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Budget expectation – Background
Paradigm shift in focus from economics to politics primarily because of political instability at the Centre and across various states in South India
Given the Political Scenario and inflations levels - Low expectations on budget
Probably as many as 11 states are due for election in the next 12-15 months. So, expect populist budget
Inflationary conditions showing no signs of abating.
Expected to come out with a very populist budget with hopefully special emphasis on infrastructure
We think that this budget will force the Hon. Finance minister to pull the best out of his box. We expect the budget to deliver strongly on Infrastructure and continue with reform oriented policies
Budget expectation - Real Estate Sector
Extension of Section 80 IA/80-IAB/80-IB(10) benefits
Extension of STPI benefits beyond this fiscal
Clear roadmap to GST, IFRS and DTC
Upward revision in Section 24(b) from the present limit of Rs. 1.5 lakhs in the context of increase in interest rates
Upward revision in Section 80C from the present overall limit of Rs. 1 lakh
Increase forward momentum towards REMF’s and REIT’s – The commercial office market seems to have bottomed out and now presents excellent options for investing into yield assets. This factor should logically catalyze the formation of REIT’s
ECB in Reality sector – In entirety and not specific to Hospitality, Townships and SEZ’s;
Higher capital expenditure in Infrastructure Sector
Corporate surcharge may be abolished
Improved availability and mechanism of long term financing for infrastructure projects coupled with faster implementation and monitoring process
Relaxing FDI norms- Allow 100% FDI in multi-brand retailing
Last year, housing loans under Rs. 10 lakh were given an interest rate cut of 1%. The same needs significant upward revision to make it more meaningful and effective in present terms primarily due to significant increase in interest rates and the current level of property prices. (There are hardly any flats available at Rs. 10 lakhs!)
Irfan Razack, CMD, Prestige Group
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