Real(ty) poll plank
The ruling party heads into parliamentary elections riding on a horde of pre-poll infrastructure provisions and productive real estate reforms
While the issue of nationalism in the wake of Pulwama and air strike continues to dominate the political discourse in the run-up to 2019 general elections, yet growth with good governance remains the main poll plank of ruling BJP, which is showcasing how its reforms have paid rich dividends in the real estate and infrastructure domain, not only contributing significantly to nation's GDP but also boosting the living standard of masses.
Riding high on the theme of New India & transformation through reforms, this year's interim budget spelt out measures to boost real estate. Not only was the annual income up to 5 lakh made tax free to boost the disposable income of home buyers, but tax exemption on house rents was also hiked to 2.4 lakh to encourage investors to invest in second homes for rental income. The budget also lessened the tax burden of developers by way of extending the exemption of tax levy on unsold inventory, from one year to two years, besides benefits under Section 80-1BA of the Income Tax Act to projects approved till March 31, 2020. With these budgetary incentives together with a substantial cut on GST rate on housing, the government focused on boosting real estate.
In fact, immediately after taking over in 2014, the Modi government demonstrated its commitment to give a boost to the construction and housing sector. In a far-reaching measure, the first budget of the NDA government met the long-standing demand of liberalising FDI norms in the construction sector by reducing the requirement for a built-up area and capital requirement. In yet another significant step, REITs were introduced with tax incentives to unlock a new source of funding for the capital-starved developers. Besides these, the twin measures of increasing home loan interest exemption limit by 50000 rupees and income tax limit by another 50000 rupees were major incentives to boost housing. In the following budgets, infrastructure was given a big push with an investment hike of 70000 crores and setting up of National Investment and Infrastructure Fund.
Fully recognising that affordable housing is key to meet the severe shortage of housing in the country, the government brought in incentivised policies for affordable housing including providing infrastructure status to it. The reform of demonetisation together with Benami Property Prohibition Act was introduced to stamp out black money from real estate, responsible for an artificial spurt in prices. Further, the reform to regulate real estate through the Real Estate Regulation Act (RERA) was introduced which not only contributed to bringing down realty prices but also brought in transparency and fair play into real estate transactions.
The government launched the flagship mission of 'Housing for All by 2022'. And to ensure that housing was within the reach of masses, Pradhan Mantri Awas Yojana (PMAY) was launched with Credit Linked Subsidy Scheme (CLSS) offering home loan interest rate subsidy of up to 2.67 lakh. This has significantly helped to make homes affordable. The gains of PMAY are visible to all in terms of delivery of record number of homes, though they are far short of 2022 targets. On the infrastructure front, the record construction of over 25 km a day of highways is another achievement which Modi government is showcasing.
Modi government is now flaunting these reforms to voters ahead of polls. That the government has made real estate, housing and infrastructure as one of its main poll planks, is clearly visible from the hordes of projects/schemes launched in a rush before the introduction of poll code. Among the key metro rail projects given go-ahead were Kanpur & Agra Metro, Phase 4 of DMRC, Dwarka Expressway metro connectivity and extension of Red Line Metro to Ghaziabad. The Dwarka Expressway stuck for years in Delhi area, was given go ahead. In order to provide a big connectivity boost to real estate, regional air connectivity from Hindon Airforce Station in Ghaziabad was started with the operationalisation of civilian flights. The foundation laying of Rs 90000 crore Delhi-Mumbai Expressway and 61000 crores Delhi-Meerut Rapid Rail Project.
However, notwithstanding the pre-election real estate and infrastructure bonanza and the positive impact of real estate reforms, only time will tell, how much dividend this poll plank will pay to the ruling party in the parliamentary polls.
(The author is Founder & Editor of Ground Real(i)ty Media. Views expressed are strictly personal)
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