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Budget 2021: Reactions from Infrastructure & Real Estate Sector

Union Finance Minister Nirmala Sitharaman on Monday tabled the first paperless Union Budget for 2021-22 in the parliament.

Here are some reactions of experts from the Infrastructure, and Real Estate Sector:

Prasoon Shrivastava, Founder, and CEO, Zepth: 

“Your biggest life-changing decisions are taken in the room where you are not present. The Indian economy has taken a hard right with the new budget and I say there is no wrong time to make the right decision. Even as a staunch supporter of the government of the day I had started feeling that the Indian government has lost its way when it comes to the economy. The impact of the pandemic was a force multiplier and as a small-time entrepreneur, I saw little hope in the way the government was laying out its policy and approach towards the revival of the economy. All I can hope now is that government can deliver especially on the infrastructure and healthcare front as there is many a slip between the cup and the lip. Exciting times ahead for sure.”

Mr. Sanjay Daga, Chief Operating Officer – Runwal:

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“The first digital and post-pandemic annual budget exercise has delicately crafted a strategy to boost redistributive and equitable growth, reviving investment and giving a fillip to ease of doing business. Union Budget 2021-22 is a forward-looking document and aims to revive demand and elevate economic growth. We welcome the government’s move to extend the tax holiday by one year for affordable housing projects and exemption from TDS on dividend paid to Real Estate Infrastructure Trusts / Infrastructure Investment Trusts. We would have expected granting Infrastructure status to the entire Real Estate sector which could be beneficial for lenders, developers, and home buyers and will enable access to liquidity and speed up project completion. 

Setting up of Development Finance Institution to address funding gaps, highest infrastructure spending, recapitalization of banks, boost to divestment, and monetization of government assets will surely ensure an increase in the growth momentum. Overall, the budget covers major themes such as health, which is on expected lines, sprucing up of infrastructure to ensure growth and job creation, and ease of doing business. And we would also like to add that the budget is favorable for corporates and individuals, as there is no new tax burden being implemented.”

Vikas Chaturvedi, CEO of Xanadu Realty:

“The today budget announcement was eagerly awaited by the Indian realty sector and has not disappointed with the proposed policy measures. The Sensex has jumped over 1,600 points since this morning, highlighting the positive market sentiment that prevails in the wake of the budget. By including physical and financial capital and infrastructure amongst the pillars of its ‘Nation-first’ Sankalp, the government has once again underlined its commitment to holistic development across all regions, with affordable housing highlighted as a priority. 

The tax holiday for affordable housing has been extended for one more year and will be applicable until March 31, 2022. Likewise, the provision to provide a deduction of INR 1.5 lakh on the interest paid on home loans to purchase affordable houses has been extended by another year. The eligibility of erstwhile tax sops available on home loans has also been extended by one more year. These measures will further incentivize homebuying and strengthen consumer purchase sentiment in the real estate sector. The amendments outlined in the InvIT and REIT structures, such as the proposal to exempt dividend payments from TDS and mandating that the advance tax liability arises only after the payment of dividends, will also incentivize more institutional and debt investors to fund these projects. 

This expected influx of funding will accelerate the momentum for commercial real estate and establish it as a lucrative asset class. The NHAI has already sponsored one InvIT that covers 5 operational roads with a value of INR 5,000 crore. With the next batch of AAI airports coming up in tier-2 and tier-3 cities also to be monetized for operations and management, real estate developers have an unparalleled opportunity to take advantage of the infrastructural growth across the nation.”

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