The NDA government’s latest Union Budget is set to come out soon, with mixed expectations from the industry. Since this will be the interim budget, there are less hopes from the Finance Minister Nirmala Sitharaman.
The minister has already ruled out any “spectacular announcement” for his sixth budget on February 1 this year, saying it would simply be a “vote on account” ahead of the general election.
An interim budget outlines the government’s anticipated receipts and expenditures until the new government is formed. However, a comprehensive Budget encompasses all aspects of government finances, including revenue, expenditure, allocations and policy statements.
An annual Budget is a strategic guide, charting the economic trajectory of the nation over an entire fiscal year. The interim budget provides financial details for the transition period.
What do Home Finance Companies require?
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 spoke to some of the HFC leaders to get an idea of what they expect from the upcoming budget.
According to a recent report by Anarock, residential property sales in the top seven cities reached a new peak in 2023, surpassing the previous high of 2022. Against this backdrop, Ravi Subramanian, MD and CEO, Shriram Housing Finance said that the residential sector has a positive . perspective and more tax incentives must be given to the first time home buyers.
He said the government should try to link interest exemption on home loans in line with the inflation adjusted cost of home purchase.
Talking about the expectations for the affordable housing segment, Subramanian said that the affordable housing should get preferential treatment.
The government should raise the limit 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 realize the government’s mission of “Housing for All”.
Union Budget 2023-2024 supported the affordable segment by extending tax benefits for home buyers and developers. It allowed deductions for interest on affordable housing loans and tax holidays for affordable housing projects until March 2024. It must be extended for at least another year. It will also help put down the Affordable Housing Projects, aimed at migrant workers, which is now a non-starter, he believed.
He also highlighted a key aspect in the home rental system saying that the government should promote more home buying as it will help develop a robust home rental system in the country. Further, it will lead to a huge demand revival for core sector manufacturing (construction materials like cement and steel) and housing finance.
Manish Jaiswal, Managing Director and Chief Executive Officer at Grihum Housing Finance Limited, speaking about his expectations from the budget, said, “The trend of rural urbanization, driven by last-mile connectivity and changing family dynamics, will drive mortgage demand, especially in semi-urbanisation . urban and peri-urban areas.”
“The Indian mortgage sector, currently at 10.6% of GDP, is poised for substantial growth, targeting 15% and a $1 trillion market by the end of the decade. Extending the PMAY CLSS Facility for All-2022 by a decade can trigger more than one crore low-income housing, supported by cost-effective borrowing and tax benefits. Green housing with rooftop solar adoption can further revolutionize the sector, contributing to India’s net GDP growth,” he added.
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