Union Budget FY 2021-22 has been announced today and while the measures announced in the Union Budget 2021-22 provide relief to the many sections of the economy affected by the COVID-19 onslaught, we gather reactions from industry stakeholders.
Surendra Hiranandani, Chairman and Managing Director, House of Hiranandani
The union budget presented is visionary and has focused on the nation’s growth. With its focus on the agricultural and rural sectors, infrastructure, health, education, job creation, digital economy, etc, it is a holistic budget that will have an overall positive impact on the economy. With the growth outlook looking promising and support in terms of government spending, we will witness a noteworthy traction in the real estate sector too this year. The government has played a tough balancing act between providing demand impetus and keeping a watch on fiscal deficit.
Overall, while the social sector has received good support and is welcome, we are convinced that the government will do its best to get the economy to bounce back, and sustain long term growth of the real estate sector too with substantial measures in the near future. We also hope that there will be more announcements soon to enhance ease of doing business for the developers and are optimistic that with green shoots in the economy in sight, the real estate sector is ready for explosive growth in the post pandemic era.
Anurag Mathur, CEO, Savills India
"The budget has reaffirmed the government’s commitment to bring back the country on a road of recovery through focused impetus on infrastructure, healthcare, inclusive development, innovation and robust governance. Real estate specific announcements were targeted towards affordable housing and REITs. Tax holidays and exemptions in affordable housing and debt financing for REITs are expected to strengthen the confidence of all the stakeholders in the residential and office segments. Central sponsorships of metro projects in key urban areas among other infrastructure initiatives are likely to bolster the real estate potential of specific micromarkets in these cities.”
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."
Lindsay Bernard Rodrigues, Co-Founder and Director, Bennet & Bernard Group
The budget demonstrates the government's resolve to focus on demand generation, spurring jobs, and increase infrastructure spends, healthcare for all, attract foreign institutional investors and increase farm income. It is also noteworthy that the government has stressed upon building on an aspirational India in order to boost standard of living and economic development. Infrastructure development continued to remain on top of the government's agenda of propelling economic growth and undoubtedly, it has a major multiplier effect on not just the overall economy but on the real estate market as well.
The real estate sector has the potential and is poised to be one of the key drivers for supporting the overall growth in the economy. The pace of revival can quicken, provided the government extends a helping hand and injects enough stimulus to boost the real estate sector. In conclusion, it can be said that the budget 2021 has set the stage for the economy and hope to grow positively and achieve new heights through its reform measures.
Dhaval Monani, Director of Affordable Housing and Associate Professor at Anant National University
“The budget FY2022 came in on the back of a historic contraction of GDP due to the pandemic. The real estate sector coming out of a prolonged slowdown had a long wish list that was largely ignored. There was though a very important big bang reform that should potentially be a game changer.
The Finance Minister announced the setting up of a bad bank that will take stressed assets off the balance sheet of banks and restructure them. One of the biggest challenges for real estate has been the difficulty in access to capital. Resolution under the Insolvency and Bankruptcy Code (IBC) takes on an average 400 days and in the best of cases has recovered about 65% of the capital. The proposed structure will not just clean up the balance sheet of banks and make them free to lend but find a resolution for stressed assets in a faster and efficient way.
The extension of income tax exemption under section 80IB (A) and extra Rs. 1.5 lakh exemption under section 80EEA were on expected lines. This year could well be the year of consolidation for the sector as stalled projects get revived and we see growth reviving with better access to capital.”
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.”
Vikas Chaturvedi, CEO of Xanadu Realty
By including physical and financial capital and infrastructure amongst the pillars of its ‘Nation-first’ Sankalp, the government has once again underlined its commitment to holistic development across all regions, with affordable housing highlighted as a priority. The tax holiday for affordable housing has been extended for one more year and will be applicable until March 31, 2022. Likewise, the provision to provide a deduction of INR 1.5 lakh on the interest paid on home loans to purchase affordable houses has been extended by another year. The eligibility of erstwhile tax sops available on home loans has also been extended by one more year. These measures will further incentivize home buying and strengthen consumer purchase sentiment in the real estate sector.
The amendments outlined in the InvIT and REIT structures, such as the proposal to exempt dividend payments from TDS and mandating that the advance tax liability arise only after the payment of dividends, will also incentivize more institutional and debt investors to fund these projects. This expected influx of funding will accelerate the momentum for commercial real estate and establish it as a lucrative asset class. The NHAI has already sponsored one InvIT that covers 5 operational roads with a value of INR 5,000 crore. With the next batch of AAI airports coming up in tier-2 and tier-3 cities also to be monetized for operations and management, real estate developers have an unparalleled opportunity to take advantage of the infrastructural growth across the nation."
KE Ranganathan, Managing Director, Roca Bathroom Products Pvt Ltd
“Our Hon'ble FM has given the near-perfect 'Vaccine'
to the Economy for faster recovery. The 'jab' will be very effective as seen
from the huge jump of +35% in Capex spending and the fiscal deficit widening
from 6.8% to 9.5. Indeed a bold step to pull the demand side up through these
higher allocations for spending.
The 'Jab' will spread to all parts of the Economy body: agriculture getting a big target of 17 lakh Cr funding, urban infrastructure, railways and roadways a major chunk of over 3 lakh Cr allocation, affordable housing with tax breaks, Swachch Bharat with 1.15 lakh allocation, textile getting a big boost etc. On the people side good to see GIG / Platform workers getting protected with better social security benefits. Relief for senior taxpayers from filing returns is in the right direction.
Overall the health of the Indian economy will re-bind faster with this well thought out vaccine.”
Rahul Singla, Director, Mapsko Group
"Budget 2021-22 has been enacted as a game-changer for policy support in the residential sector. This budget embraces a tax exemption for rental housing that has been extended for a year aiming to provide affordable housing for the marginal workers. We could see the flourishing aim of the house for all in affordable price has been prioritized that will cheer the benefit for both consumers as well as the developers. Further, affordable rental housing projects will boost demands in the real-estate sector. Providing additional interest deduction for loans amounting to 1.5 lakh to purchase affordable housing."
Hemant Daga, CEO, Edelweiss Asset Management
In a global economy which is flush with liquidity, the budget has strategically opened the doors for global capital to fund the growth needs of India. This is a master stroke. A big thrust on monetization of operational assets like roads, airports, transmission towers etc is a clear win-win for both the government and investors. This will not only help the government to manage its fiscal deficit, but will also help unlock capital for investing in other Greenfield infrastructure projects. There is considerable interest from global pension funds and insurance companies for these assets and the long-term, inflation-indexed cash flows make this space very attractive for patient institutional capital.
The creation of an infrastructure-focused Development Finance Institution with a capital base of Rs 20,000 Cr is a very good initiative from an economic standpoint. By providing finance for infrastructure projects, which are envisaged under the National Infrastructure Pipeline, this will provide the stepping stone for funding infra projects in India. Coupled with this the zero coupon bond issuance by IDFs to fund infra projects is another enabler for capital to flow freely.
The budget connects capital to infrastructure which has been the biggest missing link. What we now need is meticulous structuring of these initiatives and good execution.
Kamal Khetan, Chairman and Managing Director, Sunteck Realty Ltd
“The Union Budget has packed some great ideas and a definite direction for strong economic growth ahead, especially through infrastructure, capital expansion and banking and financial services. For real estate, the move to extend the tax holiday available for the purchase of affordable houses as well as for the affordable rental housing projects is a welcoming move as it would further strengthen the confidence among both developers and homebuyers. The move will certainly prompt more demand, especially among first-time buyers who generally fall in the lower and mid-income segments. Also, the extension of the tax holiday on affordable housing projects for developers by another year will increase the project launches in this segment as they would get additional time and resources. Apart from this, the mega infrastructure development and upgradation to be undertaken across India will add much value to the real estate sector.”
Nitesh Salvi, Founder and CEO, Pocket52
"Indian Government launched the Startup India Initiative back in the year 2016 with the idea to increase wealth and employability - giving wings to entrepreneurial spirits. So definitely, for the old start-ups another year of TAX HOLIDAY has no importance. As they would be well-funded by now and then paying TAX would not be a challenge anymore. And the ones which are not well-funded have crossed the time-limit of TAX HOLIDAY. For the new and budding start-ups it can definitely act as a confidence-boosting attribute but as a good entrepreneur and citizen, I would still want to focus on reducing operational costs and enhancing profits rather than saving taxes."
"If 2020 has taught us something, that's the importance of good health. Not just ours but of people in general. And the key to good health is strong immunity. Apart from Covid-19 vaccine coming in, many other measures need to be taken to educate people on having strong immunity. Also, to have a hygienic lifestyle. And for that investing in the health sector and human capital is of utmost importance"
Lalit Keshre, Co-founder and CEO, Groww
"The income tax filing exemption granted to senior citizens, who rely on only pension and interest income, will significantly reduce their tax compliance burden. The announcement of a faceless dispute resolution system should help taxpayers by fast-tracking the resolution process. The pre-filled capital gains and interest income in ITRs will make income tax filing easier for retail investors. Overall, these measures announced in the budget will simplify the lives of small taxpayers and are welcome."
Vishnu Saraf, co-founder of Possible
Overall, the budget is quite positive. 33% increase in capex to Rs 5.5 lakh crore will boost demand. Also, Rs 64,000 crores Atma Nirbhar Health Program is a good initiative. It's also good to see no new taxes, especially when the fiscal deficit is so high. Allowing one person company will also help entrepreneurs to start a new company.
Neha Bagaria, Founder, CEO, JobsForHer
The government’s emphasis on creating an Atma Nirbhar Bharat is synonymous with ensuring that our women are also Atma Nirbhar, which can only come with their financial independence. It is thus a welcome change that women will be allowed to work in all categories with adequate protection, a move which will open up further job opportunities for women, thus enabling higher financial security.
Additionally, we had highlighted the need to ensure that gig workers, a huge proportion of who are women, need to be provided with adequate benefits. It is thus heartening to see that Social Security benefits will now be extended to gig and platform workers for the first time.
Sandeep Wirkhare, MD & CEO, Indian School Finance Company
“Over all well thought out six pillars for growth. Education sector would have expected higher allocation or specific measures for schools & education infra financing institutions given the pandemic overhang but setting up 15000 model schools under NEP is positive and will go a long way in channelising energies in desired direction to enhance much required quality in education. Financial institutions are to benefit from setting up an organization in line with Asset Reconstruction Company. Specifically, bringing down applicability of SARFAESI to the loans above INR 20 lakh will be a big boost to NBFCs like ours to tackle NPAs.”
Ankit Gera, co-founder of Junio
"The Finance Minister and the Government of India have been very supportive in promoting digital payments, which is reflected in the budget speech today. While India has been one of the fastest-growing fintech markets globally, it is also important to note that the digital mode of payments has also emerged as one of the most transparent and trustworthy methods to track payment/credit repayment compliance. This can be reflected even in the budget announcement today wherein the Finance Minister, Nirmala Sitharaman proposed to increase the limit for tax audit for persons who are undertaking 95% of their transactions digitally from 5 crores to 10 crores. Another encouraging factor has been 1,500 crores investment for a proposed scheme that will provide financial incentives to promote digital modes payment. This will further strengthen the buyer and provider market sentiment, and we are optimistic that a lot of market consolidation will happen this year. Also, the extension of tax holidays for start-ups and capital gains will also spark greater capital activity in the investment landscape and serve as an enabler of robust early-stage venture funding for start-ups."
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.
Swapna More, Co-Founder-KAGAAY
“Union budget 2021 reiterates 'Atmanirbhar Bharat' with new opportunities for growth. It is very progressive budget and focuses on encouraging self-reliance of India. Government focus on infrastructure, R n D and innovation will make the economy more robust. Definitely a push for the vision of making India 5 trillion economy. However, there is lack of practical options to bring liquidity in real estate sector. Financial Stringency and Banking Norms have to be relaxed at least for a year or so to facilitate liquid cash in the hands of the realty buyer”
Dr Malini Saba, Founder & Chairman, Saba Group
‘’Given that the economy is well on its path to recovery, Union Budget 2021 has focused on enhancing expenditure while keeping the fiscal targets at bay in the short term.
This Budget focuses on augmenting infrastructure with a special focus on expediting urban infrastructure projects which will act as a strong catalyst in driving real estate in urban areas. The proposed easing of restrictions on leverage by InvITs/REITs will attract more REITs listings and thus higher investments into real estate. The monetisation of surplus land of government and government bodies is a welcome move; however, the implementation will need to be monitored. The continuance to promote affordable rental housing schemes by providing a tax exemption for notified rental housing projects is a great effort. This will accelerate the pace of investments in this scheme and is likely to fall in line with achieving the overall objective of ‘Housing for All’.