Every
year come February and the entire country awaits the presentation of the
Central budget with bated breath as it not only lays down the laws for the norms and amounts to collected from its citizens and from the activities in
which they engage and earn monetary gains but also indicates the monetary
policies it will pursue for the economic growth of the country.The union
budget for the year 2013-14 did not have many surprises nor innovations.This being the last budget of the UPAII,it
kept in mind the impending elections and adopted the usual strategy of
identifying the sections which might vote for the ruling party and tried to
extend benefits to them.
Global
economy is not yet firmly on the recovery path.High unemployment in advanced countries has not come down.In an interdependent world of today India’s
growth rate cannot be spectacular.Mr.Chidambaram has done what best he can
do. Good news is there are some positive moves like higher allocation for
education, on weaker section of population, minorities and on women welfare.The budget has been thoroughly ripped open
and the good and no so good provisions have been debated on TV, newspapers and
other forums.Here in we shall confine
ourselves to what the budget has in store for construction, viz., housing, real estate and Infrastructure development,
HOUSING
a)There is
some good news for middle class first time buyers. Finance Minister (FM) has proposed
an additional deduction of Rs 1lakh on interest if the loan is below 25lakhs
and the value of the property does not exceed Rs 40lakhs. This may help those
young couple in the Metros who are looking for small apartments. Otherwise the
benefits will be for those who are in smaller cities. The catch is that
deduction is available for 2013-14 only.There
is no carry-forward benefit of the unutilized deduction to the second year. But as such concessions continue and
usually are not withdrawn one may be tempted to take a risk.
This concession will help boost housing sales in tier 2 and 3 cities,
peripheral areas and distant metro suburbs, but not within the metropolitan
cities where prices are usually above the upper limit.This benefit will be available only if the
loan is availed from a recognized bank or housing financing institution
b)The
affluent buyer will have to shell out more. The affluent buyer looking for accommodation where the consideration
exceeds Rs 50lakhs will have to pay a TDS at 1% on the value of transfer of immovable property. Experts are not clear what happens if a person sells one
and purchase another to avoid capital gains tax. It is not clear whether the
buyer has to obtain a TAN to deposit the TDS in the bank. All this will be
clarified later perhaps.
c)The budget
also proposes lowering of service tax abatement on high end homes with a carpet
area of 2000 sq ft or more or valued at Rs 1crore or more. It is slashed to 70% from 75%
With the
above provisions, It is difficult to say how the housing market will behave.With
the increase of price of diesel and some other inputs the cost of construction
and consequently prices of flats are not likely to come down
d)The
setting up of the Urban Housing Fund by the National Housing Bank (NHB) with
an allocation of Rs. 2,000crores will infuse liquidity for urban housing,
thereby boosting demand.This fund is
basically said to be directed towards EWS and for low cost housing. But how
this will be routed is not clear.
INFRASTRUCTURE
a)The additional allocation of Rs. 14,873crores to JNNURM towards public road transport will help
make distant real estate locations more viable over the longer term.
b)There is also a commitment to award 3000 km of road
projects in the first half of the financial year.Past performance of National Highway Upgradation
plan has not been satisfactory.Various bottlenecks, like land acquisition,
financial position of the private participants, and the gap between projected
and actual revenues have not been addressed adequately.The delay in execution of much touted Expressway
to Bangalore International Airport which is now very much in news is one such
example.
c)The intention to set up a regulatory authority for road
sector is also welcome. It will address concerns of users as well as private
developers.The authority may look into users complaints like lack of promised
facilities, poor maintenance, safety measures and difference between promised
and provided facilities. It may entertain dispute between NHAI and concessionaries.
It may not only hasten progress but also may solve some of the problems of
determining toll fee and their periodical increase’
d)The enhancing of the limit for tax free bond to Rs 50,000crore
and extension of benefits under
section 80-1A for investments in power projects will boost progress in these sectors
NATIONAL TRANSPORT
ARTERIES AS INDUSTRIAL CORRIDORS
Finance
Minister Mr. P Chidambaram, in his
budget presentation speech has announced two new industrial corridors,1)
Chennai –Bangalore, 2) Bangalore – Mumbai. This is in addition to Delhi- Mumbai
corridor which is already under implementation with the Japanese assistance.This
1500 km route passes through UP, Haryana, Rajasthan, Madhya Pradesh, Gujarat
and Maharashtra. We are told work will soon start at Dholera in Gujarat and Shendra
Bidkin in Maharashtra.The Government has already approved a budget of Rs 18500crore.
For Chennai – Bangalore corridor the alignment will be running from Hoskote, a
suburb of Bangalore to Bangarapet in Karnataka, Palamannar and Chittor in
Andhra Pradesh and Sriperambudur to Chennai.
In
addition to strengthening the rail link, an express way of 6 lanes is proposed.
The vehicles will be able to drive at 160kmph.
Steel, cement, food processing, IT/BT, automobile, readymade garment,
petro chemical complex are some of the sectors which are likely to develop and
grow in this corridor. The Bangalore – Mumbai corridor will run via Tumkur,
Davangere, Hubli, Belgaum (Hukeri), Navanagara (Bagalkot) etc. With Dhabol –
Bangalore Gas pipe line project in place it will boost the industries in that
region. It is expected that new cities
with manufacturing hubs will grow along these corridors. If successful they may contribute to slowing
down of migration to Metros. It is also
an opportunity to develop these cities incorporating latest ideas in town
planning, green construction and energy conservation. For this both the Centre and Concerned state
shave to work in Tandem.
VOCATIONAL COURSES
Recognized
institutions offering vocational courses approved by state councils need
not pay service tax i.e. no tax is payable.
FM proposed to ask National Skill Development Corporation to set up curriculum
and standards for training in different skills .After he/or she goes through
the training in an institution, He/she would have to take a test. If qualified
and gets a certificate the successful candidate will be rewarded Rs 10,000.00.Blue
collar vocational training as a tool for solving unemployment problem of school
dropout has been recognized by the Government of India, and we know that
National Skill development Council and Board have been setup. But the progress
in this direction has been slow.Hope this scheme will act as a catalyst and
construction will be one of the major beneficiaries.Shortage of skilled labor has been a
perennial problem.Construction skills
are devoid of glamour and have not been able to draw good talent.
DRINKING WATER
PROJECTS
The
budget has allocated Rs 1400crore to set up water purification plants for areas
which are affected by Fluoride and arsenic contamination.Naturally construction sector will have its
share.
CONCLUSION
We did not expect the Indian Union Budget 2013-14 to be a game-changer. The global economic condition is not rosy.
The realities of the Indian economy need to be viewed in context with the
factors that drive it. The ruling party cannot also ignore the fact that the
election is coming up in the near future.
The growth rate has come down and common man is concerned about the
inflation. Under the circumstances FM has tried not to rock boat and taken the middle path and
offered a few goodies here and there
More,
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