In the recent past, schemes such as the Pradhan Mantri Awas Yojana (PMAY) have played a pivotal role in improving homeownership. Continued focus on budgetary and extra-budgetary allocation to such schemes can improve the access to housing in the low to mid-income segments of the population.
The pending expenditure on PMAY is over Rs 1 lakh crore while the allocation was Rs 48,000 crore in FY2022 (Budget estimate) and Rs 41,000 crore in FY2021 (revised estimate); the same needs to be ramped up in the forthcoming Budget to meet the target of 50 million dwelling units under the PMAY.
Currently, GST benefits, government subsidies, and enhanced tax deductions are available for the affordable housing segment. An increase in the cap in the area (currently capped at 60 sq. mts.) and the value (currently capped at Rs 45 lakh) of the units that are eligible for the affordable housing benefits will provide incentives to buyers across a wider spectrum and stimulate demand.
Extend tax holidays for affordable housing beyond March '22
Incentives of extra deduction of home loan interest on affordable houses and tax holidays for the affordable housing segment were extended till March-2022. Further extension of these benefits beyond March-2022 will support sales momentum.
On the supply side, the small to medium-sized players faced challenges in terms of reduced cash flows and credit availability owing to the COVID-19 pandemic. Efficient models for targeted credit availability to highly impacted projects can be considered to tackle potential issues such as stalled projects.
Need to further augment budgetary allocation for SWAMIH fund
The SWAMIH (Special Window for Affordable & Mid-Income Housing) fund was announced in November 2019 with a target fundraise of Rs 25,000 crore, out of which it raised Rs 10,000 crore from the government and the remaining from large institutional investors, including LIC, HDFC, and SBI. Further augmentation of the budgetary allocation for the SWAMIH fund will support the completion of large stuck real estate projects in the country.
Targets on actual monetisation of land bank needed
Post the last Budget announcements, multiple SPVs have been set up by the public sector undertakings (PSUs) to unlock the land bank potential; the forthcoming Budget can provide an additional thrust and lay down targets on actual monetisation of this land bank, helping to improve the supply of land parcels for real estate development in the country.
Take steps for faster adoption, implementation of resolution plans
Notwithstanding the various industry-specific amendments to the insolvency resolution laws, the implementation of the bankruptcy process for real estate companies remains a challenge. Steps taken to streamline the insolvency process to achieve faster adoption and implementation of resolution plans will be beneficial to both lenders and homebuyers in such stuck projects.
On the commercial real estate segment, incremental steps taken over the past years have resulted in a successful track record of REIT issuances. Further, steps taken to improve the ease of access to debt capital and enhance retail participation can channel more investments into this segment.
The writer is Sector Head and Assistant Vice President, ICRA Limited. Views are personal.
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