The economic survey for the year 2020 genuinely reflected on the grim state of Indian economy, starting with a warning of how the GDP growth for the year is predicted to slip no less than by 5 percent. However, it was also speculated that the growth rate will again be rising upwards by 6-6.5% during the financial year of 2020-21. Here’s a look at the budget 2020 to figure out the various factors that will substantially help reverting growth standards for the real estate sector.
Upping Allocations for Social Sector
The Indian Budget, besides being a plan for the income and expenditure of Central Government is also seemingly the biggest opportunity for financial policymaking. The 2020 budget is certainly no different. Mostly, the goals are all long term ones while one might have to endure a little bit of pain for a short period. The allocation for the social sector is on the rise; starting with a 12,300 crore allocated for Swach Bharat Mission. The Honourable Finance Minister Nirmala Sitharaman commented on the allocation saying that the Government is determined to bring about massive betterment in the area across waste collection and segregation as well as the processing of sources for the same.
In terms of real estate, Pradhan Mantri Awas Yojana has been allocated Rs 27,500 crore which is a sharp increase by a rate of 8.5 percent to what it was the previous year. Jal Jeevan Mission which aimed to improve the water supply and maintenance for household needs is looking to promote activities like desalination, water harvesting and recharging of all existing sources. The same has received a total of Rs.3.6 lakh crore for 2020-21 along with Rs 11,500 crore additionally.
The Clean Air Policy has also received a total allocation of Rs 4,400 crore and the focus is on all cities that have more than 1 million population. The Clean Air Policy is looked at bettering the situation of deteriorating air quality across major cities of India which in turn shall enhance the very quality of living and the liveability index in particular.
Affordable Housing – A Major Area of Focus
In her budget announcing for the year 2020-21, the honourable Finance Minister Nirmala Sitharaman has extended a total of INR 1.5 lakhs of benefit in any interest that is paid towards affordable housing loans by more than a year, i.e. March 2021. Additionally, the Union Budget has offered a tax holiday for one more year to all developers working on affordable housing projects. In her announcing, she said that the Union Ministry in its attempt to realise the goal of “Housing for All” is willing to extend the date of all loan sanctions for who wishes to avail the deduction anytime by March 2021. The 2020 Budget also continues on last year’s deductions lab for up to Rs 1.5 lakh on any interest that is paid for loans for a property that’s valued up to INR 45 lakhs. The total deduction that one can avail is no less than 3.5 lakh. A metropolitan city like Kolkata has witnessed a slew of high rises and top-class residential projects across a range of 2BHK and 3BHk apartment. Especially, flats in North Kolkata, where one gets to enjoy the best in class amenities, a safe neighbourhood as well as great connectivity for daily chores of life.
A Foray into Establishing Strong Fiscal Prudence
The Finance Minister in 2020 Budget has proposed a fiscal deficit of 3.5 percent which does imply that the Government will be looking at no large scale borrowings from now on. In other words, there will be direct pressure on the interest rates to shoot up. Furthermore, any stable low-interest-rate policy will also function to offer maximum benefit for property buyers and also for buying consuming durables on loans. Moreover, the other areas where Budget 2020 brings in good news include the following:
- A hike in Bank Deposit rates – Starting from 1 Lakh, the insured amount for all bank deposits has been increased to Rs. 5 Lakh, which shall boost the security of all depositors.
- Personal Taxes –Personal Taxes shall see a major change in slabs, where under the newly promise regime, taxpayers shall be paying anything between 10-25 percent for an income range fluctuating between 5-15 lakhs. However, to avail, the scheme taxpayers might have to opt-out from the exemptions provided. Prior to this, taxpayers had to pay 20 percent of their income for an income slab of 5-10 lakhs as well as 30% for an income range of Rs 10-15 lakh. As such, anyone with an income range below Rs. 2.5 lakh shall remain exempted and an income range of Rs 2.5-5 lakh shall get a debate. A total of 70 different kinds of exemptions shall be withdrawn within the new system that also comes with a lower tax liability.
Wrap Up
By all means, the Union Budget of 2020 has gone ahead with allocation of large sum towards social and infrastructure sector with a focus to enhance one’s life, living conditions, confidence as well earning an opportunity to invest more in fixed assets. Hopefully, such implications shall usher in a befitting phase to help reverse the path for optimum and positive economic growth.