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Business News » India News

Budget 2019 expectations: Developers demand ECB in real estate

With the looming slowdown in the economy, and Govt searching for ways to give a fresh impetus - credit should consider moving an application to the government to open in real estate.

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Budget 2019 expectations: Developers demand ECB in real estate
There must be reconsideration to reduce the percentage for the 5 lakhs to 10 lakh slabs as that will reduce the burden and increase disposable income which will aid liquidity. Photo: PTI

In a bid to make fund flow smooth to the real estate sector, especially after the IL&FS crisis that dried up the NBFC funding to the sector — Indian developers have demanded from the finance minister Nirmala Sitharaman to allow external commercial borrowing in the real estate. The industry insiders say it would help them tide over the ongoing NBFC slow down. They also want schemes like 80 I B, permitting ITC in GST, removing deemed rent on unsold inventory and removing the 45-lac cap for affordable housing at least in metros if not in entire India.

Ashok Mohanani, Chairman, EKTA World told Zee Business Online, "The budget majorly requires discussing the key issue of the high unemployment rate, financial sector challenges like the NBFCs crisis, agrarian crisis etc. as this has cumulative pressure on people and the economy. With the looming slowdown in the economy, and Govt searching for ways to give a fresh impetus - credit should consider moving an application to the government to open ECB (external commercial borrowing) in real estate. This will see significant funds flow into our industry. This will help us tide over the current NBFC slow down as well. Schemes like 80 I B, permitting ITC in GST, removing deemed rent on unsold inventory and removing the 45-lac cap for affordable housing at least in Metros will stimulate growth."

 He said that according to the previous budget the government decided to emphasize more on enhancing overall infrastructure, connectivity, and transportation which reflects the government’s proclivity towards providing a sustainable developed environment. Also, there is certainly a need to relook at the tax structure. There must be reconsideration to reduce the percentage for the 5 lakhs to 10 lakh slabs as that will reduce the burden and increase disposable income which will aid liquidity.

Parth Mehta, Managing Director, Paradigm Realty said, “The reality of realty sector is amidst trinity of worst three facts including increasing input cost due to abolishment of ITC & exorbitant development premiums, excruciating liquidity crisis due to NBFC defaults & rising NPA’s of banking sector and piling up of unsold inventory due to weak consumer sentiment on back of high unemployment. It is one of the worst phases for real-estate as an asset class underperforming by leaps and bounds vis-à-vis others. Hence the wish list of the sector is long which was left ignored in the interim budget due to governments focus of populist budget ahead of the election. The NBFC fiasco & overall credit crunch of the banking system had a domino effect on the viability of Real-Estate with access to construction finance largely paused and exorbitant rates of borrowing making project viabilities questionable.”

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TAGS:
Budget 2019Union Budget 2019Nirmala SitharamanNarendra Modi
Written By: Asit Manohar
Updated: Wed, Jun 19, 2019
03:14 pm
New Delhi, ZeeBiz WebDesk
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