NEW DELHI: The Union Minister for Finance & Corporate Affairs, Nirmala Sitharaman presented the Union Budget 2021-22 in Parliament today, which is the first budget of this new decade and also a digital one in the backdrop of unprecedented COVID-19 crisis.
Laying a vision for AatmaNirbhar Bharat, she said this is an expression of 130 crore Indians who have full confidence in their capabilities and skills.
Continuing with its focus on affordable housing, the government today extended benefits of availing an additional Rs 1.5 lakh tax deduction on home loan interest till 31 March 2022. The move is aimed at fulfilling Prime Minister’s Narendra Modi’s vision of ‘Housing For All” by 2022 and will provide a huge impetus to the residential real estate sector.
“This Government sees ‘Housing for All’ and affordable housing as priority areas,” said Sitharam while presenting the Union Budget.
Considering the present scenario wherein challenges are faced by the migrant workers to find suitable accommodation in metros and other large cities, Sitharaman also proposed to allow new tax exemption for notified Affordable Rental Housing Projects.
“The government is committed to provide affordable rental housing for migrant workers,” she said.
Following are some of the immediate reactions of industry leaders on Budget
President – NAREDCO Maharashtra
“The Government has put their best efforts to put the economy back on track after the adverse effects of Covid-19 pandemic that the entire country went through. It has focussed a lot on infrastructure in this budget. This will indirectly help boost the housing demand especially in the Tier II & Tier III cities,”
“The Government’s decision to further infuse Rs. 20000 crore for public sector banks will help address liquidity issues to a large extent. The proposal to extend the Rs 1.5 lakh benefit on interest paid on affordable housing loans by one year to March 31, 2022 is an exceptional move which will boost the affordable housing segment and help to achieve the Prime Minister’s vision of Housing for All. It will also ensure that more and more homebuyers get to avail this benefit. The reduction in tax burden on senior citizens above 75 years will give a push to the senior-living projects,”
“Also, the Government’s continuous efforts to promote ease of doing business and digitization will help the real estate sector business in a long way going forward,”
Dr Niranjan Hiranandani -National President – NAREDCO and MD – Hiranandani Group
“It is a get well soon type of Budget, the ‘V’ shaped recovery being powered by the Covid-19 vaccination program.” On real estate aspects, the proposals for the annual budget reinforce the Government’s focus on affordable housing. For the home buyer, the second extension of the deadline till 31 March 2022 for the additional Rs1.5 lakh tax deduction given on loans taken to buy a house in an affordable housing project is welcome, as is the developer whose affordable housing projects also get an extension for tax benefits, for projects completed till March 31, 2022. Similarly, tax exemption for notified affordable housing for migrant workers, and the deduction on payment of interest for affordable housing being extended by a year will give a fillip to this emerging segment. As affordable housing attracts only 1% GST and Rs 1000 stamp duty in the state of Maharashtra will augment the production of affordable housing in the state. The enhanced spending on public infrastructure projects like ports, railways, airports, warehousing, gas pipelines, metro, economic corridors is laudable and welcomed by industry that will give impetus to the employment generation and attract the essential investment to lift up the economic revival.
“The strong focus on digital covering setting up of a Fintech hub at Gift City, seen in sync with moves to enhance digital payments and use of Artificial Intelligence and Machine Learning etc. in governance, will give a fillip to creation of Digital India,” he concluded.
Given the challenged scenario, the proposed annual budget has been largely positive, no major taxation enhancement is something that is welcome. As the Prime Minister pointed out last year saw mini budgets across the pandemic impacted time frame; the unsaid thing for most industries across the economy is that similar steps may happen with more positives in the offing. Continued focus on ‘Minimum Government, Maximum Governance’ will enhance ‘ease of doing business’, this government spending will provide stimulus for GDP growth, and is laudable.”
Ajay Piramal, Chairman, Piramal Group
“I would like to commend the Finance Minister for a well-balanced and realistic Union Budget 2021-22 designed to put India’s ongoing business cycle recovery on a much more solid foundation. The Budget’s high focus on public capital expenditure, relaxing fiscal deficit targets and concrete plans to support financial markets through recapitalisation of public sector banks, and an asset reconstruction company for bad loans will provide the necessary impetus to restore economic growth. While the Budget is cognizant of the country’s immediate economic needs, it also lays out a medium term vision of 3-5 years.
Furthermore, the introduction of a Development Finance Institution (DFI) to fund long term projects will complement the high focus on infrastructure. With banks remaining evasive towards long term institutional exposures, the DFI is expected to ensure availability of credit for projects with long gestation periods.”
Rehan Huck, Vice President – Retail, ILC Group
“I feel that the overall budget announced will definitely pave way for avenues pertaining to the real estate industry. From the point of view of real estate, I think the decision on land monetization for airports and railways is expected to have a positive outcome for the entire fraternity. Also, REIT can now raise international funds which will give a massive boost to the retail real estate segment. I believe these are the two biggest highlights of this year’s budget for real estate. Moreover, the investments, disinvestments and privatisation plans that were talked about were also much needed.
However, not implementing these strategies properly could act a vital roadblock for the expected growth rate of the upcoming financial year. Adding to this, I feel that a year of tax holiday for startups is not sufficient and should have been exempted for at least 2 to 3 years. Also, no reduction in tax slabs has been announced which could have been a major relief for the people suffering during these unprecedented times like COVID-19. It could have further seeped in the benefits with the rise in public spending but a slight benefit in the tax slabs would have been further encouraging.”
Pushkar Singh, Co-founder & CEO, LetsTransport
“In the times of stress, when nobody has the idea of how things will come into play, the government has yet again proved that their approach towards resolving the stress by spending the budget where it’s required the most highly commendable. The move will increase the much-needed demand and result in getting the economy back on track. The announcement of a voluntary vehicle scrapping policy is a welcome move for logistics solutions providers which will result in more sustainable and better logistics.
The allocation of Rs 1.18 Trillion in Budget 2021-22 and the announcement of over Rs 2 trillion worth of highways in 4 states is a welcome move for smoother logistics and transport. Benefits of these will be reaped by Tier-II and smaller cities and will allow better connectivity to every nook and corner of the country. We are very happy to see such steps and hoping for an even better implementation.”
Ashish Deora, CEO and Promoter Aurum Ventures
“The various sops extended to the real estate sector in the 2020-21 budget is a welcome sign given the ongoing pandemic. Adequate measures have been taken keeping affordable housing in mind number of decisions with respect to extension of tax holiday and housing deduction by another year and extra tax exemption for affordable housing loan by another year. These initiatives will put additional liquidity in the hands of home buyers which would further boost demand.
Also the proposal to make dividend payments to REIT (Real estate investment trusts) and Invit’s (Infrastructure investment trusts) exempt from TDS will give the sector the much needed fillip. Granting Infrastructure status to the entire Real Estate sector which could be beneficial for lenders, developers and home buyers and will enable access to liquidity and speed up project completion is something which we hoping for but no announcement was made in this regard.”
Ashish Deora , CEO and Promoter Aurum Ventures
“Aurum Ventures a new age Real Estate Company with end to end capabilities from Acquisition, Design, Execution, Project Management, Property Management and Hospitality.
Pradeep Misra, CMD, Rudrabhishek Enterprises Limited
“As it was expected and much needed, there is massive emphasis on infrastructure in the union budget. The number of projects under NIP (National Infrastructure Pipeline) has been extended to 7400, which will help in generating immediate employment. Focus on the Affordable Housing section continues with the extension of eligibility to avail benefits for another year,”
“Plan to set up ‘Development Financial Institution’ with fund infusion of Rs. 20,000 crores for financing infrastructure & development projects will further help in mobilizing the long term capital, especially through debt instruments. This should be vital in pulling out the projects that are stuck or slowed down. The aim to complete 11,000 Km of National Highways; seven Port projects worth Rs 2,000 crore in PPP mode; extending metro in Tier 2 cities and peripheral areas of Tier 1 cities etc. will collectively create a vibrant economic conditions of growth. As mentioned by the Hon’ble Finance Minister, fund infusion in the infrastructure sector will have to be accentuated by multiple measures, including monetization of assets, creating institutional structure as well as raising the union & state governments’ budgetary allocations. Overall, the budget has set the tone of intense infrastructure development in FY 21-22 and following years,”
Abhishek Jain, Chief Operating Officer, Satellite Developers Private Limited (SDPL)
“The Union Budget 2021-22 continued the government’s focus on the affordable housing sector. The government’s decision to extend tax holiday for affordable housing projects by another year is a step in the positive direction to boost the sentiments among real estate players in the market and achieve the government’s vision of ‘Housing for All by 2022’ for India. This budget has focussed heavy on infrastructure that will indirectly lift the housing demand especially in the Tier II & Tier III cities. Also, the Government’s continuous efforts to promote affordable housing will help the real estate sector business in a long way going forward.”
Ankush Kaul, President – Sales & Marketing – Ambience Group
“The focus of the Union Budget 2021-22 is to improve economic efficiency and infrastructure growth. Increased focus on infrastructure growth and capital expenditure will impact the overall growth of the real estate sector too. A good infrastructure could propel the development of real estate, both commercial and housing, along the transit corridors, highways and newly proposed airports,”
Kaushal Agarwal, Chairman, The Guardians Real Estate Advisory
“It’s a pragmatic & forward looking budget, at the same time. The estimated, gradual reduction in the fiscal deficit from 9.5% to under 4.5% by 2024-25 will help boost consumption in the economy. The government’s big bet on infrastructure is bound to pay off in the long-term & will also catapult desired growth for real estate & the economy. The NPA’s of PSU banks have seen an encouraging reduction from 8.96 to 6.8 trillion by end of Fiscal 2020. The setting up of ARC & AMC for banks troubled with bad loans and NPA’s alongside the further recapitalisation of Rs.20,000 crores will help improve the lending capacity of the banking & financial sector. The government’s decision to extend tax holiday for affordable housing projects by another year is a step in the right direction to realise the PM’s dream of ‘Housing For All by 2022’.
Anuj Puri, Chairman – ANAROCK Property Consultants
Considered ‘the Margaret Thatcher moment’ for the FM, Union Budget 2021-22 was literally a make-or-break event. The circumstances are unprecedented – it is the first budget presented after a pandemic which shattered the economy globally, and in India. The impact of the pandemic has been catastrophic with early govt. estimates indicating a 7.7% contraction in FY 2020-21 – the biggest GDP growth plunge in over four decades. Expectations across sectors were at an all-time high, though the fiscal pressures on the finance ministry are nothing short of crippling.
As expected, healthcare got the highest priority in resource allocation and policy support including INR 64,180 Cr outlay under PM Aatmanirbhar Swastha Bharat scheme. It bodes well for healthcare facilities and wellness-oriented real estate.
Further, FY 2021-22 capital expenditure outlay at Rs 5.54 lakh crore to ensure that the target of becoming a USD 5 trillion economy by 2025 is well on track. This will positively impact infrastructure, connectivity of Tier II cities, and job creation for SMEs and MSMEs – thereby benefitting the target customers of affordable housing.
For the ‘Aam Aadmi,’ personal tax relief by way of tax rate cuts or favourably readjusted tax slabs topped demand and the FM failed to deliver on it. An upward revision in the deduction limit under Section 80C (at Rs 1.5 lakh a year) was long overdue and increasing this limit would have increased disposable incomes, inevitably pushing up consumption. It would have also helped improve consumer sentiments across sectors – the real need of the hour.
As anticipated, affordable housing and rental housing got a big boost with the govt. extending the period for extra deduction of INR 1.5 lakh available for loans up to 31st March 2022. This will keep demand buoyant for affordable housing in 2021 as well. Further, the extension of the tax holiday for affordable housing projects for one more year will help bring in more new supply within this segment. As per ANAROCK Research, affordable housing already accounts for more than 35% of the supply across the top 7 cities in the country.
Infrastructure got a major push. Infra works proposed include building 8,500-km of highways by March 2022. There were big infra sops announced for poll-bound states including West Bengal, Tamil Nadu, Kerala and Assam. The govt. also announced the Bill to set up Development Finance Institution (DFI) providing INR 20,000 Cr to boost infrastructure projects. The Modi government has not lost sight of its USP of infra creation, which will help connect more areas and thus open them up for real estate development.
Customs duty on steel reduced to 7.5% will create some space to real estate developers who may not be in a position to increase prices immediately.
The announcement to set up 7 mega textile parks with plug-and-play facility in 3 years will unlock the potential of new markets for development and provide an impetus to real estate assets, including logistics and warehousing.
Post the pandemic, the chances of NPAs growing are significantly high. The Budget announced the setting up of ARCs to help banks to cushion the impact of the pandemic. Besides the setting up the long-awaited bad bank, the government will also infuse INR 20,000 crore into public sector banks as part of its recapitalisation plan.
All in all, the budget was broad-based with special emphasis on building robust healthcare infrastructure, physical infrastructure and affordable housing. It will result in job creation in the informal sector, which was severely impacted by the pandemic. Creating buoyancy in the job market will benefit the Indian economy in the long run. The focus on rural job creation will also give a boost to affordable housing, which will help increase housing demand in tier 2 & 3 cities.
Dr. Nitesh Kumar MD& CEO Emami Realty
“Being the first budget after COVID Pandemic the budget holds immense value & importance. The government has addressed the need of infrastructure development and given a handsome boost especially in Bengal and Tamilnadu that will be indirectly beneficial for Real estate also. The Additional deduction of interest payment up to Rs 1,50,000 for first-time buyers of affordable homes (under Section 80EEA), and profit-linked tax exemption (under Section 80IBA) for developers will again be beneficial for under-construction projects and tax incentive for affordable rental housing projects.
We were expecting some more measures to boost the real estate sector of tax reliefs for individuals have not been met. In nutshell we can say it is a balanced budget.”
Sripad Nandiraj, Founder, Hocomoco
“The government’s intent of pushing Housing for All and affordable housing in Budget 2021, is going to be a welcome move after the slump in the construction industry due to the pandemic. The proposition of extending exemption available for purchase of affordable housing and tax holiday for affordable housing projects for more than one year till March 2022 will give a fillip to the buyers. We also hope that the measures of tax incentives around affordable housing will help in a formidable growth of the housing market.”
Abhishek Trehan, Executive Director , Trehan Group
“The Union Budget for the financial year 2021-22 is quite satisfactory for the affordable real estate sector, especially the housing segment. The plans for providing the tax holiday for affordable housing projects extended for one more year till 31 March 2022 will play a crucial role ahead. Also, with a deduction for interest paid loans taken for the purchase of affordable houses, the sector is expected to gain a decent amount of customers in the following years.
“However, reduction in the tax slabs could have added to it as people are going through several financial hardships post the coronavirus pandemic. Now, it’s all down to the implementation part of this budget as the execution is everything from here.”
T Chitty Babu, Chairman and CEO, Akshaya Pvt Ltd
“We congratulate Nirmala Sitharaman on budget speech in the Parliament today. We welcome the move in launching a portal to maintain information on gig workers and construction workers. This could help in monitoring the health and also in providing the benefits. We also welcome the major proposal about boosting the road, rail and airport infrastructure for a robust public transport. This will ease the mobility and now people will also think about property investments outside the city. This budget allocation towards pubic transport will definitely reduce the air pollution resulting in a healthy and peaceful living. Government’s decision to extend eligibility of erstwhile tax sop on home loan up to FY22 and the proposal that affordable housing projects can avail tax holiday for one more year can ease financial constraints on the real estate developers. It will certainly boost the real estate sector and accelerate it towards the growth wave. Homebuyers can expect a slew of options in the coming quarters as developers get the due support from the financial institutions as well as the government.”
Manpreet Singh Chadha, Chairman, Wave Group
“The budget 2021 will set the foundation stone for a high growth rate trajectory. With a clear road map for privatization, the budget proposed CAPEX led to a high trajectory growth story. Retaining tax holiday on Affordable housing projects till March 31, 2022, and the proposal to make dividend payments to REIT and InvIT exempt from TDS is a much-needed relief for the real sector. In a difficult time, it’s a very good budget as it has not changed the tax structure, leaving the disposable incomes at the hand of individual unchanged.”
Ravindra Sudhalkar, CEO, Reliance Home Finance
The Union Budget 2021-22 has provisions to boost demand and supply of affordable housing. While extension of the deduction on payment of interest on purchase for affordable housing by another year will encourage home buyers to invest on their own properties, extension of the tax holiday on affordable housing projects will encourage more launches in this category.
Sandeep Upadhyay – MD – Infrastructure Advisory, Centrum Capital Ltd on Budget 2021 (Infrastructure & Banking Sector)
“The build up to one of the most anticipated Budgets in recent times at the backdrop of tall claim coming from the FM to expect “a budget like never before” has certainly been vindicated at large and more specifically for stakeholders in some of core sectors like Infrastructure,”
“The intent it seems is clearly to propel growth within our spluttering economy driven by unleashing the Capex cycle and leveraging the multiplier effect of investing into Infrastructure sector. The staggering increase in allocations to Railways, Roads and Urban Infrastructure segments beats the market expectations, however what was most appealing to me is the shift in approach towards raising capital through a national asset monetisation pipeline and proposed divestments in the financial and banking sector including the much anticipated IPO of LIC. This could be the biggest takeaway from the budget speech today and it has the potential to improve much needed visibility towards identifying the sources of funds which was perhaps missing in the past,”
“Both NHAI and PGCIL are highly rated and very relevant platforms to monetize assets through the InVIT model which could be a trend setter for others to churn their investments. The proposal for setting up of a Development Finance Institution (DFI) with a capital of Rs 20,000 crore is a welcome move however lending target of Rs 5 lakh crore over the next three years sounds ambitious. TDS exemption on dividend payments to InVITs and REITS will certainly entice more sovereign wealth funds to invest into the sector,”
“With maximum GST Collections reported so far in January 2021, SENSEX hitting all time high a couple of weeks ago and sustained drop in COVID cases along with Government’s promising vaccination drive now acknowledged globally, CY2021 had already started of with a bang and today’s Budget except for the glaring expected Fiscal deficit numbers for FY22 is expected to get a big thumbs up from the market,”
Pradeep Aggarwal, Founder & Chairman – Signature Global Group & Chairman – ASSOCHAM National Council on Real Estate, Housing and Urban Development.
“In Real Estate sector, Affordable Housing is set to get boost from the tax holiday being extended for one more year till March 31, 2022 and Rs1.5 lakh for interest paid on loans to purchase an affordable house being extended another year. The demand for affordable housing is at an all time high, and we will focus on fulfilling it. we will keep contributing to PM Shri Narendra Modi’s mission of ‘Housing For All’. The focus of the government on infrastructural development and MSMEs will lead to job creation, which will help people get financially stable. Looking at the experience of people in last one year, affordable housing will get more buyers as people want to secure their lives by owning a home
Yash Miglani, MD, Migsun Group
“The budget announcement made today by the Honorable Finance Minister are indeed progressive and will help the industry in many ways. The affordable homes market has potential to take care of the housing problem of the citizens of the country to a large extent. The real estate industry is at the cusp of transition in the country and the twin announcement by the FM on rental housing and affordable housing both will provide a lot of support to the sector at this juncture. However, the government could have done more to alleviate the some if the pandemic inflicted pains for the industry which is unfortunately missing. The pandemic has dealt a heavy blow to the industry and any short-term easy financing solution for the developers could have made the deal sweeter,”
Vikas Garg, Deputy Managing Director, MRG World
“Government’s focus and commitment for the real estate industry can clearly be gauged for the announcement made by the Finance Minister Niramala Sitharaman today. The affordable housing has emerged as important segment of the realty industry and FM has rightly address the biggest concern of the developers and buyers of such projects. Even the rental housing design of the government will solve the problem of residences for migrant workers to a great extent. The push to infrastructure will also benefit the real estate industry indirectly as better infrastructure in the country will help in real estate projects spreading out of compact city limits. A little bit of clarity on Input Tax Credit would have made the matters even better for the industry. All in all, it’s a good budget for the real estate industry”
Kapil Kapur, Director, Sales,Strategy & Business Development, Bullmen Realty
“The Budget announcement made by the Finance Minister today addresses an important problem in the real estate industry today, i.e. housing for the migrant workers. The decision to provide exemption from tax to the notified affordable rental housing projects will maximize the migrant workers to get a home of their choice in a big city at lower payment. However, the government did not address the long pending demand of the industry to expand the definition of affordable house. The present limit of Rs 45 lakhs as the price of a house to be called affordable is too small and must have been raised to Rs 75 lakhs,”
Ankit Kansal, Founder & MD, 360 Realtors
“The union budget has reiterated the government’s focus on Affordable Housing through concentrated policy impetus in the form of tax exemptions and tax holidays. Another good thing discussed in the budget is the multilayered support to infrastructure. The Budget has announced a host of policies and initiatives to boost urban development, enhance urban infrastructure, monetize freight corridors, upscale power generation capacity, and commence work on numerous large scale roadway & railway projects. The government has also announced huge allocations in the urban Swachh Bharat mission 2.0. These initiatives will boost the overall infrastructure, increase economic productivity, improve the livability index of urban cities alongside building real estate demand in Indian urban corridors,”