Amid speculation over whether the budget presented on Friday will be a populist one or the government will stick to the path of fiscal prudence and economic growth, Mr Piyush Goyal, the interim finance minister presented a well-balanced and a pro-growth budget. The finance minister focused on three main factors, which align with the long term vision of the government viz., real estate sector, consumption and rural economy.
One key aspect that stands out is the strong emphasis on housing.
‘Housing for all’ has been one of the important focus areas of the government's long-term developmental plans and continues to be the focus area in this budget as well. The notional tax that was payable by the developers if a property was unsold for a year now has been extended for two years and extending the tax benefits of Section 80-IBA by a year for affordable housing projects approved till March 31st, 2020 are positive steps for property developers given that in many of the urban cities there has been a slight slowdown in property sales.
The benefit under section 54 (b) has been amended to give the exemption for two houses as opposed to one house keeping in mind the needs of growing families.
Further there will be no notional tax that will be levied on a second self occupied property. This will encourage people having one property to buy an additional property. The statement by the finance minister saying a review will be undertaken of the GST rules applicable to under construction properties could be a big positive.
Increasing the tax exemption limit to Rs 5 lakh, increasing the standard deduction limit to Rs. 50,000 and increasing the TDS threshold from Rs. 10,000 to Rs. 40,000 for interest earned on bank deposits will leave higher disposable income in the hands of the people thus enhancing their ability to take a larger loan to buy a house. Higher disposable income will also lead to increase in consumption in the economy thus helping spur economic growth.
The much needed benefit given to small and marginal farmers (having up to 2 hectare of land) by a way of assured income support of Rs. 6,000 per year and long-term measures to double the income of farmers with interest subvention scheme will help rural spending ultimately boosting the economy as a whole.
This budget lays special emphasis on women by providing an amount of Rs. 1,330 crore for protection and empowerment of women. The government’s various initiatives for women viz., Pradhan Mantri MUDRA Yojana which has more than 70 per cent women beneficiaries, Pradhan Mantri Matru Vandana Yojana for expecting mothers and Ujjawala Yojana have gone a long way in empowering women.
Though this was an interim budget, it took into account a whole host of issues that needed immediate attention which normally one would not see in an interim budget and that was very positive, refreshing.
The writer is managing director, HDFC