31 , January , 2023
So, it’s all in readiness as the 2023 Budget session of Parliament will officially kick off tomorrow with the Economic Survey 2022-23 being tabled a day ahead of the presentation of the last full Budget of the PM Modi government before the 2024 Lok Sabha elections. Like all the sectors, the real estate sector has big hopes pinned on the Union Budget 2023-24, especially at the time when the sector is recovering from the realms of global pandemic. In fact, the real estate veterans expects the government to ensure a smooth road to recovery amid rising input costs and razor-thin margins. Team Realty Dekho interacted with veterans of the real estate industry to know their expectations. Here are the excerpts:
Nadir Godrej, Chairman and Managing Director of Godrej Industries
Global inflation, China's economic slowdown, the pandemic's aftereffects, and the conflict between Ukraine and Russia pose a great challenge for the Indian economy. Although there is wage-push inflation in core inflation, as this is only 25% of the basket and since commodities make up most of our inflation basket, and their prices are dropping globally, headline inflation is expected to be around 5%. The global slump poses difficulties for overall growth. Exports have fallen. Therefore, growth must be prioritized. A larger budget deficit is acceptable if the spending stimulates higher GDP growth. Spending on infrastructure has boosted growth, which has attracted private investment and promoted exports. Domestic development and the Gati-Shakti initiative will be very beneficial. The type of deficit should be our primary concern rather than the overall budget deficit. Any investment that fosters progress is appreciated. Subsidies should be cut, and direct transfers to the underprivileged should be made. There might be a temptation to interpret the budget as populist, and I hope that won't happen. The Union Budget for 2023-2024 provides an excellent chance to invest in women's empowerment. The government must increase its efforts in infrastructure, skill development, education, health care, financial inclusion, and other sectors critical to empower women. Investing in the workforce can help create jobs and raise women's wages, ultimately leading to improved long term economic growth that benefits the bottom of the pyramid.
Ankur Gupta, JMD, Ashiana Housing Ltd.
The Indian economy will continue its growth momentum and both services and manufacturing sectors are witnessing a strong and resilient growth rate. In line with this northward trajectory in the overall economy, the real estate sector would also do well. The buoyancy which we have witnessed in the realty sector in the past few years is set to continue in the near term. Despite the headwinds in the global economy along with the inflationary pressure, the challenges are unlikely to impact the housing sector in India in the near term. The upcoming budget hopefully will provide homeowners further relief by giving more interest subsidies on taxation.
Nakul Mathur, MD, Avanta India
Indian real estate stands on a strong footing with a hike of 50% in sales transactions in 2022, compared to the previous calendar year. The positive sentiments will continue in 2023 backed by a healthy economic outlook, expansion in the job market, and a rise in per capita income. Meanwhile, it is also imperative for the governing agencies to take proactive steps to further build consumer demands alongside streamlining the supply cycle. Steps such as reducing GST rates on raw materials such as cement & steel, offering better credit for developers, and single window clearance can immensely help the overall sector.
Ankit Aggarwal, MD, Devika Group
The real estate industry is considering a few tax breaks, such as a 2-lakh reimbursement increase under Section 24, because gross margins are already low in the immediate wake of the global epidemic, and developers must compensate for lost time. For many years, there has been a demand for a single window clearance framework. Furthermore, now would be an ideal time to confer industry status on the sector of real estate for it to obtain lower-cost credit from financial institutions.
Ankit Goel, Director, Goel Ganga Developments
In this budget, the government should mull impetus such as an increase in home loan interest deduction. Under section 24 of the Income Tax, one can avail of a deduction of up to INR 2 Lacs of home loan interest on the income tax. If the government can increase the limit to INR 5 Lacs, it can be a great help for both buyers as well as developers, as due to other succeeding/ successful factors, the prices and EMIs of homes have gone up, so it is a must to increase the deduction for the same.
Suren Goyal, Partner, RPS Group
Indian real estate constitutes close to 8% of the Indian economy. It is also the second-largest job creator after the agriculture sector and close to 250 ancillary industries are dependent on it. This further reflects the importance of the sector, and it is essential that GOI take concentrated efforts to help the industry. Overall, the industry looks upbeat but the rise in interest rates can decelerate the growth juggernaut. Hence the government should step up and take proactive steps to reduce lending rates. If directly reducing the rates is not feasible then it should at least try other means such as offering incentives to first-time home buyers and rendering more lucrative deductions in income tax returns.
Gurmit Singh Arora, National President, Indian Plumbing Association
Stamp duty needs to be reduced. Following the implementation of GST, the industry was burdened, and it is extremely difficult for builders to pass it on to consumers. This can be accomplished by granting waivers rather than incentivizing it. To reduce the nation's carbon footprint, the government should incentivize green building. The government should also encourage and recruit more entrepreneurs.
