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31 October, 2014 05:06 IST
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M3M India`s pre-budget expectations
Source: IRIS | 04 Feb, 2013, 05.26PM
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Commenting on expectations from the Union Budget 2013-14, Pankaj Bansal, director, M3M India, said the following:

Home loan interest rates

It is evident that any growth in infrastructure and real estate will boost demand which will lead to overall growth. However, it is saddening to see industrial growth nearing zero. In the current scenario, lowering of interest rate will lead to upsurge in housing demand and overall economic growth. 

Tax rebate on home loan interest repayment

There is a provision of rebate of interest on housing loan to a maximum of Rs 1,50,000 from the taxable amount on yearly basis. It was last amended in year 1999. Since then housing prices and the amount of housing loan availed by the middle class segment have grown manifold.

Current home loan interest repayment exemption is not even in line with the HRA benefits buyer normally gets. Our suggestion on this would be as follows:

> Entire interest payment  for the first house / home in which person intends to stay shall be exempted from tax

> Else at least there could be a limit based on metro and non metro city.

> In the worst case it shall be in line with HRA exemptions

Therefore, the interest rebate needs to be revised upward on an urgent basis. This will motivate end users to buy properties and shall reduce speculative investment.

Targeted lending to incomplete projects

Many projects across sector are delayed due to unavailability of funds and rising input costs. A provision of targeted priority lending to these projects should be brought in to ensure their timely execution. Targeted lending to stressed but viable projects will lead to filling up of the gap in demand and supply in the housing sector. Based on a project's viability, banks can look at replacing the lenders from the informal sector that charge much higher rates.

Extension of ECB norms

Government has brought in provision of ECB up to USD 1 billion for low cost housing. It is a positive step but in the given circumstance it is not going to benefit the industry much. It should be extended from low-cost housing to mid and high segment as well. This will lower the cost of fund for development. 

Infrastructure status to the housing sector

Many countries have given an infrastructure status to the real estate sector which helps them arrange funding from domestic as well as foreign market at a very affordable interest rate. Real estate sector in India is yet to get this status. Giving infrastructure status to real estate will solve the funding problem of Indian realty by a significant margin.

Fast-track Approval Process

In last few years, may steps have been taken by the government for housing sector but very limited has been done to bring transparency in project approvals. Among all required approvals, few of the basic approvals may be taken by the State Government at the time of announcement of Master Plan itself. This will not only expedite the delivery but will bring down the towering prices as well. 

Reforms to land acquisition and consolidation policies

There is an urgent need to simplify land acquisition and land bank consolidation norms. Many Indian cities are in need of redevelopment due to ageing infrastructure, congestion, etc. These have significantly reduced the quality of urban living for a population that is educated, affluent and young. This segment demands superior civil, education, health, shopping, commercial and entertainment infrastructure close to their place of work and residence.  Gated communities and integrated (mixed use) townships can address these issues, provided the process of acquiring and consolidating land banks is simplified, less complicated and devoid of multiple approval procedures that cause delays and foster corrupt practices.

Ease FDI investment norms

FDI funding can play a big role in providing the critically required capital for accelerating growth in real estate and infrastructure development. A consistency and clarity and businesslike approach to policy guidelines are very necessary. 

Lower import duties on capital goods imports

Mechanization, automation and scalability are essential to uplift construction quality and shorten delivery time lines, lower interest and construction costs. All this will lead to reduction in project cost. The final beneficiary would thus be the buyer.  Indian realty industry is woefully lacking in this key area. What takes a year to build in India is done in a matter of weeks in China and many other countries due to mechanization.


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