The 2017 Union Budget is significant in many ways. It’s the first combined budget that was presented since the cabinet led by PM Narendra Modi decided to scrap the separate Railway budget (doing away with a 92-year-old practice). In-line with PM Modi’s indication of an early budget, it was being presented a complete month in advance, which will help people plan better for the upcoming financial year as well as allow newer schemes/changes to be applicable from April 1. It is also being seen as a follow up to the much-debated demonetisation drive undertaken by the government on November 8, 2016.
Affordable housing is maybe the most important, yet under-rated consequence of this budget. In his New Year’s Eve speech, PM Modi announced that the government is to provide a subvention of 3% and 4% for loans upto Rs 12 lakh and Rs 9 lakh respectively. This was an indicatory first step towards Indian economy’s focus towards affordable housing for the citizens of India.
Moreover, the affordable housing cause has been covered from not just a rebate angle, but also from the infrastructure stand point. This is a welcome move, as affordable housing cannot be achieved unless other factors affecting it are also addressed.
Hence, infrastructure status to affordable housing comes as a landmark announcement for the consumers and the real estate industry. “Easy and dedicated access to institutional financing, higher limit on external commercial borrowings will attract more investments and assure sustained growth of affordable housing in India, making it the core driving segment for real estate,” said Brotin Banerjee, managing director and chief executive officer of Tata Housing Development Co. Ltd, which is currently developing around 40 million square feet of affordable housing.
Further to this, the National Housing Bank will refinance individual housing loans worth Rs 20,000 crore in 2017-18.
As things stand, due to surplus liquidity, banks have started reducing lending rates for housing. This will create a revolution of home ownership that will extend to all sectors of society. This will trigger a dominos effect response of better spending power, stability of economy, job security and will be a major contributing factor to mitigating poverty.
Overall, these combined moves for Affordable Housing will create more jobs than any other policy measure in the last 12 months – a fitting beginning for the growth phase of Indian Economy.
The author, Tejasvi Mohanram is CEO, RupeePower.