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Budget Reactions | Consultants

07 Feb 2018 Long Read
P Pranavant, Partner, Deloitte India
“The budget reaffirms continued focus on Infrastructure and programmes such as Smart City mission, AMRUT, NMCG, the Regional Connectivity Scheme (UDAAN) etc. as can be seen by increased outlay by 20% from the previous year. The key takeaway form this budget is the thrust on social and rural infrastructure including health, education, housing, agri-value chain and penetration of digital infrastructure. Another key point is the emphasis on job creation particularly in the rural area through investment in the infrastructure. Overall, given the constraints and recent reforms initiatives, it is a balanced budget; however, the true picture will emerge only after implementation framework are detailed.”

Peeyush Naidu, Partner, Deloitte India
"The budget sets the right course for the aviation sector. It reaffirmed commitment to sustaining the growth in the sector by focusing on substantial increase in airport capacity! UDAN – a scheme where Deloitte has closely worked with and supported the Ministry, is expanding the aviation network through a transparent market-based model as a result of which hitherto unserved airports and helipads will be connected by existing and new operators. The budget has maintained focus on required capital expenditure for Indian Railways for the year 2018-19 - for modernization and safety related initiatives as well as capacity expansion. The key imperatives going forward would be for the Ministry to focus on leveraging technology and private sector involvement in effectively and efficiently meeting mobility solution expectations of its different client segments (freight, different passenger segments, etc)."

Vishwas Udgirkar, Senior Director, Deloitte India
1.“The budget signals higher reliance on government spending while attracting private investment through bonds. Though past experience does not validate the success of such models, a clearer picture will emerge only when definite implementation plans are chalked out.
2.A target of INR 80,000 crore for disinvestment is a welcome step. Hopefully, the excess liquidity from divestment of infra-related companies will be ploughed back in to the infrastructure sector.
3.Measures announced on Railways investment is laudable, with focus on capacity creation, passenger safety, doubling of lines, and electrification. Specific mention of improving suburban train system in Mumbai is heartening announcement.
4.Specific attention on Mumbai sub-urban rail and Bengaluru Metro Rail are welcome steps. However, we expected more on measures to encourage public transportation in budding cities for sustainable mobility.
5.Focus on digital initiatives, including R&D activities in the fields of Artificial Intelligence, Machine Learning, robotics, IoT and Blockchain are steps in the right direction and will push the digitization efforts of the government.
6.Measures to promote tourism, including development of 10 iconic tourism destinations through digitization, skill development, and branding & marketing are likely to boost local economies, strengthen India’s position on world tourism map as well as have a significant trickle down to aid job creation.
7.Government’s efforts towards providing Housing for All are commendable, especially as the Affordable Housing Fund (AHF) will be funded from priority sector lending shortfall.”

Shubham Jain, Vice President and Sector Head, Corporate Ratings, ICRA
“Impact: Positive

The total capital outlay for infrastructure sector has been budgeted to increase by 20.8% to Rs. 5.97 lakh crore in 2018-19. Apart from the core Railways, and Roads, the special focus of this budget has been on rural infrastructure through development of rural roads, houses, sanitation, irrigation and water supply which will provide a significant boost to the rural economy. To meet the government’s target of housing for all by 2022, the budget announced construction of additional 51 lakh houses in rural areas. Similarly, capital outlay under PMAY (Urban) has been increased sharply which includes assistance for constructing 37 lakh homes in urban areas. The budget emphasized on the completion of on-going high priority irrigation projects and increased allocation under PMKSY-AIBP. The budget also provided direction on the long-term projects being undertaken under Smart Cities Mission and AMRUT programme. So far, out of 100 cities planned for upgradation under Smart Cities Mission, 99 cities have been selected. The programme will involve capital outlay of Rs. 2.04 lakh crore (projects worth Rs. 2,350 crore completed & works of Rs. 20,852 crore under progress). Similarly, under AMRUT programme, State level plans for providing water supply in 500 cities with capex of Rs. 77,640 crore have been approved. Deepening of bond markets is required to support long-term infrastructure financing especially given the twin challenges faced by commercial banks - asset-liability management and increasing share of stressed assets. Relaxation of rating threshold (from AA to A) is a positive as it would encourage more participation from domestic insurance companies and pension funds in infrastructure sector.

Roads Impact: Neutral
The total budgetary allocations (including PBFF, CRF and GBS) to fund the ambitious new highway development programme (including Bharatmala) is estimated at Rs. 3,43,045 crore over FY2019-FY2022. Therefore, starting this budget, the allocations to road ministry was expected to increase substantially; however the increase in budgetary allocation (excluding PMGSY) has been nominal at 8.7% from Rs. 64900 crore to Rs. 70544 crore. Majority of the Bharatmala is expected to be undertaken through NHAI, therefore to bridge the shortfall in budgetary allocations, NHAI is expected to raise funds by monetising more assets through toll-operate-transfer and Infrastructure Investment Trust routes (by transferring mature assets to SPVs). Thrust on PMGSY continued through advancement of completion target to 2019; allocation to PMGSY remains at Rs. 19,000 crore – same as that of FY2018. This is expected to bolster order-book of medium sized road construction companies over the next 2 years. Further, Phase-III of PMGSY is planned to be launched to connect hospitals and schools with major link routes in the interiors of villages. Deepening of bond markets is required to support long-term infrastructure financing especially given the twin challenges faced by commercial banks - asset-liability management and increasing share of stressed assets. Proposal to relax the rating threshold (from AA to A) is a positive as it would encourage more participation from domestic insurance companies and pension funds in the infrastructure sector.

Railways Impact: Positive
The capital and developmental expenditure of Railways are projected to increase to Rs. 1,46,000 crore in FY2019 from Rs. 1,20,000 crore in FY2018RE (Rs. 1,31,000 crore in FY2018BE). The increase of 22% in FY2018 is in line with expectations, and will be required to meet the Railways Vision 2022. The Budget has also emphasized on setting higher execution targets with commissioning of 4,100 km of railway lines in FY2019 compared to 3,500 km during FY2018BE. The budget continued the emphasis on electrification of Railways by sharply increasing electrification projects capex (up by 82.6%) and target (up by 50%). In addition, the Budget also highlighted the redevelopment of 600 railways stations which is being undertaken by Indian Railway Station Development Co. Ltd. Other major announcements in the budget initiation of suburban rail network projects in Mumbai and Bengaluru with estimated project cost of Rs. 68,000 crore.”

Sunil Agarwal, Associate Dean and Director, School of Real Estate, RICS SBE
“We welcome the changes announced in today’s budget. In continuation of its focus on affordable housing, the government has announced a dedicated affordable housing fund and construction of 51 lakh affordable homes this year. Lending for affordable housing will become a priority, which should encourage more private sector developers to build affordable homes. It will also add to the existing demand momentum for affordable homes. We are delighted to see that the government has recognized the challenges of rapid urbanization and is taking efforts to meet them. It is however disappointing to see that the real estate sector has once again been denied industry status.

Union Minister for Finance, Arun Jaitley laid out plans for the future of India’s economy in the Union Budget of 2018. RICS believes the government has offered a positive budget with special focus on the rural economy, agriculture, MSME’s, education, health care and infrastructure sectors. Agriculture and rural economy was the running theme of the Budget, with the honourable Prime Minister Shri Narendra Modi calling for doubling of farmer income by 2022 to mark India’s 75th year of independence. On the whole, the decision to invest in agriculture and rural infrastructure is a wise one, considering the distress in the rural economy. The Finance Minister is confident that India’s economic growth will surge past 8 per cent, which is positive for all the sectors.

Key takeaways from the Budget for real estate and infrastructure sector
Real estate:
This year’s Budget, ignored most of the demands of the real estate sector. There was no mention of infrastructure status to the real estate sector or tax incentives for first time home buyers. Affordable housing however did find prominent mention in the Budget. The government has stuck to its stated mission of providing a home to every poor by the year 2022. This year, the government proposes to build 51 lakh affordable homes. The biggest takeaway for the real estate sector is the government’s proposal to establish a dedicated affordable housing fund under National Housing Bank for priority sector lending. This will ease lending for affordable housing projects. Last year’s Budget announcement of an industry status to affordable housing encouraged many private sector developers to launch affordable homes. We believe that easing of funding for affordable housing will have a similar effect. We are likely to see entry of newer players in this housing segment. Supply of affordable homes increased after the government accorded infrastructure status to this segment and we expect this trend to continue. We are glad to see the government recognise urbanisation as an important challenge. An increase in urban population has increased the demand for basic services such as water, transportation, sewage treatment, low income housing in cities. The government has two interlinked programmes to address the urbanisation phenomenon-smart cities and AMRUT. AMRUT programme will focus on water supply to all households in 500 cities. Water supply contracts for 494 projects worth 19,428 crore has been awarded. So far, 99 smart cities have been selected with an outlay of Rs 2.04 lakh crore. It is good to know that these cities have started implementing the ambitious smart cities mission and about Rs 2350 crore worth of projects have already been completed. Around Rs 20850 crore worth of smart city projects are still under progress. The other positive for the real estate sector is the government announcement that for income from capital gains tax, there will be no need to make adjustment in case circle rate does not exceed 5 per cent of sale consideration. This will make real estate transactions easier.

Environment: In what is a rare occurrence, protecting the environment found mention in the Budget. The government has recognized air pollution in Delhi-NCR (National Capital Region) as alarming and to mitigate this, the government has proposed to give subsidies for farm machinery to manage crop residue.

Infrastructure and construction: Infrastructure remains a huge priority for the government. The Budget has increased infrastructure outlay from Rs 4.94 lakh crore to Rs 5.97 lakh crore. The Finance Minister, Arun Jaitley, said the country needs a massive investment of Rs 50 lakh crore in infrastructure to increase growth of GDP and integrate network of roads, ports, airports. The government is confident of completing national highways exceeding 9,000 km in 2018-19. India needs to spend billions and billions of dollars in building infrastructure, so this investment is much welcome. Railway capex has increased by 25 per cent to Rs 1,48,558 crore from Rs 1,20,000 crore. Around 600 railway stations are being redeveloped. This year, the government plans to renew 3,600 km of railway tracks and around 4247 unmanned railway crossing in broad gauge network will be eliminated. It is encouraging to see the government spend on upgradation of local rail network in the cities of Mumbai and Bengaluru. The government proposes to add 90 km of tracks to Mumbal’s local train network at a cost of Rs 11,000 cror . It has also allocated Rs 17,000 crore for Bengaluru metro network. The AAI (Airports Authority of India) has proposed to expand airport capacity to 1 billion trips a year.

Key measures that will impact real estate, construction and infrastructure:

Affordable housing
Govt to establish a dedicated affordable housing fund under National Housing Bank. It will ease lending to affordable housing sector.

Tackling urbanisation
Budget reveals that out of 100 smart cities, 99 cities have been selected with an outlay of Rs 2.04 lakh crore
AMRUT programme to focus on water supply to all households in 500 cities. Water supply contracts for 494 projects worth 19,428 core awarded

Infrastructure investment increased
Infrastructure remains a big priority for the government. The Budget has increased infrastructure outlay from Rs 4.94 lakh crore to Rs 5.97 lakh crore.

Railway capex has increased by 25 per cent to Rs 1,48,558 crore
The AAI (Airports Authority of India) has proposed to expand airport capacity to 1 billion trips a year.”

Rakesh Bharti Mittal, Vice Chairman, Bharti Enterprises & President Designate, Confederation of Indian Industry (CII)
“The Finance Minister has presented a realistic Budget. Given this is the last budget before the general elections, he has touched upon the rural stress and social sectors, which I believe needed a lot of support. A couple of things that have been announced will help in increasing farm income like bringing all crops under MSP using the 1.5 formula, and that will be bridged if there is a gap between the market price and the MSP. So, I think those are the positive steps taken. Rs 1,400 crore for food processing is again a good initiative, which will ensure that we will start seeing some investments in cold chain and logistics as well. FPOs have been granted 100 per cent tax reduction that will generate on and near farm employment opportunities. Also, as FPOs come together with their produce, they value-add and supply to consumers or buyers. That will ensure that they get a better price. So, all in all, for the rural and farm sector including the rural infrastructure outlay, which is large, will help that. On the healthcare front, the national healthcare scheme that was announced covering 10 crore families or 50 crore persons with Rs 5 lakh per year of medical expenses is a big gamechanger that will really help the poor to gain access to quality healthcare. On the education front, bringing in an intergrated programme with the degree programme is something that is again a welcome step. We will get quality teachers coming out of training institutions going forward. The Indian infrastructure story will continue as there are huge outlays. One good thing is that the Finance Minister has not announced any large infrastructure schemes. He has largely focussed on existing smart cities, ports and airports. That is something good as the energy and focus will be on completing the projects in hand. In spite of the increase in public expenditure, fiscal deficit has been contained at 3.5 per cent, which is a good sign.”

Shobna Kamineni, Executive Vice Chairperson, Apollo Hospitals Enterprises (AHEL), and President, Confederation of Indian Industry (CII)

“The government has done quite a bit to ease farmers’ woes because that’s fundamentally 64 per cent of the population. Then it moved the envelope again on some schemes that have been successful – more toilets, gas connections and free electricity. The rural electrification is a big thrust. And more than anything else, the second major cause of rural poverty is healthcare. This will address 500 million people through the biggest health scheme in the world and its implementation will lead to a more productive workforce, and will also help a lot of job creation. In infrastructure, the Finance Minister said that the existing infrastructure plans need to be executed. And those are the things that corporate India likes to hear. Tax on 90 per cent of corporates has been reduced, which is the MSME sector. The government is pushing the envelope by talking about Make in India and creating smart cities. India Inc now has to look at the fineprint deeply and to find out how quickly those opportunities will play out. Indian infrastructure is likely to see 20 years of a huge boom. We need to spend $1 trillion in three years. And the government will be raising money through annuities. For instance, our air capacity has gone up 100 per cent in the last three years and we will have 900 new planes coming here in future. Therefore, infrastructure will continue to be the bedrock of India’s growth.”

Shreekant Somany, Chairman & Managing Director, Somany, and Chairman, CII National SME Council
“The Budget is highly focussed on farmers, rural economy and infrastructure. These were the areas that primarily needed to be looked at, and the government has done that in the Budget. Of course, there’s not much that could have been done. Corporate India would have wanted reduction in taxes, which was promised, but hasn’t happened over the years. Beyond that, one of the good things that has happened is the direct labour employment, which has been extended to all sectors and will help in cutting down the middlemen. Whatever has been announced for MSMEs is a welcome step. But there’s a lot that needs to be done because I personally believe that it is one industry segment that has the highest potential for job creation and value addition to the country.”

Ramesh Nair, CEO & Country Head, JLL India
“No direct impact on Real Estate, Budget only focuses on long-term: JLL rates Budget 3/10.
The union budget announcement did not have any direct impact on the real estate sector. No changes in Income Tax sops or other direct measures that influence the sector. The demand and supply dynamics of real estate sector get no further intervention. The sector which has been reeling for a while was expecting some big ticket announcements to revive it. This was from the perspective that real estate greatly contributes to the three E’s – Economy (by contributing 7.7% to GVA), Employment (15 million job creation over 5 years) and contribution to Exchequer. The functional reforms of RERA, Benami Properties (Prevention) Act, Bankruptcy and Insolvency have created a more transparent and accountable sector. The expectations to receive from direct benefits from the budget was high. The real estate sector’s long standing demand of getting an ‘industry’ status has once again not found mention. Further there was no concessions for ECB for real estate. The sector expected to see some measures to infuse demand with relaxations in key tax rates like 80C, 80CC and 24B which have also not been addressed. Aspects like single window clearances, uniform stamp duty or reduction in GST rates on real estate were not mentioned either.

Like the GST, single window clearance and stamp-duty could also been brought into a centre-state ambit to be implemented with states towing the line with incentives and benefits upon implementation. We understand that states’ will be consulted as part of centre – state dialogue to come to a consensus. We see some strengthening of the affordable housing sector in the form creation of Affordable Housing Fund under the National Housing Board. This will allow better access to capital for related developments in urban and semi – urban areas. Announcements in allocation in infrastructure and road and highway developments of over 9000 kilometers, Airport development to increase capacity by 5 times as well as 600 railway station development will create opportunities for developments around these locations. Further government continues to focus on the ‘Bharatmala’ to develop 60,000 kilometers further allows for development of new locations. Alternatives have seen credible mention in the budget with Healthcare and Education being direct beneficiaries. While Senior living, by virtue of improvement in saving capacities of senior and super senior citizen, may also get a boost. The government continues to stress on transparency by making multiple provisions towards the same with mentions of block chain technology for digital economy, further integration of Jan Dhan to mainstream economy, facilitating raising of bonds and 142 cities receiving investment rating. The government has focused on creating long term programmes for inclusive growth. They have clearly spelt the motivation of this year’s budget as ‘Ease of Living’. This budget, seen in the light of yearlong announcements, is only a continuation in the process of reforming the economy.”

Anshuman Magazine, Chairman, India and South East Asia, CBRE
“It is fair to say that this year’s budget is a populist one, focusing on providing social security at the grass root level. The various announcements and funding provided are towards promoting the further growth of small scale industries as well as improving infrastructure, particularly across rural India. There is some good news for the real estate sector as well. With the aim of improving connectivity the Finance Minister has proposed the redevelopment of over 600 railway stations, completion of 9,000 kms of highways as well as improvement of regional connectivity with UDAN expected to connect 56 unserved airports and 31 unserved helipads in the country. This will have a positive impact on the country’s trade movement. Additionally, the budget also focusses on the development of the suburban railway networks in Bangalore and Mumbai. This focus on infrastructure development is in line with the governments long term objective of making India future ready. The establishment of a dedicated affordable housing fund under the National Housing Bank for priority sector lending will provide a further impetus to the development of housing in this segment. Additionally, the fact that differentials between market value and circle rates for properties (upto 5%) will not be adjusted, will also help the demand for housing. From a taxation point of view, the increase in standard deductions to INR 40,000 per annum will help individuals have more disposable income which could be channeled towards higher investments into real estate. It was hoped that this year’s budget would finally address the need to put in place single window clearance and accord infrastructure status to the sector. Though these issues continue to remain, this year’s budget has focussed towards strengthening the country’s agricultural and rural sectors, two significant contributors to India’s economy.”

Shishir Baijal, Chairman & Managing Director, Knight Frank India
“The Union Budget 2018-2019 has predominantly focussed on revitalising the rural economy which is a good move. We also welcome the thrust on the healthcare, agriculture and infrastructure sectors outlined in this budget. Throughout last year, measures surrounding ‘Affordable Housing’ were the mainstay from the perspective of real estate industry. This was also evident in the Credit Linked Subsidy Scheme (CLSS) and the last Goods & Services Tax (GST) Council meet where they brought down the effective rate to 8% from 12%. A similar trend is visible in this budget where the ‘Affordable Housing’ fund under National Housing Bank (NHB) has been created as a part of the priority sector lending. However, there has been a silence in the budget on stimulating mainstream real estate demand. The sector grappling with the reforms-driven new order has been bereft of any meaningful interventions that could have been achieved through the budget.”

Anuj Puri, Chairman, Anarock Property Consultants
“All eyes were on the Finance Minister as he delivered his fifth full Union Budget – the last one before the general elections in 2019. As expected, the budget turned out to be populist and sounded excessively cautious while the need of the hour was to provide a positive boost to the economy, which is reeling under the pressure of structural changes and policy reforms.

The Budget did not offer any substantial incentives to individual taxpayers, with slabs remaining constant. A change in the standard tax deduction in lieu of transport and medical expenses, which now stands at INR 40,000, was the only gift to the salaried class. There was no change in tax savings on home loans, nor were the 80C limits raised. While this put paid to any hopes for significantly increased home buying appetite, there were some notable announcements with positive implications for the real estate sector:

The continued push for affordable housing: As many as 51 lakh houses in rural areas are to be built in 2018-19. Also, a dedicated Affordable Housing Fund was announced in this Budget. These are the right moves towards achieving the vision of Housing for all by 2022.

The Budget addressed the anomaly under Section 43 CA to tax real estate transactions at their real value rather than the value arrived at by applying artificially higher circle rates. As per new announcement, if the circle rate does not exceed 5% of transaction value, no adjustment is required towards the capital gains on a real estate transaction. It will help in terms of some extra savings if there is parity between the market rates and the ready-reckoner rates. Cities which are not under the heavy influence of real estate investors and where prices are rational may benefit from this announcement.

Improvement in regional air connectivity: The regional air connectivity scheme to connect 56 unserved airports is a good news for business growth and office space demand in smaller cities, with a natural spinoff demand for housing on the back of job generation.

Curbing cryptocurrencies: The Government is landing down heavily on cryptocurrencies such as Bitcoin. There was conjecture that cryptocurrencies would find their way into Indian real estate, as it has in developed countries, effectively becoming the 'new black money' in the sector. With the Government committed to taking all necessary steps to eliminate the use of cryptocurrencies in India, people who were looking at them as a get-rich-quick route will have to look at traditional asset classes and investment routes again.

Increase in taxpayers: With the massive crackdown on black money, the taxpayer base has increased significantly. This is, at least indirectly, good news for the real estate sector as seeking home loans is now going to be easy for a larger set of individuals.

Allocation of INR 1 lakh crore to update education infrastructure over the next four years may result in the development of new education institutes. In addition, if the Government emphasizes more on a definitive student housing policy, a new avenue will open up for the real estate sector.

The allocation of INR 5.97 lakh crore on infrastructure spending is a welcome move, though we need a massive push to ensure that the country’s infrastructure meets global standards.

In a nutshell, while there were not many takeaways for the individual taxpayers, the Budget also did not seem to favour any particular sector. With fiscal deficit slipping to around 3.5% of GDP in 2017-18, the Government seems to be on the right path of taking charge of things and ensuring that the fiscal deficit target of 3.3% of GDP for 2018-19 is achieved.”

Jaxay Shah, President, CREDAI National
“Budget adopts a fresh and bold approach by targeting education and health not as benefits but instruments of growth and development. Agriculture, investment and jobs were the three critical tests for the Budget as pointed out by Economic Survey and the Budget passes these tests with flying colors. Real estate had just received a major reduction from 12 per cent to 8% in GST on January 25, 2018. The Budget has added to this concession for housing by adopting a target of 31 lakh homes in 2018-19 to be built in urban areas and 51 lakh in rural areas. In order to do so, Government has planned a dedicated Affordable Housing Fund under NHB with priority sector lending shortfall contributing to this fund. Government assuming ownership of NHB from RBI is welcome as it translates into the focus of NHB shifting from regulation to development. Lastly, Government has addressed the anomaly under Section 43 CA to tax real estate transactions at their real value rather than the value arrived at by applying the artificially higher circle rate. More than these direct measures, however, it is the deeper economic logic of the Budget which is the major boost for housing and real estate. The case of long term capital gains being subjected to tax at 10 per cent from now on is especially pertinent as it renders investment in real estate more attractive than before. There is also the expectation that senior citizens and salaried employees receiving tax breaks gives them money in the hand to go and buy a house. Most importantly, the public investment in infrastructure in the rural areas, agricultural marketing, smart cities and urban connectivity, multiply investment prospects for real estate sector.”

Pankaj Bajaj, President, CREDAI NCR
“Budget 2018-19 has some incremental announcements for the real estate sector. The Finance Minister has amended section 43 CA and allowed for market transactions to happen upto 5% below the circle rate without deeming the deficit to be the income in the hands of the seller and the buyer. While we welcome the move it would have been better to do away with this provision entirely as the in many places the market prices are way below the circle rates . The budget announced the Affordable Housing Fund under NHB which will further catalyse investments in this sector. However, the big benefit to housing would accrue from middle class having more disposable incomes in their hands. Stndard deduction has been increased. Senior citizens have been given tax breaks all this will increase the EMI bearing capacity of the middle class and improve the demand for housing. Finally, the imposition of LTCG on equity and equity funds will also improve the relative attractiveness of real estate as an asset class. Otherwise, for the last one year financial instruments were suckking up all the investments from the middle class.”

Kushagr Ansal, President, CREDAI Haryana
“The budget has brought relief to the health, education and agriculture sector; however, overall expectations of the realty sector were high which have not been met. In a move to boost the affordable housing demand, the government has announced to establish a dedicated Affordable Housing Fund (AHF) in National Housing Bank which is positive for real estate sector. There has been allocation of funds for infrastructure development which includes construction of road networks and setting up of urban and rural clusters. Affordable housing has been given a fair share. This would kick-start the real estate in Tier 1 and Tier 2 cities along with new mushrooming areas in major cities as well. Increased investments and number of airports may boost Aerotropolis projects. This is likely to impact commercial as well as a residential sector in the country. Much to our disappointment, Industry status and single window clearance system could have been the biggest game-changing reforms for real estate sector which were not even mentioned in the budget.”

Mayur Shah, President, CREDAI-MCHI
“The budget has focused on areas such as agriculture, rural sections and health care that are vital and have lacked attention in the previous budget. Announcements on building 1 crore houses under Pradhan Mantri Awas Yojana (PMAY) in rural areas will surely promote housing in the rural areas. This includes 31 Lakh homes to be built in 2018-19 in urban areas. Also, establishing a dedicated affordable housing fund under National Housing Bank for priority sector lending will help developers in financing projects. Government assuming ownership of National Housing Bank from RBI would translate in to focus of National Housing Bank shifting from regulation to development. The government has shown special focus on developing connectivity in Mumbai by strengthening and expanding the rail network. Creating 99 smart cities will further boost the spirit of development in the country. Corporate tax reduction for MSME will be good news for developers and 10 percent tax long-term capital gains may bring more investments to Real estate, as it’s a level playing field with the equity market. The government has also addressed the anomaly under section 43 to tax real estate transactions at their real value rather than the value arrived at by applying the artificially higher circle rate. However, we were expecting some more from the honourable Finance Minister. Post demonetization and GST the sector has been limping back. In such circumstances, an announcement on providing industry sector status to real estate would have made things easy. Also, there was no announcement on GST, which is very high coupled with states Stamp duty, around 20 per cent transaction cost is being the biggest dampener for real estate and housing. The industry was expecting some measures for home buyers on higher interest exemptions on home loans which would have certainly helped developers and buyers in equal measures.”

Deepak Kapoor, President, CREDAI Western UP
“The Union Budget 2019 has focused on some key issues which is somewhat positive for real estate sector. In some major declarations made in the budget regarding infrastructure development, it is clear that government is keen to give a boost to urban housing segment. Increased investment and number of airports will lead to several aerotropolis projects, like development of office buildings, shopping malls, hotels, entertainment complexes, manufacturing, assembly, logistics and warehousing facilities around the airports. This is likely to impact residential as well as commercial sector. The reintroduction of standard deduction after many years of Rs. 40,000 a year is a welcome move by the government. This may really enthuse taxpayers. Reduced corporate tax by 25 percent extended to companies, with a turnover of Rs 250 crores to benefit small, micro and medium enterprises will give relief to builder fraternity. Many issues related to health, education and agriculture have been addressed which is good. But his budget may not really encourage homebuyers. The biggest disappointment was that the real estate did not get the infrastructure status which was the long pending demand of this sector.”

Vipul R Jhaveri, Managing Partner Taxation, Deloitte, Haskins & Sells LLP
“The Budget is really targetted at segments that needed to be helped. So, the agriculture sector and small businesses have been adequately recognised for support. Large businesses that were looking for some tax concessions might be disappointed. As far as the tax regime is concerned, the government has reduced the tax rate for MSMEs. And that should really help the government’s agenda on employment generation. Of course, there is no limit to what more could have been done. But it’s a continuous process and, therefore, for the time being it is adequate. We don’t see anything detrimental in the Finance Minister’s speech. Support has been extended to certain specific sectors in the small, medium as well as in agriculture space, whether animal husbandry, leather, apparels or textiles.”

Manish Agarwal, Partner and Leader-Infrastructure, PwC India
"A sum of 50 lakh crore for infrastructure is welcome is as it reaffirms continued funding of various initiatives in Roads, Railways and Urban Infrastructure. Quantum leap in airport capacity is key requirement to keep pace with the rapid growth in aviation. Other initiatives, outside the budget, to revive private sector play in these sectors, will complement and further the impact of the budget allocations.”

Prem Rajani, Managing Partner, Rajani Associates
“The Budget 2018 has touched upon almost every sector, while not disrupting the overall economic environment. It aims to provide the necessary push in field of infrastructure, farming, rural household provisions, education, and biggest of all, healthcare, for the common man. The Government continues with gusto towards developing India’s road and real infrastructure. From an industry perspective, we have seen focused efforts to support lending through loans schemes, promotion of NBFC’s and other incentives.

1.LTCG Tax on Securities: The Finance Budget 2018 re-introduced long term capital gain tax on sale of shares of listed entity and units of mutual funds at the rate of 10% on prospective basis (i.e. all gains upto January 31, 2018 will not attract long term capital tax). While this move will enable the government to collect tax on sale of securities of listed entity, which was otherwise exempted for almost 14 years, there are two important aspects on sale of securities which the Government must assess and provide for (a) non-levy of the securities transaction tax (which was introduced in the Finance Budget of 2004 in lieu of the tax on long term capital gain), and (b) making available the indexation benefit on securities held for more than one year.

2.Infrastructure: Through initiatives such as Bharatmala Pariyojana, AMRUT and Rashtriya RailSanraksha Kosh, the Government has reaffirmed its commitment towards the infrastructure sector, which will boost investor interest. The Indian railways will definitely benefit significantly from the announcements made today. Telecom infrastructure, too, should see momentum. With initiatives to revive interest towards InvITs and ReITs, we expect investor interest around these financial instruments.

3.Strategic Disinvestment: The biggest goal set by Budget 2018-19 is the disinvestment target of Rs. 80,000 crore. The Government will need to continue its sustained efforts in 24 identified CPSE’s in order to achieve this goal. This will go a long way to help fund key projects.

4.Capital Markets: Market regulators are looking at fresh liquidity through the bond market. The regulators are looking to nudge large corporates to address one-fourth of their financing needs through the bond market. This is something, we believe, a larger number of businesses should explore with interesting options available currently.

5.Financial Lending: From a corporate and banking perspective, we are pleased to see greater attention provided to resolving NPAs of MSMEs, as till now, many initiatives were directed towards addressing of large NPAs. Initiatives towards NPAs for MSMEs will help in the cleaning up of stressed assets to a great extent and also help improve bank lending towards this segment. The linking of loan sanctions to SME’s with GSTN through the GSTN online portal would improve the time taken for loan sanctioning.

6.Real Estate: Reaffirmation towards housing for all along with the Affordable Housing Fund (AHF) in National Housing Bank, will certainly provide a boost to the real estate sector, to sustain its progress towards housing for everyone by 2022. With the implementation of RERA, this would be a good time for developers to further focus on the affordable housing segment, especially in Tier-II and Tier-III cities of India.”

Abhishek Goenka, Partner, Tax and Regulatory Services, PwC
“Overall, it’s a good Budget. I’m neither disappointed nor particularly thrilled with the Budget. The reason I say that is because there was a fear about several populist measures being announced. However, that hasn’t happened. The other thing is there’s finally some recognition of the rural distress and some very specific measures have been taken on that front. The massive healthcare programme is quite surprising at one level, given its target to cover 50 crore people with Rs 5 lakh coverage. But that’s something that the country desperately needs. If it is pulled-off, it could of one of those watershed announcements. On the tax side, based on what the Finance Minister mentioned in his speech, there are no surprises. The long-term capital gains tax was expected and it has come out in a reasonably calibrated manner. What worries me is that because we are making a modest start does that mean that it will keep climbing because, unfortunately, that’s what the government has done over the years once it has introduced a tax. The other area where I am disappointed is the corporate tax rate. The government has increased the availability of the lower tax of 25 per cent to companies of up to Rs 250 crore, but that’s patchwork in my view. It should have been across the board; if not down to 25 per cent, at least, down to 28 or 29 per cent. I would always like to include startups to MSMEs because I believe that classification needs to be bridged and combined. There was some mention of full taxation of startups with received capital in the Finance Minister’s speech. I don’t necessarily see anything that will jumpstart investment across the board. There is still a little bit of something here and something there.”

Bhairav Dalal, Partner-Real Estate Tax, PwC India
“Affordable Housing continues to get preferential treatment given the ‘Housing for all’ agenda. Creation of the Affordable Housing Fund will certainly ease the funding gap. While providing a safe harbour is a welcome move for property transactions, the margin of 5% may not serve the purpose. REIT investors would have to now factor LTCG tax while evaluating investment opportunities which would increase their return expectations.”

Amol Prabhu, Partner, Shashi Prabhu & Associates
“The budget was very well drafted with a focus on grassroots development within India. Government’s initiative to promote affordable housing for all with the basic infrastructure being benefitted with an investment of 50 lack crores in infrastructure sector, creation of 115 model aspirational districts, outlay of 2.04 crores for smart city and setting up of Architecture and Planning schools within the IIT & NIT. I am hoping that the creation of the affordable housing fund under the ‘National Housing Bank’ coupled with the earlier initiative of ‘Pradhan Mantri Awas Yojana’ scheme will boost the development of Tier II and III cities by creating housing for all. Government is taking the initiative to construct 2 crore toilets in next fiscal year under Swach Bharat Mission. The Bharatmala project to develop 35,000 KM of roads under phase 1 with an outlay of Rs 5.35 lakh crore will help connect Tier II & III cities to metropolitan cities. Green Initiative will also get a small boost with the exemption of custom duty on Import of solar tempered glass for manufacture of solar cells. Wish the budget had done some more in this area. Government has also proposed to increase the number of airports from 124 to 620 and the UDAN scheme to connect 64 unconnected airports across the country will give a huge boost to development of smaller towns and cities with proposing to setup 1.5 lakh centers to provide health facilities closer to home and setting up of one medical college for every three parliamentary constituencies, with 24 new government medical colleges also being envisioned in the coming year is a great initiative to provide healthcare facilities to every citizen.”

“This Union Budget came against the backdrop of a raft of reforms, economic slowdown and fiscal stress. While the budget proposals will incrementally contribute to economic expansion, with its de facto elements of stimulus, the pace of growth will largely be due to factors outside the budget. Growth has already bottomed out, so the key drivers in fiscal 2019 will be: 1) improved ability to benefit from strong global growth as domestic headwinds from demonetisation and implementation of the Goods and Services Tax fade, 2) enhanced ability of banks to lend following recapitalisation, and 3) normal monsoons. To be sure, there was limited headroom for a big spending push due to fiscal constraints. The government has for the second consecutive year already breached its fiscal deficit to gross domestic product (GDP) target of 3%. As opposed to a budgeted 3.2%, fiscal deficit in fiscal 2018 stood at 3.5% of GDP and is budgeted at 3.3% in fiscal 2019. But the more worrisome part is that the breach in fiscal deficit is despite a cut in capital expenditure (capex); that means, had the government stuck to its targeted capital expenditure for fiscal 2018, fiscal deficit would have been still higher.”

Niranjan Hiranandani, President, NAREDCO
“The National Real Estate Development Council (NAREDCO) has hailed the overall budget presented by Finance Minister, Arun Jaitley and feels that the Government has continued making announcements that will take the country on the path of growth as across sectors, namely, Agriculture, Food Processing, health insurance industry, textile and the affordable housing. The affordable housing sector which already has received Government of India’s positive reforms shall continue to grow in years to come. Affordable housing shall witness increased growth in across Tier 1, Tier 2 and Tier 3 cities. Consequent to this, with real estate having forward and backward linkages, supply chain industries - Cement, Steel, Iron, Construction Materials and Transportation, will also witness growth. This will boost economy, create employment and avenue for housing and real estate. I think the Budget is an Realistic Budget. The provisions for Agriculture, especially 11 lakh crores for Fisheries, Aquaculture and Animal Husbandry; 5.97 lakh crores for Infrastructure; National Health Protection Scheme for 10 crore families; 3 lakh crores for Mudra loans; 1 lakh crores for the RISE Scheme; Medical Colleges; 10,000 crores for an affordable housing fund; provision for Education; lower tax rates of 25 % for MSMEs with a turnover upto 250 crores; are all measures which will give a huge boost to the economy and GDP. These will all in turn uplift housing and real estate. The government has in any case been taking steps for promoting housing, especially affordable housing separately ever since 2014. It is therefore equally possible that steps for promotion of Rental Housing and for removal of distortions in some provisions of the Income Tax Act to allow investment in multiple homes upon sale of an old house, can be taken during the discussions on the Budget in the Parliament or during the course of the year. We would like to compliment the Finance Minister, Shri Arun Jaitley for announcing an overall good budget for the country. The budget announcements are leaps to the future for agriculture, health, infrastructure, rural and MSME sectors. These announcements shall prove to be the drivers of economic growth and showcase government’s focus on fiscal prudence and reforms. We are indeed grateful to the Government for considering NAREDCO’s request of lowering GST rate from 18% to 12%, which is effectively 8% now, after considering land abatement at 30 percent. The beneficiaries will be houses built as Affordable Housing; houses under Credit Linked Subsidy Scheme for Economically Weaker Sections (EWS); lower-income group (LIG), middle income group-1 (MlG-1) and middle income group-2 (MlG-2) under the Housing for All (Urban) Mission or Pradhan Mantri Awas Yojana (Urban). The Finance Minister’s announcement of a dedicated affordable housing fund (AHF) in National Housing Bank, funded from priority sector lending short fall and fully service bonds, authorized by Government of India, is a welcome decision. This will help in achieving the vision of Housing for All by 2022.

The focus was on 'ease of living' after 'ease of doing business'. When he started his Budget Speech, Finance Minister Arun Jaitley said what has been largely expected that the budget will focus on Agriculture and rural economy. He did not disappoint this expectation, with what is largely a ‘Socialist’ budget. In rate the Budget at 3 out of 5. Finance Minister Arun Jaitley has managed to balance populist demands, the need to support economic growth and Prime Minister Narendra Modi's focus on fiscal discipline and reforms. From a real estate perspective, the Finance Minister said the government will establish a dedicated affordable housing fund in the National Housing Bank through various funding measures. This is a welcome step. The Finance Minister’s mention of reducing hardships faced in realty deals was ‘positive’. It was also positive to see Suburban Railways in Mumbai find a mention in the budget, with Rs 11,000 crore of outlay. “Improved railway network and accessibility generally have a positive multiplier effect on real estate. Targets of Swacch Bharat, rural electricity and LPG connections have been increased substantially, which is a positive. The Budget take-away: Focus on 'ease of living' after 'ease of doing business'.”

Parveen Jain, Vice Chairman, NAREDCO
“We welcome a comprehensive and well structured budget announced by Finance Minister. Positive announcements across sectors are contributors towards economic growth and shall boost these sectors, simultaneously, creating opportunities for real estate sector. NAREDCO also welcomes the decision of the Government for amending Section 43 CA of the Income Tax Act, that no adjustment shall be made in respect of transactions in immovable property, where the Circle Rate value does not exceed 5 percent of the consideration. In other words, by allowing it to be valued at up to 5% below circle rates for calculation of stamp duty and capital gains tax.”

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