Budget 2013: Tax reforms, increased infra spending on wishlistAs the Union Budget nears, the whole industry is eager to see how the Finance Minister keeps his promise that he has been making all this while, promising rating agencies and investors outside the country on the fiscal deficit.
After talking with several industry leaders, we believe that the ministry needs better and timely use of planned spending to avoid lapse of allocated funds, apart from increasing the budgetary allocations. In order to recover the economy, the ministry should take concrete steps to remove the bottlenecks that hinder investments. Let’s find out what the India’s leading industrialists have to say about their pre-budget expectations:
“Currently, the real estate sector is looking at certain key policy decisions which make home buying a priority for everyone in the country. We hope that the government grants infrastructure status to affordable housing sector as it will help facilitate easy financing and address the housing problem to a large extent.
A reduction in the base rate is extremely important as it will enable banks to lower their lending rates thereby resulting in reduction of interest rates charged to developers and home buyers. The government should also look at developing provisions for special residential zones (SRZs) in order to incentivise housing stock.
Reduced taxation and simplified taxation by possibly introducing GST will be another welcome move. The government can play a major role in incentivizing the real estate industry by bringing down the taxes which comprise over 35 per cent of the sale value.
We are looking forward to a raise in the income tax exemption limit to Rs. 3 lakh and a reduction in excise duty rates to put higher disposable income at the hands of the public.”
“Previous year was a very challenging period for the construction equipment manufacturers industry and also the construction sector in general. We expect that the government comes out with clear SOPs for the capital equipment like reduction in excise duty in order to boost up sales of the construction equipment. This can of course happen only if the government takes bold steps in awarding contracts for infrastructure projects. Outside the budget, the government also should work towards bringing in policy reforms, especially for PPP projects to make it attractive for investors to invest in infrastructure projects in India.”
“We expect government to increase infra spend in this budget. Raising infra spend will increase the demand and employment. This would result in higher industrial output growth and consequently higher economic growth. The government should also focus on cutting deficit and reduce subsidy bill.”
“The budget for 2012-13 did not have much to offer for real estate, and without any stimulus it is not surprising that the difficult conditions in the sector escalated further. There is a need to fast track the creation of structures such as REITS and real estate funds and a market for commercial, retail and hospitality assets to improve the liquidity in the system.
Real estate can make a big difference to the economy, and it is important that the government provides the required impetus to the sector to improve national growth rates. Given that there is such a huge unmet demand. Some critical steps can give exponential benefits to the real estate industry and these are essential for long-term, sustainable development of the sector.
“We expect Union Budget that can stimulate domestic demand. And to make that happen, the Finance Minister must focus on infrastructure creation. India’s infrastructure is bursting at the seams, its carrying capacity is almost saturated, and this deficient infrastructure is one of the reasons why inflation, especially food inflation, has remained high. The various advantages of infrastructure creation are creation of new employment opportunities, readying the economy for higher rates of growth, fuelling entrepreneurship and setting in motion a virtuous cycle. Most importantly, infrastructure connects the hinterlands with the mainstream economy and makes growth more inclusive.
The widening gap between supply and demand in the affordable housing segment highlights the need for effective, focused efforts toward bridging the same. The government needs to look into providing additional fiscal incentives such as tax concessions on building materials, technology and services to decrease construction costs, and provide more income tax relief to buyers of affordable housing units.
The government also should extend interest subvention for affordable housing, which was 1 per cent on housing loans of up to Rs. 15 lakh. This will continue to have a positive impact on residential sales in small cities and towns and peripheral locations of major metros where the units are priced up to Rs. 25 lakh.
“Hopefully this budget will finally come up with a credible roadmap for rolling out GST across the country. The industry has patiently waited for long, and the least the government can do is to remove the ambiguity surrounding this entire issue. Additionally, we are looking forward to a sustained thrust on overall infrastructural development in the country and hopefully this budget will come up with provisions that boost investments in the infrastructure sector by way of allocating higher funds for basic infrastructure like roads and power.”