The Covid-19 pandemic has turned into an unprecedented humanitarian and economic crisis. Gazing into a crystal ball to predict an outlook was risky as we never imagined that an outbreak of such a magnitude. It was a very difficult period to navigate through simply because there is no past precedent to rely on. The upcoming budget is seen as a way forward to get the economy back on track.


The Union Budget should focus on policies which will lead to economic growth, boost consumption and encourage private investments. The Budget should also lay a strong emphasis on healthcare and livelihood creating sectors such as infrastructure and housing. 


Housing is one of the most important sectors in terms of job creation both for the direct benefits it gives to the housing as well as to the indirect jobs that it creates. Direct jobs are created for construction workers, masons, carpenters, plumbers, engineers and so on. Indirect jobs are the support that the real estate sector provides to industries like cement, steel, paint, power and many of the ancillary industries associated with housing. The creation of jobs generates income, increases consumption and results in greater demand for goods and services. Job creation increases aggregate demand and eventually leads to higher economic growth. Real estate therefore plays a noteworthy role in shaping the economy and its revival is crucial for GDP growth.


The CLSS scheme has been a major success since its launch in 2015. There is a need to extend PMAY benefits to more locations and extend the deadline for the Middle Income Group till March 2022 like the extension which is provided in the EWS/LIG category.


Reduction in stamp duties in some states led to significant increase in demand. To keep the momentum going, more states need to provide some incentives to the real estate sector.  For instance, Maharashtra has reduced stamp duty from 5% to 3% till March 31, 2021 (And had reduced to 2% till December 31, 2020). This has resulted in a three-time increase in registration volumes for the month of December 2020 compared to the corresponding month in the previous year. Maharashtra has also reduced premiums charged on construction by 50 per cent till December 31, 2021. This 50 per cent waiver in premium is applicable to both ongoing and new projects. The reduction in premium will help softened prices and improve buyer’s interest.


There is a need to promote the rental market in India. Currently, the setoff and carry forward of losses from house property is restricted to Rs. 2 lac. The earlier law did not have such restrictions and hence the earlier law could be restored.


Currently for under construction properties homebuyers have to pay GST of 5% that are not part of the affordable housing segment and 1% for residential properties in the affordable housing segment. If the GST for under construction ca be removed for a limited period of time, it will go a long way in boosting the demand for under construction properties.


With aim to provide last mile funding to stalled housing projects, government had set up SWAMIH fund. Whilst SWAMIH is an excellent initiative, there are numerous housing projects which require last mile funding. It is not practical for a single fund to resolve all the last mile funding issues faced by the sector. Hence it would be desirable to have more such funds which will enable stalled under construction project to be completed faster.


I hope and pray that we will soon see the end of the Covid-19 pandemic and that our lives will be back to normal.


(Renu Sud Karnad is the Managing Director at HDFC Ltd.)


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