In any economy, Real Estate plays the role of one of the most important driving forces. More so in developing economies, wherein not only is the Real Estate an important economic driver but also facilitates social reengineering, inclusive growth and addresses various facets of urbanization. Hence it is time that Government takes practical cognizance of the vitally important role that the real estate sector plays in the Indian economy in the forthcoming Union Budget 2011-2012.
Some of the stark realities of India’s unequal distribution of growth is evident from the common statistics like 15% of the country’s urban population living in slums, 35% of all urban households living in single room dwellings, shortage in urban households currently being 25 million houses etc. It is time that the Union Budget takes serious cognizance to the issue and offer more sops under affordable housing.
In this budget, Rajiv Awas Yojana should be clarified and the ambiguities addressed to enable focussed activities under the Yojana. Furthermore, under affordable housing, government should consider incentivising the buyers, among others, through capitalization of interest subsidy so that contribution deficiency of potential customers could be addressed. This would create a demand which will provide stimulus to the developers to actively pursue this segment of the market in tier 3 and tier 4 locations.
I also expect the forthcoming budget to address the issue of the complex tax structure for the real estate sector. Government should work towards creating a nationwide, unified taxation system, which currently differs between states.
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