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Budget 2017 | A Big Move Towards Housing For All

Adhering to fiscal consolidation roadmap, the government as expected is committed to its target of 3.2 per cent of the GDP for FY 2017-18

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Budget 2017 was the budget of many firsts. The government advanced the Budget announcement by one month and merged the Union and Railway Budgets. The budget faced some uncertainty coming from the impact of demonetisation .

Against this backdrop,  Finance Minister Arun Jaitley presented a budget which focused on every aspect of the economy. Be it rural employment, education skills and jobs for youth, housing, infrastructure, digital economy, fiscal management, taxes and black money.

Adhering to fiscal consolidation roadmap, the government as expected is committed to its target of 3.2 per cent of the GDP for FY 2017-18. It is definitely a laudable step and positive for the economy.

The Budget continues to provide tremendous impetus to the housing sector, which has been a key focus area of the current government. Giving ‘Infrastructure’ status to affordable housing is an extremely positive step. It will help in reducing the cost of borrowing for real estate developers, provide easier access to finance and spur investments. This will go a long way in fulfilling the objective of ‘Housing for All’ by 2022. Also the refinancing of individual housing loans of Rs 20,000 crore by the National Housing Bank will help low-income borrowers and Housing finance companies.

The decision to redefine the size of affordable housing from built up area to carpet area of 30 Sq meters in four metropolitan city limits and 60 Sq meters at other locations will help homebuyers and improve transparency. Extending the project duration from 3 to 5 years to avail the tax break under Section 80-IBA of Income Tax Act is another major move in favour of developers which will lead to a huge increase in affordable housing.

Reducing the tax rates for Individual assesses from 10 per cent to 5 per cent for the slab between Rs 2.5 lakh and Rs 5 lakh will not only benefit large number of taxpaying population but also encourage people to pay taxes thus expanding the taxpaying base further. It will also leave more money in the hands of the people. This will increase consumption and thereby, help in faster capacity utilisation which in turn will over time increase private investments as well.

Apart from consumption, reviving the investment cycle has remained a worry. Hence, the impetus on infrastructural development such as roads, railways, waterways and civil aviation will help in creating ‘Smart Cities’ and signal a revival of private investments.

Demonetisation had its impact on the MSME segment. Budget 2017 provided relief to MSME ‘s with turnover up to Rs. 50 cr. by reducing tax rates from 30 per cent to 25 per cent, thus providing benefits to 96 per cent of companies in the sector.

Curbing black money was one of the major promises. In the current budget banning cash transactions above Rs 3 lakh takes the fight against black money to a next level. Also fight against black money for the first time includes donations made to political Parties as well.

Budget 2017 has proposed several revolutionary steps to boost the quality of education and make the youth employable. Steps such as introducing system to measure annual learning outcomes in our schools, launching ‘SWAYAM’ platform with at least 350 online courses, Innovation Fund for Secondary Education are noteworthy and will go a long way in strengthening the education in India.

The shifting towards a digital economy received a special focus in the budget. The objective of the government to move towards a digital economy has far reaching implications. Budget introduced Aadhar Pay, for those without debit cards, mobile phones or e-wallets target of over 2,500 crore digital transactions for 2017-18.

Overall the budget will help in creating a conducive environment for sustainable growth. With our strong fundamentals, India will be one of fastest growing economies in the years to come

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house. Unless otherwise noted, the author is writing in his/her personal capacity. They are not intended and should not be thought to represent official ideas, attitudes, or policies of any agency or institution.

Renu Sud Karnad

The author is Managing Director, HDFC Ltd

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