Reforms of Modi Government in Real Estate in 2 years tenure

The overpowering victory of Modi-led BJP government and oath of Mr. Narendra Modi on 26th May 2014 had raised lot of expectations from the government seeing the promises of its election campaign. With such optimism toward the government, it was vital that the new government at the centre to bring reforms that could bring a positive change in all the sectors of India.

India’s GDP has been increasing for past two years which clearly depict its economic growth. The real estate has been affected by the various policy changes by the government but the industry’s upcoming years might bring more merriment to the sector. Some of the prime factors which can be highlighted in this context are the recent passing of RERA, FDI liberalization, getting REIT’s operational and tax benefits in housing sector. Apart from this the strengthened stable government has also given adrenaline rush to the people to make more investment to the sector.

The government is ready to escort India into a new era of urbanization induced growth under which it had planned to build 100 smart cities in India. This initiative involved the deployment of wide scale technologies and innovations, integrated townships, infrastructure advancement, transparent e-governance & better utilities. For now list of 98 cities is declared and 33 urban cities will start receiving govt. seed funding of Rs.48000 crores. If this gigantic project becomes fruitful Indian standard of living will improve and empower the real estate industry & urban infrastructure.

Housing for All by 2022, another mission on which the government is working, tends to build houses for Economically Weaker Section (EWS) & Lower Income Group (LIG). The initiative will offer interest subsidies & financial aid and envisages building around 110 million individual units by 2022, the 75th anniversary of Indian independence. In recent times, the government has publicized to build nearly 30 million units in the rural areas involving a cost of Rs. 82000 crores per 10 million units.

By enabling Real Estate Investment Trust (REIT), small investors can prosper investing in income generating commercial real estate units. In recent budget, REITs have been made insulated from the Dividend Distribution Tax, thereby clearing a significant tax hurdle.

Real Estate Regulatory Act, was proposed to bring in more transparency into the overall Indian real estate industry. It also insists that developers should park 70% of their cash inflow in a separate bank account to ensure better linkage between cash inflows & project construction. The bill has been passed in Rajya Sabha and with robust efforts on safeguarding buyer’s interest it will enhance buyer’s confidence.

Curated by editor at  Wienerberger India

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