By: Ravi Sinha
The Finance Minister seems to be getting more appreciation than brickbats for renewing focus on the housing needs of Aam Aadmi. Even the real estate sector is divided and while the long awaited demands have not been fulfilled, a section of the realtors with affordable housing projects have appreciated the efforts. Even the Maharashtra Chamber of Housing Industry (MCHI), a body of the real estate developers termed the Union Budget as positive steps focused on the common man who is interested in buying a house in the rural and urban areas.
However, the Aam Aadmi who is the beneficiary and is supposed to be applauding Pranab Mukherjee is rather bewildered as to whether to appreciate or to condemn. The common man on the streets of Mumbai is even asking whether mere his presence in a city like Mumbai denotifies him as Aam Aadmi. “Does the Aam Aadmi of Pranab Mukherjee only lives in tier-II and tier-III cities,” they ask. Majority of the Mumbaikars, like any other metro city are pretty convinced that they need a loan of more than Rs 15 lakh to buy a house.
This apprehension with the budgetary provision of home lending up to Rs 25 lakh from the existing Rs 20 lakh is not without any basis. After all, how many houses in metro cities are available in the given slabs? “Today even if I get a house in Rs. 25 lakh it will be so far at the fag end of the suburbs that I can’t travel to work. So for me this budget makes no sense and it is only meant for the tier-II and tier-III cities,” says Abhishek Saran, a medico marketing professional.
Sweta Shah feels the budget will have no impact for the home buyers even in many of the tier-II and III cities. “It seems to be more of populist and election centric budget, where Aam Aadmi is just the symbolic beneficiary. Had there been a genuine concern, the Finance Minister would have definitely factored in the skyrocketing of property prices,” says this advertising professional.
Ragini Patil has worked briefly with a real estate company and understands the nuiances of the business and the scope of budgetary provisions. She says, “The fact that real estate being a state subject, added to various price patterns in various cities I feel it is high time that tax incentives are rationalized state wise keeping in mind the cost of the property in the given city. What is the price of affordable house in Mumbai might be the price of super luxury in a city like, say Kanpur.”
“If the government intention is really clear about providing affordable housing to Aam Aadmi, will the Finance Minister tell us what has been done in the policy initiatives to encourage the real estate developers in the segment. I doubt the government will ever release cheaper land for providing momentum to the housing for all schemes,” said a property agent requesting anonymity.
Alok Ghorpade, a resident of Worli says while the focus on rural housing is welcome, the plight of the middle class and their slum like living in Mumbai is even worse. “The Finance Minister should have aimed at increasing the coverage of housing finance to urban areas at a competitive rate. Obviously, for that the benchmark should have been raised. I don’t have so much money for down payment that I can buy a house with just Rs. 15 lakh loan. The middle class of Mumbai has worse living condition than economically weaker sections and low housing groups in rural areas,” he says.
Even Sunil Mantri, President MCHI who has otherwise welcomed the budget admits that “the members of the MCHI were expecting restoration of 80 IB in respect of residential units of less than 1,500 sq ft area, easy accessibility of funds for project execution, permission of External Borrowing (ECB) for funding of real estate projects, granting a status of infrastructure project to the redevelopment project and withdrawal of service tax on real estate. However, the Finance Minister did not address these issues, which might affect the growth of the real estate sector.”
The pain of the Aam Aadmi was aptly described by Anuj Puri, Chairman and Country Head, Jones Lang LaSalle India when he said that raising the priority home loan limit to Rs 25 lakh is good news for the LIG segment, but will do nothing to ease the pain in the metropolitan cities, where real estate prices and demand for affordable housing is the highest. “Companies such as Unitech and Ansal, which are rolling out budget housing, will be benefited by increase of volumes,” he says.
