Budget 2019: Enhancement of housing loan interest exemption limit will enable positive sentiments: KPMG India

Delivering her budget speech in Parliament today, Finance Minister Nirmala Sitharaman pointed out that the Indian economy has added one trillion dollar in the last five years due to the various initiatives and reforms undertaken by the Government, and is poised to  grow to be a 3 trillion dollar economy in the current year. Talking about the importance of  programmes like Pradhan Mantri Gram Sadak Yojana, Industrial Corridors, Dedicated Freight Corridors, Bhartamala, Sagarmala, Jal Marg Vikas and UDAN for enhancing physical connectivity through various modes, she said these initiatives will improve logistics, reduce the cost of transportation and increase the competitiveness of domestically produced goods.

According to the Finance Minister, for the MSME sector, Rs. 350 crore has been allocated for FY 2019-20 under the Interest Subvention Scheme, for 2% interest subvention for all GST registered MSMEs, on fresh or incremental loans. She further said the government will create a payment platform for MSMEs to enable filing of bills and payment. This will help eliminate delays in payment and give a boost to investment in MSMEs . 

Talking about several initiative, Chintan Patel, Partner - Deal Advisory, Head - Building, Construction & Real Estate, KPMG India, told Zee Business online, “The budget has brought forth positive interventions to accelerate the ‘Housing for All 2022’ agenda of the Government. Focused initiatives such as Implementation of the Rental Housing Scheme, delinking of financing and regulatory powers between NHB, HFCs and RBI, Direct Benefit Transfer to ease construction technology adoption will provide immense fillip to housing development."

"Enhancement of housing loan interest exemption limit by INR 1.5 lacs will enable positive sentiments amongst consumers. Allowance of Foreign Portfolio Investors (FPIs) to subscribe to listed debt securities under REITs and InvITs mechanisms will further boost foreign investor participation. These steps showcase the intent of the current Government,” Patel added.

Neeraj Bansal, Partner, Advisory Services, KPMG in India, however, said, “Significant boost to affordable housing with additional deduction on interest on housing loan with potential savings up-to INR 9.3 lacs for a single household for people with income less than 18 lacs on max loan amount is welcome. This will create new demand for houses up-to INR 45 lacs in the current year which is a big positive for the affordable housing developers”

Elias George, National Head - Infrastructure, Government & Healthcare, KPMG in India, said “The budget has put in place the basic architecture for moving India closer towards our new goal of becoming a USD 5 trillion economy by 2024-25. The budget rightly focusses on augmentation of physical and social infrastructure, particularly transportation infrastructure, customer-centric universal travel, integrated water management for ensuring clean water availability to all by 2025, ‘One nation One grid’ for universal power availability and countrywide provision of internet infrastructure and measures to improve the ease of living."

"A number of measures have also been proposed to enhance private investment levels in the country for bridging our infrastructure deficit. Particularly welcome are the budget interventions aimed towards improving women’s welfare,” he added.