The last Union Budget by the NDA government is set to roll out soon, with a mix of expectations from the industry. Since this will be the interim budget, less hopes are there from the Finance Minister Nirmala Sitharaman.
The minister has already ruled out any “spectacular announcement” for her sixth budget on February 1 this year, saying it would simply be a “vote on account” before the general elections.
An Interim Budget outlines the government’s anticipated receipts and expenditures until the new government is formed. However, a comprehensive Budget encompasses all facets of government finances, including earnings, spending, allocations, and policy declarations.
A full-year Budget is a strategic guide, charting the nation’s economic trajectory for an entire fiscal year. The interim budget provides financial details for the transitional period.
What Housing Finance Companies demand?
The housing sector remains a key focus area for the government. It has been aggressive on the sector with schemes in the affordable housing space. ETBFSI talked to a few of the HFC leaders to get an idea on what they expect from the upcoming budget.
According to a recent Anarock report, housing sales in the top seven cities reached a new peak in 2023, surpassing the previous high of 2022. On this background, Ravi Subramanian, MD and CEO, Shriram Housing Finance said the residential realty sector has a positive outlook and more tax incentives must be given to the first-time home buyers.
The government should attempt to link interest exemption on home loans in line with the inflation adjusted cost of home purchase, he said.
Speaking on the expectations for the affordable housing segment, Subramanian said the affordable housing should get preferential treatment.
The government should raise the cap on the affordable housing segment. It will help attract more buyers into this category. Now the upper limit or ceiling is Rs 45 lakh, which is quite inadequate in the backdrop of high inflation and rising commodity costs. It will help expand the scope of the sector and achieve the government’s mission of ‘Housing for All’.
Union Budget 2023-2024 supported the affordable segment by extending tax benefits for homebuyers and developers. It allowed deductions for interest on affordable housing loans and tax holidays for affordable housing projects till March 2024. It must be extended for at least another year. It will also help take off the Affordable Rental Housing Projects, targeted at migrant workers, which is a non-starter now, he believed.
He also highlighted a key aspect in the home rental ecosystem saying the government must promote more home buying as it will help evolve a robust home rental ecosystem in the country. Further, it will lead to a huge demand revival for core sector output (construction materials like cement and steel) and housing finance.
Manish Jaiswal, Managing Director and Chief Executive Officer at Grihum Housing Finance Limited speaking on his expectations from the budget said, “The rural-urbanization trend, driven by last-mile connectivity and changing family dynamics, will propel mortgage demand, especially in semi-urban and peri-urban areas.”
“The Indian mortgage sector, currently at 10.6% of GDP, is poised for substantial growth, aiming for 15% and a $1 trillion market by the end of the decade. Extending the PMAY CLSS Housing for All-2022 by a decade can trigger over a crore low-income housing constructions, supported by cost-effective borrowing and tax benefits. Green housing with rooftop solar adoption can further revolutionize the sector, contributing to India’s clean GDP growth,” he added.
Sarosh Amaria, Managing Director at Tata Capital Housing Finance Ltd said, “The upcoming elections can present an opportunity for the housing sector to thrive under stable conditions with enhanced focus on government schemes. Incentivising customers falling under affordable housing market and first-time buyers can stimulate demand and enhance financial inclusion.”
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