Budget Announcements for Real Estate Sector
The finance minister has introduced key concessions aimed at bolstering the real estate sector, particularly focusing on affordable housing. These measures include the relaxation of borrowing norms for real estate firms and the extension of loan subsidies for low-cost, affordable houses.
Expansion of Funding Window for Developers
- External Commercial Borrowing (ECB) for Affordable Housing: The proposal now allows ECB for low-cost affordable housing projects. This dual-purpose move aims to:
- Broaden the funding avenues for real estate developers.
- Ensure affordable housing projects are completed within specified timeframes without facing cash constraints.
Historical Context of ECB for Real Estate
- As highlighted by global consultancy Deloitte, the Reserve Bank of India (RBI) had previously permitted ECB for developers in integrated township projects spanning 100 acres or more, up until December 31, 2010.
Extension of Loan Subsidy
- 1% Interest Subsidy on Home Loans: The finance minister has extended the 1% interest subsidy on home loans up to ₹15 lakh, provided the house's overall cost does not exceed ₹25 lakh, for an additional year.
Industry Reaction
Industry leaders have responded to these concessions with skepticism, viewing them as insufficient and a 'too-little-too-late' move that will have a limited impact on the sector's overall health and growth.