We have a lot of positive expectations from the upcoming Budget 2016-17. My thoughts are focussed on three major points - transparency on GST, encouraging the Real Estate Regulation Act (RERA), and REIT.
GST is expected to boost India´s economic development by breaking tax barriers between the states. It will integrate the country as one vast market like the European Union. This will lead to an integrated tax tariff and regulations at the pan-India level. Taxes paid in one state will be allowed to be set off against taxes payable in another state. It is also likely to bring down cost, improve tax compliance and compilation. The Real Estate Regulation Act will surely help to boost the sector, and increase the mutual trust between developers and buyers. It will set up a regulator who can be approached for redressal of grievances against any issues related to the sector. Further, I also expect reduction in taxes on Real Estate Investment Trusts (REITs) that will help builders to make affordable homes.
This is the most promising and effective budget for the real estate and infrastructure industry in comparison to the last few budgets. Finally, the affordable housing industry has got the much-needed industry status, which will not only revive but also give a boost to the almost dead sector. Industry status will enable these projects to avail associated benefits. The surplus liquidity created by demonetisation with banks has enabled financial institutions to reduce lending rates, which will give direct benefits to the borrower.
The allocation for infrastructure stands at a record Rs 3.96 lakh crore, which is 24 per cent higher than last year´s budget. The proper and fast implementation of such initiatives and policies will take this country to the next level. The encouragement of the PPP model and establishment of small airports, railway security fund, construction of highways and new connected roads across India will not only strengthen the economic condition of the country, but will also create millions of job opportunities through parallel industries. Similarly, rural and urban housing schemes will support other parallel industries like consumer durables, electronics, textiles, cement, tiles décor, etc.
The restructuring of the FDI policy will lead to inflow of funds into the country, which will provide the much-needed financial support to large-scale infrastructure projects. Overall, it is fair to say that the Budget has been drafted with vision and precision. It is going to provide momentum to the entire infrastructure industry.