A sector that has always remained unorganised and unregulated is now following a progressive policy approach. Kudos to the honourable Prime Minster Narendra Modi who is the man behind reshaping real estate segment as mature, professional and regulated sector.
The policy initiative and reforms undertaken for the housing segment has given this industry a new dimension. Not just it arose the investor’s interest, it has also simplified the segment with more protection for buyers and accountability of developers. The key missions like Smart Cities, Housing for All, Goods and Services Tax (GST) , AMRUT (Atal Mission for Rejuvenation and Urban Transformation) are some of measures that are crucial impact in real estate segment in terms of infrastructural developments.
Other important reforms as liberalised FDI rules, Real Estate Regulation Act (RERA) and Real Estate Investment Trusts (REITs) are responsible to pump in more funds, bringing transparency and protecting buyer’s interest respectively in realty sector. No doubt, Indian real estate has been a lucrative investment destination for the investors across the globe.
Operation from July 1, GST aims to discontinue federal tax barriers by creating a unified market that will be governed with predictability and transparency. It is expected to reduce the tax management expenses and soften the overall burden of taxes on real estate.
RERA shall come into effect on May 1 which shall bring regulation and transparency within segment. It will not only boost the investor’s confidence by protecting their interest but also make developers accountable and will make them adhere to the project deadlines.
The Modi’s mission of Housing for all by 2022 focuses on the affordable housing primarily for Economically Weaker Section (EWS) at low cost. In the view to this mission, 100% service tax exemption has already been granted to the developers for the initiation of affordable housing projects. Credit linked Pradhan Mantri Awas Yojna, hiking exemption limit on interest outgo over home loan and granting infrastructural status to affordable housing with a view to generate for funds inflow are some of the crucial measure that are initiated by the government to accomplish its mission.
Budgetary allocation to rural housing under PMAY has already been raised from Rs. 15000 crores to Rs. 23000 crores with the aim to complete 10 million homes by 2018. To facilitate middle-income group and extending the facilities beyond LIG (Low Income Group) and EWS section, mortgage reforms have been initiated by the Central government via Credit Linked Subsidy Scheme (CLSS). The interest rates over home loans have also observed a dip as the Marginal Cost of Funds-based Lending Rate (MCLR) has been introduced.
While residential sector is on its way to recover, the commercial segment has already seen a turnaround. Sales in residential project has also picked up with investments of over 26,000 crores. Two million jobs shall be created annually with the addition of 60 million new houses over 6 years span and this will bring $1.3 trillion housing boom within the country.
By doubling the funds for infrastructural development over the last three years, Modi government has been able to deliver the desired results of inflow touching a record in financial year 2017 at $43.5 billion. BSE Realty Index has also been increased by 50% with Indian economy expected to become fourth largest in world by 2022 at $3.5 trillion. The fair credit for these reforms goes to the government’s policies.
But, still the implementation of GST, RERA, Housing for all, REITs etc is one of the biggest challenges for government. But the country still lags behind standing at 130th position to fix the Land Acquisition Act and introduction of Single Window System to promote ease at doing business. These transformational changes will no doubt put forth India as an emerging country in terms of growth but still their proper implementation is big challenge that need to be dealt with.
