The Hindu Business Line : Balancing act in a pre-election year

The Finance Minister, Mr P. Chidambaram, has taken to the populist path, trying to gain the common man’s confidence while keeping an eye on global slowdown signals.

On the one hand, the Government is trying to rein in inflation by reducing the excise rates and, on the other, it is attempting to increase the disposable income available in the hands of people, by raising the income slabs.

The Minister has increased the income slabs for the tax rates, which will boost overall consumer spending, including in the housing sector.

Development of the corporate debt market will give a fillip to corporate funding.

DDT (dividend distribution tax) set off for dividend paid by subsidiary company to holding company will do away with double taxation on the dividend amount.

The Government has increased budgetary allocation to Bharat Nirman and NHDP to help give a boost to the infrastructure sector in the country.

Real-Estate sector

Increased fund allocation to national housing banks to boost the housing finance sector will enable borrowers to get housing loans at affordable rates.

Reduction in excise duty from 16 per cent to 14 per cent will result in overall reduction in prices, and make housing more affordable to the common man.

The reduction in CST from 3 per cent to 2 per cent is in the right direction of transition to the GST regime.

The five-year tax holiday to hotels in UNESCO-specified sites is a welcome step to boost the tourism industry and related infrastructure.

The Finance Minister has presented a fair Budget with an objective to give an impetus to growth and check inflation.

Overall, the Budget has a positive impact on the real-estate sector.

The reduction in excise duties across products will help lowermanufacturing and construction costs which, could then be passed on to consumers in the form of lower prices.

The five-year tax holiday to 2/3/4 star hotels in the specified UNESCO sites would further give a fillip to the industry with increased demand in Tier I/Tier II cities.

(The author is CFO, DLF Ltd.)

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