Jul 2019 , by , in Interviews

A noted businessman and media personality once said that, ‘A budget consists of telling your money where to go, instead of wondering where it went!’ And to that end, this government seems to have had the right idea.


Even though this budget (and by happenstance, I will admit!) saw the light of day, only in July. So how does it impact you and what should you know about it? Let’s dive right in and take a closer look at the four topic area divisions, to better appreciate the budget from a Realty & Infrastructure point of view.


  • Perhaps for the first time, the interconnectedness and economic symbiosis of the infrastructure and real estate spheres is impacted with positive and visible intent. This is best exhibited by –
  • The Pradhan Mantri Gram Sadak Yojana (Phase III) which ambitiously plans to deliver up to 125,000 kilometers of road length for public use.
  • The Bharatmala Pariyojana Highways Project (Phase II), which seeks to develop 3000 kilometers of expressway.
  • The modernization of Railways through employing SPVs such as the, ‘Rapid Regional Transport System’, under the Urban Mass Transit Corporation.
  • The enhancement of Metro Railway initiatives by encouraging more Public Private Partnerships (PPPs).

All these initiatives will support Transit Oriented Development, in line with enhancing the existing 657 kilometers of metro rail network, already operational. The launch of the National Common Mobility Card (NCMC) operated by the National Payments Corporation of India, is seen as complimentary to this set of policy initiatives.

The Pradhan Mantri Awas Yojana (PMAY), which when both its Rural and Urban spreads are combined, will offer up in addition to the 1.54 Crore homes already delivered, a further 1.95 Crore homes. This latter metric becomes all the more relevant, when we consider that India’s urban population, it is estimated, will be well north of 600 million people, by 2031. Indeed, the reduction in the time taken by the government agencies in constructing a singular dwelling, which has decreased from 314 days to 114 days, is seen as being catalytic to this projection.

The good Finance Minister, it would seem is well moved by her Prime Minister’s dictum, that, ‘Government has no business to be in business!’ and to that end, the disinvestment receipts from PSUs for the year are set at INR 105,000 Crore.


Of particular relevance to Builders in the affordable housing segment and the first time home buyer, is the INR 1.5 Lakh, tax deduction made available for interest paid on housing loans sanctioned in the current fiscal year, extending up to 31st march, 2020.

The exemption however, applies only to homes priced below INR 45 Lakh and which are situated in peripheral areas of metro cities, Tier II and Tier III towns and cities. The total benefit, in this instance extends to a period of 15 years and may accrue to be a maximum of INR 7 Lakh.

Currently, interest payments of up to INR 2 Lakh are permitted by way of a tax deduction for housing (in all segments), while in the case of principal loan repayments, the amount is INR 1.5 Lakh.

In the case of the corporate tax rate of 25% which originally applied to companies with an annual turnover of INR 250 Crore, we see that now, it is made prescriptive to the extent of INR 400 Crore, which effectively excludes a miniscule 0.07% of the total corporations in operation, out of its ambit.


The Centre has also been of singular resolve in enhancing the sources of capital for Infrastructure Financing. It is estimated that India will need access to upward of an average of INR 20 Lakh Crore of capital, per annum.

Of great relevance, is the notification of the RBI that envisages the establishment of a ‘Credit Guarantee Enhancement Corporation’, in this financial year. This is to be carried out in concert with an, ‘Action Plan’ to deepen the Long Term Bond Market, permitting an easier transfer of Foreign Institutional investor (FII) and Foreign Portfolio Investor (FPI) investment in Debt Securities, issued by Infrastructure Debt Fund (IDF) – NBFCs.

Additionally, the regulation of Housing Finance Companies (HFCs) are now relegated exclusively to the administrative overview of the RBI from that of the National Housing Bank (NHB). This has been done, with the express intention to arrive at parity in the regulation of HFCs and NBFCs and also to enable the RBI to directly increase liquidity in the HFC Sector.

Personal taxation of the Rich and Super Rich has been revised upward so that it now ranks amongst the highest in the world and it remains to be seen what impact this will have, both immediately and in the long term.

The NHB played an integral role in the re-financing and lending operation of the HFC Sector and in the same breath, acted as the market regulator as well, so there was a very evident conflict of interest. This institutional disequilibrium has been done away with, by the Government’s acquisition of the NHB, separating it in all operational aspects from the RBI, which will now undergo statutory modification, to provide for its new powers.

On the RERA front, the law has been widely adopted across the country, with the North Eastern States of Arunachal Pradesh, Meghalaya, Nagaland & Sikkim, being in the process of notifying RERA Rules, giving full effect to the law, while in Jammu & Kashmir, the J&K RERA Act, 2018 has been notified.

While, the Rental Housing Policy examined the rental housing markets in as many as 8 countries, including notably, China, America, United Kingdom & Germany, legal experts believe that while borrowed wisdom has its merits, there are some homegrown concerns which we face.


Rental Housing is an idea whose time has come, it would seem, from the velocity with which the Draft Model Tenancy Act, 2019 (MTA) has followed, on the heels of the budget. Ever since the findings made in Draft Urban Rental Housing Policy of 2015 (RHP), were made public, speculation was rife as to when the MTA would come into force.

Indeed our experiences with the application of the RERA law come to mind and one wonders if it might be true that, ‘What we learn most from history, is that we learn nothing from history!’

It will not be an easy law to transplant into the various state mechanisms, due to the subject wise power sharing arrangement, provided for in our constitutional scheme of things. However, what is certain is that the MTA reflects an attitudinal shift amongst policy makers, which augurs very well for the housing industry as it will generate a new market segment, altogether.


In the end, one wonders if India’s current Finance-Minister, (and only the second woman to so serve, in over seven decades), took to heart, the observation of Frank Lloyd Wright, that architectural doyen and windswept iconoclast of the American mid-west, who famously stated that, ‘Toleration & Liberty are the foundations of a great republic.’

This connection, though tenuous at first, appears plausible on reflection, if only because, this Budget is a study in extremities, while earnestly attempting to sort out our financial landscape for the long term. Yet, the numbers put out by the Centre make for compelling review, being as we are, a USD 2.7 trillion economy headed toward breaching the USD 5 trillion mark by 2024, from that of a USD 1.85 trillion economy in 2014.

In summation, our upward trajectory as an economy will continue unabated and that, while real estate may be in a phase of consolidation, due to a perceptible liquidity crunch, it will naturally grow closer to the infrastructure space and the synergy therein, will well lead, to some form of market momentum, from time to time.

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