The real estate sector was already going through a consolidation phase before the pandemic had struck. In the last few quarters, the sector has shown signs of some recovery, owing to the low-interest regime, macro-economic revival and some policy support from the government. However, the sector needs multiple measures from the government to bring it back on track of recovery and growth.
The real estate sector is just too crucial for the overall economic growth of the country as it is one of the top contributors of GDP with almost 6% share coming from real estate. On top of that, a number of allied sectors such as steel and cement are directly impacted by the pace in real estate. This is also a massive employment generator specifically in semi-skilled and unskilled segments. In the forthcoming Union Budget, the sector looks forward to certain policy measures and provisions that can catalyze growth by supporting both the supply and demand sides in real estate.
Income tax relief for home buyers
Investible surplus in the hands of people has been shrinking. For the demand to pick up, the government can incentivize the home buyers by raising the tax relief on the home loan interest to Rs 5 lakh, which is presently set at Rs.2 Lakh. Related to this, the revision of income tax slabs can also be considered to provide a financial cushion to the middle class for purchasing homes. The demand-pull needs to be created for sustainable real estate growth.
Because of the pandemic, WHF culture has kicked off. This has pushed the need of homeowners to upgrade from 1BHK to 2BHK or, from 2BHK to 3BHK. To enable this, the up-gradation should be allowed in the CLSS scheme of PMAY. In the prevailing provisions, the homebuyers will lose the 2% interest exemption that they get under the scheme through the banks.
Source: Financial Express