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Vice-Chairman & CEO, HDFC Ltd
The public anticipation towards the Union Budget 2014-15 has been unprecedented.
Despite the shortage of time, the Finance Minister has unveiled Budget 2014-15 that is pragmatic and visionary and sets the tone of the Government’s agenda.
More importantly, the Finance Minister has laid down the roadmap of fiscal consolidation by keeping the previous Government’s fiscal deficit target of 4.1 per cent for FY15, with the objective of reducing the fiscal deficit to 3 per cent by FY17.
The Budget has also assuaged the fears of investors by promising a stable tax regime. The Budget has proposed 100 per cent FDI for the development of smart cities. Increasing the foreign ownership limit in insurance to 49 per cent will ease the funding pressure and bring in the much-needed investments.
There are a number of incentives and allocations for the housing and real estate sector. Particularly positive was that tax exemption limits on principal and interest of a housing loan that were raised by ₹50,000 each. It was good to see that incentives for REITs have been introduced, which will encourage larger participation and provide an alternate funding source.
A similar REITs type structure has been introduced for infrastructure. The emphasis on infrastructure and the Prime Minister’s vision of developing 100 smart cities will have a multiplier effect on the rest of the economy. It will drive the demand for affordable housing, generate new employment opportunities and hence, will benefit the housing and real estate sector.
Moreover, the focus on infrastructure will in the long term address the supply side structural bottlenecks, which are persistently causing inflationary pressures.
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