5 must-haves in Budget for real estate sector

Many expect this budget to be Modi government’s North Star for years to come and naturally there are tall expectations from the budget. As of now, everyone is waiting to know what the budget has in store for them. The newly formed government hopefully can deliver the promise.

The real estate and associated sectors (Hospitality, MICE and Tourism) are a reflection of the health of the economy. What’s good for the overall economy is good for the sector. Why then do we see newspapers full of intolerant demands for concessions but sorely lacking in vision?

So what BHAGs (Big Hairy Audacious Goals) can be offered by the budget and the administration which can move the needle of progression for the economy and Real Estate sector?

Think Jobs – A large and (rapidly) urbanizing country needs jobs in the manufacturing sector. While the domestic economy is large, it’s not large enough. About 400 million people are expected to migrate to cities in 20 years. We need to be the manufacturing engine for the world. Think SEZs (Special Economic Zones) and SIRs (Special Investment Region) – 15 years after the initial forays, we still don’t have a single large manufacturing SEZ of any size. Why? Not for the lack of concessions for sure; but because it is uncomfortable for established companies to manufacture in India and export. The protectionist and license-raj mindset of 1970’s still pervades bureaucracy’s oversight over manufacturing industry while the global economy has raced ahead. Ease of manufacturing in India should be the most important focus for this administration.

Unclog the arteries – Real Estate like any other sectors, cannot grow if the country’s arteries (Rail, Seaports, Roads and Airports in that order of urgency) are so hopelessly clogged. What we need is an infrastructure budget and an urgent desire that infrastructure gets more capital than, for example, defense. For a soon-to-be USD 2 Trillion economy with archaic infrastructure, we need to pump at least 200-300 Billion a year for the next few years. Just as a rising tide lifts all ships; similarly the GDP will boost and unclog the arteries. Beware of graft though.

Have an urban planning and urbanisation vision – Doing too-many things is tantamount to doing nothing well – Smart Cities is a good concept, but it defies logic to promote new capital investment (at select politically opportune locations) while the existing cities languish for want of funds. It can’t be either-or. Smart ULB’s (Urban Local Bodies) have to precede Smart Cities and before we app-enable everything, one should check whether the water flowing in urban taps is drinkable. How would people in Gurgaon feel about a new smart city in Panipat or Rohtak while they are not even connected to Sever Lines? Hopefully the budget focuses on the 30 odd million-plus urban agglomerations we have and doesn’t fritter previous resources.

Regulate quality, not raw material – The land acquisition bill while principally correct is deeply flawed; and nowhere more so than in putting rights of displaced people over the overarching societal needs for industrial and urban growth. Some balance is urgently needed in the form of growth zones and corridors for urban and industrial areas. The regulatory energy of this administration should go into protecting real estate buyers through transparent and standardized norms.

And while the macro-picture is being worked at, restating some of the reasonable demands of the industry

Grant industry status to Large townships / Urban areas
Clear taxation hurdles for REIT’s and InVIT (Infrastructure Investment Trusts) rollout – The commercial RE industry does need a better mechanism to monetize and churn equity
SEZs are over-regulated due to the pulls between commerce and finance ministry – The need of the hour is re-introduction of originally envisaged fiscal benefits
Streamlining of the PPP’s in the social infra space

Best wishes to Mr Jaitley to get the 30,000 feet vision right – Some other year for micro wishes of the sector.
 

Source: http://content.magicbricks.com/industry-news/5-must-haves-in-budget-for-real-estate-sector/80526.html