a cash crunch. "A large number of organizations have put off their hiring plans this year because they are wary of taking up fresh monetary commitments. The government’s pledge to bear the EPFO contributions of new employees will encourage many organizations to resurrect their recruitment plans," said Dr. Vivek Bindra, Founder & CEO Bada Business.
The announcement by the Union Cabinet approving a mega-production linked incentive (PLI) scheme for 10 sectors with an aim to provide much-required impetus to the manufacturing sector has also been welcomed by the industry. Rajesh Uttamchandani, Director, Syska Group said, "The PLI scheme is aimed at promoting domestic manufacturing and revolutionizing the ‘Make in India’ campaign by making India a global player in the export supply chain and in increasing core competencies of the country, providing a boost to the economy. For home-grown FMEG companies like Syska Group, this is a great initiative that will enable us to further develop solutions in-house and focus on domestic manufacturing and generating further employment opportunities. We are positive that such schemes are set to bolster India's economic growth by making it truly Atmanirbhar."
Jaideep Ghosh, Chief Operating Officer at Shardul Amarchand Mangaldas & Co said the announcements, when viewed in a holistic manner, are clearly focused on creating short term employment and encouraging long term infrastructure and manufacturing. "These measures will boost both the formal and informal sectors. While the stressed sectors benefit from credit schemes, businesses that rely on close human interactions, such as travel & hospitality, are likely to remain depressed till the Covid19 situation improves,” said Ghosh.
Commenting on an extension of the Emergency Credit Line Guarantee Scheme (ECLGS), which has been extended till March 31, 2021 whereby entities with outstanding credit of above Rs 50 crore and up to Rs 500 crore will be covered, Aiswarya Ravi, Chief Finance Officer – Kinara Capital said: "It is a positive measure. At Kinara Capital, we have disbursed nearly Rs. 30 crores so far under ECLGS. The post-lockdown ending, MSMEs are struggling with a liquidity crunch. ECLGS allows last-mile NBFCs like us to provide quick help to small businesses to stabilize and restart their business operations.” Kinara Capital is a Bangalore based NBFC firm who provides loans without property collateral to small businesses.
Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares & Stock Brokers said announcements made on November 12 were the seventh installment of stimulus measures announced by the government and the Reserve Bank of India. "Rather than providing stimulus through one big announcement (like most other countries), the Indian government and the Reserve Bank of India have opted to roll out supportive measures at different points of time depending on the state of the economy. Giving the uncertainties on the pandemic front and also the varying pace of economic recovery, we think this is the right move," Hajra said. "At the sector level, the announcements are positive for real estate, infrastructure, export-oriented and import-substituting sectors. The announcement today can potentially be negative for the financials if the government and the Reserve Bank of India resort to moral suasion or more direct measures to nudge bank towards accelerated lending to the pandemic impacted sectors,” Hajra added.
Source: http://www.businessworld.in/article/FM-Announcements-Benefits-on-Circle-Rates-Income-Tax-Relief-Cheer-Realty-Sector/12-11-2020-342095/
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