How can Budget 2020 Revitalise the Real Estate Sector

According to Indian Finance Minister, Nirmala Sitharaman, India is set on the path to becoming a $5 trillion economy by the year 2025. This goal is admittedly lofty, but by focusing on the right avenues, can be made far more achievable. 

For instance, an important role in the achievement of this goal is played by the Indian real estate sector. Real estate has a far-reaching impact on the country’s economy due to its sheer size, national reach, tax contribution, generation of employment and contribution to the overall GDP. That is why the industry alone is set on the target of reaching a market size of $1 trillion by 2030. Moreover, by the year 2025, it hopes to account for at least 13 percent of the country’s Gross Domestic Product (GDP) .

However, in recent years, the pace of growth for the Indian real estate sector has significantly slowed, owing to a few important factors.  These include widespread reduction in demand, issues with liquidity as well as high inventory. As a result, Budget 2020 has its task more than cut out for itself. In order to revitalise the industry, there are quite a few expectations from the Budget to deliver some much-needed relief to both developers as well as homebuyers.

Industry  Status for Real Estate

The first of these expected developments from Budget 2020 is the official recognition of the real estate sector as a full-fledged industry. Real estate is easily one of the largest contributors to the nation’s GDP and has been crucial in providing employment to people across the country. The positive impact of its recognition as an industry will be multifold.  It will bring about changes in the provisioning norms for lending and help the sector secure finances at lower costs, particularly in circumstances when funding is a major concern for the industry. 

National Rental Policy

Secondly, a policy meant to meet the needs of not just homebuyers but the overall housing demand of the Indian real estateis expected to be rolled out with Budget 2020. This is the National Rental Policy, aimed at creating a sustainable and inclusive rental housing market in India. According to its suggestions, it will be possible to make unsold housing stock available as rental housing, or as investments in the rental housing market. With rising inventory and a shift in buying behaviour from buying to renting, this policy will help bridge the gap between the two in unprecedented ways.

Resolving Liquidity Issues

Lastly and most importantly, the real estate sector will be looking to Budget 2020 to solve its fairly urgent troubles with liquidity. In particular, the sector as a whole has been reeling from the impact of the Non-Banking Financial Companies (NBFC) liquidity crisis. NBFCs have always been relied upon by builders and developers as a lending source, but with the recent NBFC capital crunch, a number of under-construction projects have been stalled. 

With the Budget 2020, there is hope that this liquidity crisis will be resolved at its source, at the NBFC level, and help uplift both industries. Crucial steps, such as allocating separate funds for the completion of stalled projects, as well as increased tax incentives for affordable  housing projects, can go a long way. 

Conclusion

Even as the Budget 2020 introduces several specific and critical changes, above all, the Indian real estate sector hopes for a comprehensive approach to reinvigorating the industry.  

Such bold reforms could successfully boost the real estate industry and actively revive the home buyer's interest in the sector. In the meantime, as a potential buyer for a home, you must seek an investment opportunity that can reap the right rewards and help you save for your dream home. To that end, you can consider investing in one of our various Systematic Investment Plans (SIPs) available at Axis Direct. At Axis Direct, you can make your choice between investing in SIPs - Mutual Fund SIP or Equity SIP, based on your interest, goals and risk appetite. 

You can opt for an economical Mutual Fund SIP for as low as Rs. 1000 per month that can diversify your portfolio and make the most of compounding. Alternatively, you can fund your dream home with an Equity SIP whereby you can be your own Fund Manager and invest how and when you wish.