Tuesday January 21, 2020
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Will The Budget Provide a Lifeline to Realty?

There is likelihood of bringing down the GST on construction material like cement to boost home affordability, paving the way for speedy revival of housing.

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Modi, India, Farmers
Indian Prime Minister Narendra Modi, center, is garlanded by BJP leaders on the first day of the two-day Bharatiya Janata Party national convention in New Delhi, Jan. 11, 2019. VOA

By Vinod Behl

In a way, this year’s interim budget, the last from the present NDA government before the Lok Sabha elections, is set against a similar backdrop as its first (albeit not full) budget of 2014-15 when the real estate sector was reeling under a major financial crisis. As such, it is expected of the February 1 budget to provide a liquidity lifeline to revive the realty sector, recently hit by the crisis in the NBFCs that have been a major source of its funding.

The Modi government’s first budget had contributed to considerably improving the investment climate by liberalising the FDI norms in the construction sector, besides injecting Rs 4,000 crore to the National Housing Bank (NHB) to promote affordable housing and introducing REITs (Real Estate Investment Trusts) with tax incentives to unlock a new source of financing for cash-strapped developers.

So, on the one hand, while that budget focused on boosting supply through increased investment, on the other hand, it provided a recipe to boost demand by increasing the home loan interest exemption limit by Rs 50,000 and raising the income tax limit by Rs 50,000. And now, five years later, in the wake of the real estate sector facing the initial disruptive impact of progressive reforms like RERA and GST, the sector is looking up to the government to provide it a similar budgetary booster dose, both on the supply and demand side.

India, Farmers
Interim Finance Minister Piyush Goyal, center, holds a briefcase containing federal budget documents with Junior Finance ministers Shiv Pratap Shukla, center right, and Pon Radhakrishnan, left, upon their arrival at the parliament house in New Delhi, India, Feb. 1, 2019. VOA

Though the key reforms undertaken by the NDA government have brought in the much needed transparency and fair play in realty transactions, yet the restrictive provision of maintaining escrow accounts under RERA to check misuse of customer funds has resulted in liquidity constraints for the developers, made worse by the crisis in the NBFCs.

Hundreds of housing projects across India are today stalled for want of funds, in turn driving down the real estate sentiment. It is in this backdrop that the sector is looking up to the new budget as a saviour to provide some kind of lifeline to the stalled projects. It is expected of the budget to create a stressed asset fund to take up incomplete projects.

The industry captains are also hoping that the budget may provide some incentives to stressed asset companies to encourage them to undertake stalled projects. And to further boost supply, the industry has on its budget wishlist a long-pending demand of introducing a structured single window clearance system.

The supply constraint can be considerably tackled by boosting flows from banks to the sector. This can be achieved through a policy initiative to grant industry status to real estate, though in the backdrop of NPA-struck banking, this looks unlikely, especially as the infrastructure status earlier granted to affordable housing has not brought in the desired results in terms of cheaper bank funding.

 

budget
Himachal Pradesh Governor Acharya Devvrat being welcomed by CM Virbhadra Singh and Speaker BBL Butail on his arrival on the first day of Budget Session of the State assembly, Flickr

Incentivised policies to promote rental housing and boost construction skills and technology are also required which may ultimately improve home affordability.

While the liquidity crunch has been adding to the supply side problems, the current crisis in the real estate sector has a lot to do with home affordability. As such, it is expected of this budget to follow the first budget of the NDA government in enhancing the income tax limit as well as increasing the home loan interest deduction limit.

And as inflation has shown signs of relaxation, going forward, the reduction in interest rates, especially subsidised interest rates for affordable housing, along with tax benefits in home insurance, may well bring home ownership within comparatively affordable limits.

Besides unaffordable home prices, the high transaction cost (12 per cent GST for standard housing and 8 per cent for affordable housing), in addition to 6-7 per cent stamp duty, has been playing spoilsport in reviving housing. The government may well bring down the GST to 8 per cent and 5 per cent, with input tax credit, to make it more or less tax neutral.

 

Also Read: With The Elections Coming Up, Indian Government Promises Farmers Their Income Support

Further, there is likelihood of bringing down the GST on construction material like cement to boost home affordability, paving the way for speedy revival of housing.

But the big question is: Will these high hopes from the interim budget materialise for the real estate sector, especially as due to poll compulsions, the government has a higher priority of addressing the rural and farm distress? (IANS)

(Vinod Behl is Founder & Editor, Ground Real(i)ty Media)

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Mercy for the Nirbhaya Rapists?

Gender discrimination is the root of many evils. While keeping the aspiration of females down, certain males have committed many wrongs in the past.

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Nirbhaya
The Nirbhaya incident in Delhi was “instrumental” in bringing about a kind of gender awareness renaissance in India.

By Salil Gewali

Gender discrimination is the root of many evils. While keeping the aspiration of females down, certain males have committed many wrongs in the past. Apart from various kinds of physical tortures, the mental tortures undergone by defenseless females are endless. Within the confinement of four-walls innumerable sins are still being committed which mostly go unreported. However, it was Nirbhaya’s rape incident in Delhi that was “instrumental” in bringing about a kind of gender awareness renaissance in India. Post-Nirbhaya incident, a lot many changes in the laws have been made. The safety and security of women have been prioritized, the nation-wide the whole police departments have been sensitized, to a greater extent the road transportation has been made women-friendly.

Nirbhaya rape
The public is right and more sensible now to point out the “hard cruelty” with which the gang had sexually tortured Nirbhaya that night.

Thanks to the countless number of protests across the country condemning the six rapists. The people from all walks of life came together and relentlessly pressurized the government that the Nirbhaya convicts must be awarded capital punishment. Media’s contribution in the campaign is immeasurable. Alas, India’s judiciary is so annoyingly slow it has taken over 7 years to pronounce the death sentence.

Nirbhaya rape
Advocate Indira Jaising suggested that the convicts of Nirbhaya rape case could be “forgiven” by the parents.

However, now nothing could be so mind-blowing than the flood of condemnation against the comments by a veteran advocate and social activist Indira Jaising. Without a sense of guilt and potential backlash, she suggested that the convicts be “forgiven” by the parents. Jaising’s idea has clearly touched a raw nerve of the major population in the country. People’s anger is spilled well over social media. What is most noteworthy is the scathing condemnation directly from the horse mouth — the mother Asha Devi. A very bold lady, who determinedly fought for justice for so many years, thunders – “Who is Indira Jaising to give me such a suggestion? The whole country wants the convicts to be executed. Just because of people like her, justice is not done with rape victims,” Asha Devi aptly further adds — “Can’t believe how Jaising even dared to suggest such this; I met her many times over the years in Supreme Court, “not once” she asked for my well-being and today she is speaking for convicts. Such people earn a livelihood by supporting rapists; hence rape incidents don’t stop,”

The latter comments by the Nirbhaya’s mother clearly hint the doubt at the “integrity” of the advocate Ms. Jaising. How on earth that one who has not spoken a word of sympathy in spite of many encounters in the court can reserves the right to suggest that which offends the distressed victim party. Asha Devi deserves a salute for her boldness. Yes, India Jaising is one of the advocates who knocked the door of the Chief Justice of India in the middle of the night in July 2015 in order to seek the mercy for the dreaded terrorist Yakub Menon.

Nirbhaya rapists
In 2015, the Delhi Government proposed to award the Nirbhaya juvenile convicts with Rs 10000/- and a sewing machine.

Again, here is another bombshell to drop which many of us may have forgotten. Can we ever “forgive” for the shocking proposal in 2015 by Delhi Government to award the Nirbhaya juvenile convicts with Rs 10000/- and a sewing machine?  Who has approved such bizarre ideas and which leaders are responsible? What kind of lesson should the citizens take from this?

Also Read- Here’s how Climate Change has Affected the Economy

I think the public is right and more sensible now to point out the “hard cruelty” with which the gang had sexually tortured Nirbhaya that night. They had used the iron-rod to inflict deep injuries upon the girl which is unspeakable, which is very unpardonable. So, given the increasing cases of rapes and subsequent inhumane cruelty and cold-blooded killings, Capital punishment can be the only answer and “one of the deterrents”. Before the divine retribution, the hard rod of punishment should not be spared at all. 

Salil Gewali is a well-known writer and author of ‘Great minds on India’. Twitter: @SGewali