Only 28% of Urban India lives in rented houses: Economic Survey

A mere 28% of India’s city dwellers live in a rented house, which is a steep decline from the scenario in 1961 when a majority of them (54%) used to live in a rented house instead of owning one, according to a longitudinal analysis of India’s housing pattern undertaken by the Economic Survey 2017-18. 

While India is in the middle of a “Housing for All” mission, which aims to build 3 million houses in urban areas alone, the survey flags the cost of over-reliance on house ownership at the expense of other models of the dwelling.

While reliance on renting as a practice has declined, there has been a dramatic rise in the number of houses lying vacant in cities across the country.

According to the survey’s analysis of census figures, 12% of the total housing stock in urban India remains vacant. Mumbai has 500,000 vacant houses, followed by Delhi which has 300,000 vacant houses. 

Clearly, there are deep systemic problems in the rental market and addressing them is important for solving India’s enormous housing challenge, the analysis pointed out.

Tying the issue of housing with impediments to migration and economic activity, the analysis observes that rental housing is important for both horizontal and vertical mobility as it allows people to access suitable housing without actually having to buy it.

“Across the income spectrum, rental housing is an important foothold in a city for new arrivals, until they are able to, or choose to, purchase their own homes. For rural migrants, in particular, whose financial portfolios may already be tied up in land and livestock, it is access to shelter that is more important than investing in another lumpy asset that is subject to local market risk,” the survey said. However, rent control, unclear property rights and difficulties with contract enforcement along with India’s encouragement of home ownership through socioeconomic policies have resulted in the present scenario.

India’s housing requirements are “complex” and a broader set of policies are needed than just building new houses and encouraging ownership, said the survey.

Source- Mint

Noida authority re-introduces part-payment plan to meet Yogi's flat target

Aiming to meet the target of delivering at least 80,000 flats to homebuyers in the next two months, the Noida, Greater Noida and Yamuna expressway development authorities have decided to re-introduce their rescheduled payment policy.

This will give relief to developers of group housing projects who are yet to pay dues that collectively amount to Rs 20,000 crore. As a result, it is also expected to speed up the process of delivery of flats that currently can’t be handed over because the developers will not be able to procure occupancy certificates.

While the Noida Authority has extended the plan till March 15, the Yamuna Expressway Industrial Development Authority (YEIDA) will allow this facility till June 30. Greater Noida is likely to clear a proposal to allow builders to avail of this option at its upcoming board meeting on February 1.

According to officials, many flats are almost ready in the three areas but the projects have not received completion certificates from the respective authorities because there are crores of rupees pending from builders. Developers owe Noida Rs 11,000 crore, Greater Noida Rs 7,500 crore and YEIDA Rs 2,500 crore.

The rescheduled payment plan allows the realtor to avail of a fresh payment policy for dues against the land cost if it has completed a project but is unable to get a completion certificate. Those builders who have over Rs 500 crore dues will have to pay 10% of the amount, which will entitle them to a no-dues certificate, and subsequently, an occupancy certificate. Those who have less than Rs 500 crore dues will have to pay 15% of the total amount to get the mandatory document before flats can be registered and handed over to home buyers.

The remaining dues will need to be submitted by the builders in instalments. The ‘reschedulement’ policy was introduced earlier too in all the three areas but had lapsed last year.

Last month, chief minister Yogi Aditya Nath had instructed the three authorities to ensure 80,000 homebuyers in the three cities get their flats by March 2018.

“We have about 76 ongoing projects of about 36 builders in our area,” said a Noida Authority official. “Currently, we are looking at an outstanding of nearly Rs 11,000 crore. One of the reasons for the delay in handing over possession to homebuyers is the dues we need to recover from the builders. With the extension of the rescheduled payment plan, we will be able to clear this builder-buyer logjam and start handing over homes to thousands of buyers at the earliest,” the official added.

In Greater Noida, more than 2 lakh flats have to be delivered across 200 projects, while in YEIDA, 7,000 flats have to be handed over by March 2018.

“First the builder will have to apply for the plan and pay up. Thereafter, the builder will have to complete all formalities with the planning department regarding the completion according to building bylaws and checklist mandatory for completion. Only then will the flats be ready for registry and handing over,” said a YEIDA official.

Source- ET Realty

Budget 2018: Govt may finally give industry status to real estate sector

On the argument that real estate development is the best driver for mass job creation in a short span of time, the government might finally give industry status to the sector in its Budget for 2018-19. This has been the real estate industry's long-standing demand. “A midsize affordable housing project gives employment to at least 2,000 to 3,000 people, direct and indirect. Bigger projects require more people. This is a two-pronged plan. Not only we will help get more people affordable housing but also help millions get employment. We think this year the finance ministry would give its nod (for industry status)," said a senior urban development ministry official. If the status was granted, the official added, developers would be able to get finance at single-digit interest rates, between five and nine per cent. At present, it is 10-15 per cent.


Other sources say the finance ministry, understanding the need to boost the numbers of indirect and ancillary jobs, has decided to grant the demand.

“The past year has witnessed a lot of change in the sector, with enforcement of the Real Estate Regulatory Act. The sector has streamlined a lot and mostly players who fulfill all criteria remain.


There is seriousness in the sector that might have been missing earlier," added an official. “We estimate in the next two years itself, over 1.5 million new jobs can be created as more real estate development projects will come up." Experts say real estate has been marred by a lack of consumer confidence due to stalled projects, leading to a fall in demand and demonetisation, among other things. The hope is that industry status might help a turnaround.


“Real estate is one of the key gross domestic product contributors and fourth largest employment generator in India. Extending industry status to the entire sector will help developers to raise funds at lower rates and, in turn, reduce their project costs, which will help in pushing demand," said  Anuj Puri, chairman, Anarock Property Consultants. Additionally, its inclusive growth will help in generating employment across various sectors which are directly or indirectly related to it."

Source- Business Standard

8% GST on houses under PMAY to be effective from tomorrow

A lot of people are hoping for a populist budget from Arun Jaitley next week. And after its recently concluded meeting on January 18, the Goods and Services Tax (GST) council have given a certain section of home buyers something to cheer about.

As per the recommendations of the council, for the housing sector, there will be less incidence of GST for homes purchased under the Credit Linked Subsidy Scheme (CLSS). For under-construction homes that form a part of CLSS will now be charged GST at 8 percent instead of 12 percent, a cut of 4 percent. However, people who are not eligible for CLSS will continue to pay higher GST.

The new GST for housing

The concessional rate of GST of 12 percent (effective rate of 8 percent after deducting one-third of the amount charged for the house towards the cost of land) will henceforth (from January 25) be applicable for houses constructed or acquired under the CLSS for Economically Weaker Sections (EWS) / Lower Income Group (LIG) / Middle Income Group-1 (MlG-1) / Middle Income Group-2 (MlG-2) under the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (PMAY Urban).

Under CLSS, the interest subsidy would be provided on home loans taken by eligible urban poor (EWS/LIG/ MIG-I/ MIGII) for acquisition or construction of house.

Real estate is still not a part of the GST framework. However, real estate here refers to the value of the land and not the construction activities (or the works contract) in the building of a house. GST is applicable on the construction cost incurred by the builder and not on the houses already constructed, which only amounts to selling of the building.

This makes under-construction projects costlier than a ready-to-move-in home. As per the Central Board of Excise and Customs (CBEC), "Sale of building is an activity or consideration which is neither a supply of goods nor a supply of services." This makes the ready-to-move properties lucrative compared with under-construction properties.

Existing GST on housing

So far, houses acquired under CLSS attracted an effective GST rate of 18 percent (effective GST rate of 12 percent after deducting value of land). The concessional rate of 12 percent was applicable only on houses constructed under the other three components of the Housing for All (Urban) Mission/Pradhan Mantri Awas Yojana (Urban), namely (i) Redevelopment of existing slums using land as a resource component; (ii) Affordable housing in partnership with other entities and (iii) Beneficiary-led individual house construction / enhancement.

The exemption has now been extended for houses acquired under the CLSS component as well. Therefore, the buyers would be entitled to interest subsidy under the scheme as well to a lower concessional rate of GST of 8 percent (effective rate after deducting value of land).

How lowering of GST helps

The GST council in its statement states: "It may be recalled that all inputs used in and capital goods deployed for construction of houses attract GST of 18% or 28%. As against this, most of the housing projects in the affordable segment in the country would now attract GST of 8% (after deducting value of land)."

"As a result, the builder or developer will not be required to pay GST on the construction service of flats etc. in cash but would have enough ITC (input tax credits) in his books to pay the output GST, in which case, he should not recover any GST payable on the flats from the buyers. He can recover GST from the buyers of flats only if he recalibrates the cost of the flat after factoring in the full ITC available in the GST regime and reduces the ex-GST price of flats," the note added.

Simply put, by lowering the GST, it is expected that builders will be incentivised enough not to dodge the system and effectively lower the tax incidence on the buyer.

Source- ET Realty

Govt announces commencement of India's first-ever 'Livability Index'

Union minister Hardeep Singh Puri on January 20 announced the commencement of the country's first-ever 'Livability Index' to rank 116 cities.

An official said that the result of the exercise will be announced in June.

"The Housing and Urban Affairs Ministry has decided to assess the livability standard of 116 Indian cities, which include the identified Smart Cities and few more cities with a population of over 1 million," the housing and the urban minister told a press conference here.

Among the cities to be assessed for the 'Livability Index', include Delhi's three municipal corporations, Bangalore (Karnataka), Kochi (Kerala), Ghaziabad, Meerut, Varanasi, Allahabad and Lucknow (Uttar Pradesh) and Faridabad in Haryana.

The cities will be assessed on 15 core parameters like governance, social infrastructure, education, employment, health and safety and security.

The 'Livability Index' will also take into account physical infrastructures like housing, open spaces, land use, energy and water availability, solid waste management and pollution, among others.

The ministry, through an international bidding process under a World Bank-funded programme, has selected the 'IPSOS Research Pvt Ltd' in consortium with the 'Athena Infonomics India Pvt Ltd' and 'Economist Group Ltd' for the assessment of the livability indices in 116 cities, according to a release.

Source- MagicBricks

Yamuna expressway authority cuts interest rates by 1.5% on land allotment

The Yamuna Expressway Industrial Development Authority (YEIDA) has on Monday reduced the interest on instalments it receives from allottees by 1.5% across all properties. The cut in interest rate is likely to come into effect soon after the minutes of the authority’s board meeting are officially approved.

According to Prabhat Kumar, YEIDA Chairman till now an interest of 12% was being levied on all properties except residential. “Residential allotments would incur an interest rate of 10.65%. With immediate effect, rate of interest charged will now be 10.50% across all properties including residential, industrial, institutional, etc,” he said. “We have decided to charge only 10.5% interest, instead of 12%, on the dues to be cleared by an allottee. As banks have reduced interest rates, we want to pass on the benefit to our allottees,” he said.

Besides reducing the interest rates, Kumar further said that residents or individual plot owners will not have to pay GST for many services, including sewer and water taxes, which are provided by the YEIDA. “Plot owners will also not have to pay GST on land cost,” he said. “About 21,000 alllottees of YEIDA will be relieved by this decision,” he added.

Source- ET Realty

Property market in India: Why relaxed FDI norms will be a boost for realty brokerages

On January 10, 2018, the Union Cabinet, chaired by the Prime Minister, gave its approval to a number of amendments in the foreign direct investment (FDI) policy. These amendments include 100% FDI under automatic route in single brand retails trading, construction development (real-estate brokerage services), civil aviation and power exchange. The underlining aim of liberalising the policy is to provide ease of doing business, which will result in increasing the FDI inflow in the respective sectors, leading to growth of investment and employment in the country. Providing 100% FDI in construction development via automatic route is surely a significant move by the government. Earlier, the FDI policy included the real-estate broking services in real-estate business, in which 49% FDI was allowed under automatic route.

However, in the definition of real-estate business, clarification has been provided that the real-estate brokerage service does not fall under the real estate business. Now, “real estate business” means dealing in land and immovable property with a view to earning profit and does not include development of townships, construction of residential/commercial premises, roads/bridges, educational institutions, recreational facilities, city and regional level infrastructure, townships. Earlier 100% FDI was permitted in construction-development projects with the following conditions:

*Minimum floor area to be developed of 20,000 sq. metres.

*Mandatory infusion of FDI of minimum $5 million within six months of the commencement of the project.

The investor was permitted to exit on completion of the project or after development of trunk infrastructure—roads, water supply, street lighting, drainage and sewerage. Transfer of investment from the foreign investor to another non-resident investor required government approval. Despite the fact that 100% FDI was permitted under automatic route, this sector was not showing any sign of recovery, as the minimum thresholds were suggesting that the FDI was permitted only in new projects and not permitted in the existing projects, which were incomplete due to lack of funds. However, the government, in November 2015, re-looked the policy and relaxed it. The amended policy broadly provided:

*Minimum thresholds related to the area to be developed and the amount to be infused was removed.

*The foreign investor has been given liberty to exit the project even before its completion or development of basic infrastructure subject to a lock-in period of three years.

*No prior approval is required for the sale of investment by the foreign investor to another non-resident wherein no repatriation of investment is involved.

*Each phase of the project would be considered as a separate project for the purpose of investment.

However, the government did not clarify whether the real-estate brokerage services will come under real estate business, which acted as a major factor in restricting the foreign firm to enter the sector. But, this time, the government has taken a view and clarified its stance on the subject. The clarification is a welcome step for the start-ups/foreign firms who see Indian real-estate brokerage services as a money-making sector. Now various multinational firms can enter the Indian market without the help of local partners. Another benefit from such relaxation will be the availability of technological know-how. Foreign firm will bring advanced technology in the country. More so, this step can be seen as a strong signal towards institutionalisation of the real-estates brokerage service in India.

The clarification can also prove to be a booster for real estate sector of construction development. In the last couple of years, the real estate market has seen slow growth due to various reasons, such as non-availability of fund and rigid laws. Now, the foreign firms can directly invest in the real estate sector without prior approval of government, making the country a global retail market for real estate brokerage services. This will also reduce the problem of non-availability of funds in the market, resulting in higher contribution to the economy of the country.

Source- Financial Express

Strategic investors can invest up to 25% in REITs and InvITs: Sebi

To make REITs and InvITs more attractive, markets regulator Sebi has allowed strategic investors like registered NBFCs and international multilateral financial institutions to invest up to 25 per cent of the total offer size of such trusts.

"The strategic investor(s) shall, either jointly or severally, invest not less than 5 per cent and not more than 25 per cent of the total offer size," Securities and Exchange Board of India (Sebi) said in a circular.

The units subscribed by strategic investors, pursuant to the unit subscription agreement, will be locked-in for 180 days from the date of listing in the public issue.

Further, Sebi has put in place operational modalities required for the participation by the strategic investors in (Real Estate Investment Trusts) and InvITs (Infrastructure Investment Trusts).

Under the rules, the manager on behalf of the InvIT/REIT, will have to enter into a binding unit subscription agreement with the strategic investor, which propose to invest in the public issue of such trusts.

The draft offer document would disclose details of the unit subscription agreement. These include names of each strategic investor, number of units proposed to be subscribed by it and the investment amount and proposed subscription price per unit.

The subscription price per unit, payable by the strategic investor would be set out in the unit subscription agreement and the entire subscription price would be deposited in a special escrow account prior to opening of the public issue.

The price at which the strategic investor has agreed to buy units of the such trusts should not be less than the issue price determined in the public issue.

In case, the price determined in the public issue is higher than the price at which the allocation is to be made to strategic investor, then such investor would bring in the additional amount within two working days of the determination of price in the public issue.

However, if the price determined in the public issue is lower than the price at which the allocation is to be made to strategic investor, the excess amount will not be refunded to such investor. Further, the strategic investor would take allotment at the price at which allocation was agreed to be made to it in unit subscription agreement.

"The unit subscription agreement shall not be terminated except in the event the issue fails to collect minimum subscription," Sebi noted.

The regulator had notified REITs and InvITs Regulations in 2014, allowing setting up and listing of such trusts which are very popular in some advanced markets.

However, only two InvITs - IRB InvIT Fund and Indiagrid Trust - have got listed on stock exchanges so far and not a single REIT has been listed in the country.

Despite various earlier relaxations, listings have not taken place as they have failed to attract investors.

Last month, Sebi had notified relaxed norms to allow these trusts to raise funds by issuing debt securities.

Source- ET Realty

Budget 2018: What home buyers expect?

The year 2018 is full of expectations from the upcoming budget as homebuyers are looking forward to buying homes and developers are keen to sell. Tax benefits are likely to help many people buy their first homes, fulfilling the government’s objective of ‘Housing for All’. Many are hoping that reduction in taxes and incentives will significantly push the real estate sector.





Let us find what the industry and buyers expect from this year’s budget.


Buyers are looking for: 

1. Cheaper Home Loans: Lower rate of interest is already being offered by banks but buyers expect more. The rate of interest on housing loans needs a further reduction to increase buying. The credit-linked subsidy scheme (CLSS) under the Pradhan Mantri Awas Yojana (Urban) has significantly helped the middle-income group. “Benefits section 80C for home loan repayments should be increased from Rs 1.5 to 5 lakh. Incentives and lower interest rates reduce the burden of EMIs on the salaried class and gives them confidence to buy a house,” says Nikhil Kain, a homebuyer in Delhi.

2. Exemption and Incentives: Buyers expect an increase in incentives for first time home buyers under section 80EE by way of increasing the limit from Rs 50,000 to Rs 2 lakh. This can really help young homebuyers who want to own a home but are not able to do so because of financial restraints.

3. Reduction in tax slab: Budget 2018 is expected to increase the personal income tax limit as the lower income group falls in this category. It is one of the most important categories in the affordable housing segment so tax benefits will be helpful for homebuyers in this segment. Tax exemption is expect to be raised from Rs 2.5 to 3 Lakh in this budget.

Developers are looking for: 

1. Industry Status for the Real Estate Sector: “The Real Estate Sector should be allotted ‘Infrastructure’ status. This will lead to construction funds being available to the developer at much lower interest rates. This is eventually going to benefit customers from the Economically Weaker Section (EWS) and Lower Income Group (LIG) as developers would be in a position of making the projects ‘affordable’ in its true sense,” says Rohit Poddar, Managing Director, Poddar Housing and Development Ltd.

2. Infrastructure Status to the Housing Sector: Giving Infrastructure status to the Housing Sector is expected to simplify the approval process for affordable projects, create guidelines and increase transparency. It could also attract debt and pension funds to invest in the affordable housing segment.

3. Single window clearance: One of the main reasons for delay in projects is the approval process. A single window clearance will not only help developers kick off their projects at the earliest but buyers are also likely to get possession without any delay.

This has been a long pending demand of the industry. “The biggest delays in delivery of houses occur due to delay in approvals of projects and authorities have a major role to play in this. An online single window clearance with bare minimum human interface and precise deadlines for approvals will not only bring down the deliveries of the project by at least three years but also reduce the cost of the project by at least 15% which can further be passed on to the consumers. Going online will also boost transparency,” says Amit Modi, Director, ABA Corp and Vice President, CREDAI Western UP.

This year, the budget is expected to be different as now the GST Council decides tax rates for goods and services. But buyers and developers are looking forward to tax relief and incentives to boost the real estate sector.

Source- ETRealty

Realty body lists steps to bolster residential sector

Ahead of Budget 2018-19, National Real Estate Development Council (Naredco) on Wednesday suggested that the government should strive to increase the supply of residential properties and the purchasing power of home buyers to achieve the target of Housing for All by 2022.

It submitted the pre-budget memorandum with various suggestions and recommendations.

‘Win-win proposals’

“We have carefully spelt out our demands and suggestions pertaining to the sector for the upcoming budget. We not only want the sector to grow but also want the home buyers to benefit. All of this should happen along with an increase in government revenue from the sector. Our suggestions, if accepted, will be a win-win situation for all the stakeholders,” said Naredco Chairman Rajeev Talwar.

Industry status

“Industry status is something which is long overdue to the sector. The government should help developers in getting better access to funds and also incentivise homebuyers to create demand for the sector, which is facing a lot of challenges,” he added.

For some time, Naredco has been demanding to bring house construction in 12 per cent GST rate from 18 per cent now with 50 per cent abatement for land from the prevailing 33 per cent. The step will bring tax rate at the level of around 6 per cent of the property cost.

‘Harsh regulations’

“Regulatory requirements are at times very harsh for the sector and affect the pace of growth,” said Naredco Vice-Chairman Parveen Jain.

“We want government to make them realistic and in sync with genuine business expectations. Also, the sector which is facing challenges needs government’s help to tide over the paucity of funds and flexibility in use of the funds. We hope the Budget will address our concerns in this regard,” Jain added.

Source- The Hindu Business Line

Real estate sector likely to come under GST from April 1: Expert

To enhance transparency in property transactions, the GST Council is expected to bring the real estate sector under the purview of the unified indirect tax regime GST from April 1 next, an expert has said.

"It could be introduced from 1st April, and the legislative changes could be done in this (budget) session to facilitate this," CBEC (Central Board of Excise and Customs) ex-Member V. S.

Krishnan told business news channel BTVI in an interview.

Krishnan said the sector can be brought under the GST as a deemed service.

"Land may not be a service, but what you have is right to use land for residential construction... therefore, it can be treated as a service," Krishnan told BTVI.

"What's going to happen is that the whole transaction is going to become transparent... which means what has happened after demonetisation, that process is likely to go forward... in a sense that organised players will welcome."

Krishnan further said that the GST rate imposed on the sector may not be very high "because real estate is linked to affordable housing".

"The government may think of 12 per cent. But 12 per cent may have a backlog with the accumulation of credit... because GST paid on land would also be set off, the GST paid on cement and steel would be set off, and the GST paid in the earlier process of construction services will be set off," Krishnan elaborated.

"So, it may be revenue-neutral in the GST side, but it will clean up the land market, and probably also encourage foreign investors to invest in the real estate sector."

According to sources, the proposal to include the real estate sector under the purview of the unified indirect tax regime is expected to be discussed at the council's meeting to be held in New Delhi on Thursday.

Source- Business Standard

All real estate assets have to be registered with RERA

All real estate projects, agents and building owners have to register their properties with the Real Estate Regulatory Authority (RERA), functioning under the housing and urban development department if they are involved in development and sale of any property or real estate projects. According to the new ruling, the concerned building owners and real estate owners are asked to register their properties as per Tamil Nadu government's Real Estate (Regulation and Development) Rules, 2017, or face either imprisonment or penalty. The rules have been notified in pursuance of the Real Estate (Regulation and Development) Act, 2016, district collector K Rajamani said in a release.

No one should involve in development and sale of any building or real estate project having development or built-up area of 500sqm or where the number of units exceeds eight, without registering with RERA.

The developer of each project has to certify through an affidavit that he has legal title to the land on which the project is being developed free from all encumbrances and the period within which the project will be completed.

The building owners or promoters should mention their registration number got under RERA with their advertisements when they involve in any development and sale of that particular property, the release added.

If any registration had already been done before June 22, 2017, one has to duly apply for exemption with the concerned office. It is mandatory for all the agents working with real estates, the release further said.

Source- The Times of India

NBFCs may see 35% earnings growth

MUMBAI: Non-Banking Finance companies are expected to report as much as 35 percent growth in earnings as retail loans by small and medium enterprises continued at a brisk pace even as state-run lenders continued to hold on to their purse strings due to bad loans. 

Housing finance companies will maintain momentum with the growth coming from the affordable segment. 

A good monsoon, lower income reversal and lower credit cost due to stable asset quality will help vehicle financing report strong traction particularly tractor and commercial.

Consumer finance companies will maintain growth momentum due to pick up in sales in festive season. Microfinance institutions are expected to report softer earnings due to increased provisioning. "Two consecutive years of good monsoon have lifted rural sentiment," said Jefferies in an earnings preview report. Jefferies forecasts 15 per cent loan growth at Shriram Transport Finance and Mahindra and Mahindra Financial Services in the second quarter. 

Our checks suggest home loan disbursal has improved, though growth has varied across regions," said Jefferies in the report. "There has been some pick up in disbursal of affordable housing segment. Stabilisation of regional issues should aid better loan growth at Repco." 

HDFC's disbursement growth is likely to be strong benefitting from various government initiatives on affordable housing. 

Retail inflation rises to 5.21% in December; factory output jumps to 8.4% in November

India’s factory output jumped to 8.4% in November and retail inflation rose to 5.21% in December, confirming the prospects of sustained economic recovery and growing risks of inflation. The Index of Industrial Production was 2.2% in October. The retail inflation, based on Consumer Price Index (CPI), was 4.88% in November. In December 2015, it was 3.41%.

This is the final set of data that finance minister Arun Jaitley will have as he finalises the Budget for 2018-19 to be presented on February 1.According to Bloomberg analysts’ estimate, the IIP will accelerate to 4% in November from 2.2% a month ago, while CPI will cross the 5%-mark at 5.04% in December from 4.88% a month ago. The statistics office last Friday projected the economy to slow to 6.5% in 2017-18 from 7.1% a year ago while maintaining that growth will accelerate to 7% in the second half of the year (October-March) from 6% in the first half (April-September). The economy has been hurt by the lingering impact of demonetization and disruptions caused by GST.

Merchandise exports grew at a six-year high of 30.5% in November while the index for eight core sectors constituting 41% of IIP expanded at its fastest pace in 13 months at 6.8% during the same month. In November, passenger vehicle sales grew at 14.3%, the fastest pace since July, on the back of a low base effect due to the demonetization of high-value banknotes in November 2016.

The Nikkei India manufacturing Purchasing Managers’ Index (PMI) rose at the fastest rate in five years in December to 54.7 from 52.6 in the previous month. A reading above 50 denotes expansion and one below it signals contraction.

Affordable housing: Loans up to Rs 2 lakh see highest NPAs

With a sharp rise in loan disbursements and number of beneficiaries in the affordable housing segment, loans of up to Rs 2 lakh has ended up with the highest level of non-performing assets (NPAs) in home loans. Public sector banks reported higher NPAs in the sub-Rs 2 lakh housing loans slab than housing finance companies in 2016-17 and 2015-16, according to an RBI report on ‘Affordable Housing’.

NPAs for housing loans of up to Rs 2 lakh stood at a whopping 11.9% for PSBs during 2016-17. Housing finance companies also saw a sharp surge in housing loan NPAs in this slab. NPAs went up from 6.1% to 8.6% for the sub-Rs 2 lakh slab between 2015-16 and 2016-17. NPAs stood at 10.4% for this slab. The overall NPAs for housing loans stood at 1.5% and 0.6% respectively for PSBs and housing finance companies during 2016-17. The government’s recent thrust on affordable housing through policy measures that include incentive schemes, accordance of infrastructure tag, interest subsidy scheme under PMAY(Pradhan Mantri Awas Yojana) have resulted in sharp rise in new housing projects in the affordable segment for low income groups. New unit launches in the affordable housing segment registered a 10.1% year-on-year (y-o-y growth in 2016-17. Affordable housing was the only segment in the residential real estate sector that saw a double digit growth. New launches in the mid-range and high-end segments fell by 11.7% y-o-y and 26.7% respectively in 2016-17.

There has been a more than three-fold increase in the number of houses completed under PMAY between April and December 2017. Nearly 2.9 lakh houses have been completed under PMAY as on December 4, 2017, data with the union ministry of housing and urban affairs showed. Investments to the tune of Rs 1.72 lakh have been made under PMAY projects for constructing nearly 32 lakh houses involving a central assistance of Rs 49,537 crore. Of this, central assistance totaling Rs 12,764 crore has already been released.

“From the consumers’ perspective, while availability of low-cost credit is driving the demand for affordable housing, policies like Real Estate Regulatory Authority (RERA) Act may infuse fresh buyer interest in the realty sector,” RBI said. While the joint efforts of the government and the RBI to boost affordable housing have generated positive outcome, a host of factors including lack of suitable low cost land within the city limits, lengthy statutory clearance and approval process, shortcomings in development norms, planning and project design is affecting the pace of affordable housing development, it said.

Source- ET Realty

Budget 2018: Forget hike in exemption limit to Rs 3 lakh, here are 3 better options for FM Jaitley to give tax relief to common man

With the Union Budget 2018 just a couple of weeks away, everybody – including the salaried class – is looking towards Finance Minister Arun Jaitley with much hope. More because this is the last Budget of the Modi government before the 2019 polls and every one is expecting the Budget 2018 to be a populist one, which will help the government woo the masses.

Tax experts say that expectations of the taxpayers from the Union Budgets are always huge. Moreover, this being the last full budget before the elections – the expectation is even higher that this could be a budget for the common man.

For instance, “there is a lot of rumour that the basic exemption limit may be increased from Rs 2.5 lakh to Rs 3 lakh. However, if this is done, this may negatively impact the government’s objective of increasing the tax base. Only 3-4% of the people in India pay taxes and if the exemption limit is increased, this number will fall even further,” says Karan Batra, Founder & CEO of CharteredClub.com.

If this may not be a good step, then how can some sops be given to the taxpayers in the Budget 2018 to reduce their tax burden and give them some relief from the rising inflation and the impact of demonetisation?

1. Change in Tax Slabs

Alternatively, Finance Minister Arun Jaitley may think of changing the tax slabs and the tax rates while keeping the basic exemption limit of Rs 2.5 lakh intact. By doing this, “the government would be able to achieve the twin objective of reducing the tax burden per person while ensuring that the total tax base also increases,” says Batra.

2. Deductibles for children

The Modi government might like to introduce in the Budget 2018 deductibles for the children, who are now adults and wish to take care of their parents. For example, if a scheme was introduced whereby the children could open a retirement savings plan for their parents and claim it as deductible from their taxable income, which would be above the normal Rs 150,000 deduction u/s 80C. “This would encourage more investments to be made, which is beneficial for the government, while the tax deduction would be a welcome relief for the tax payer,” says Chetan Chandak, Head of Tax Research at H&R Block India.

3. Increase in the limits Section 80C deductions, allowances

Finance Minister Arun Jaitley should also focus in the Budget 2018 on increasing the limits of deductions under Section 80C of the Income Tax Act, 1961, as well as several other allowances for salaried employees, which are long due for a revision. For example, the limit of Section 80C deductions may be increased from Rs 150,000 to Rs 200,000. While this will help lower the tax burden of the middle class people to some extent, it will also induce people to invest more in tax-saving schemes, which will boost government revenue and will be a win-win for both. Similarly, there are many allowances whose limits need to be increased in the Budget 2018 as they have become outdated now.

Source- The Financial Express

Canada-India initiative for training of smart city planners

Twenty cities across three Indian states of Punjab, Haryana and Rajasthan are likely to have a fast-track development under a new Indo-Canadian initiative to train smart city planners on capacity-building and governance, according to experts associated with the project.

Under the proposed initiative, a rigorous planning and analysis would be taken up to assess the capacity and investment needs in municipalities, they said.

The 20 cities identified are among the 64 cities in the three states that come under the Atal Mission popularly called AMRUT. The work involves capacity building, reform implementation, water supply, sewerage amongst others.

It is in this context that the Society for Participatory Research in Asia (PRIA) based in India, and Canada-India Centre for Excellence (CICE) at Carleton University is undertaking the initiative to improve the service delivery infrastructure of these cities and thus create opportunities for private investments.

"The joint initiative would leverage Canadian and Indian expertise to address underlying challenges and build downstream receptor capacity," Rajesh Tandon, president of PRIA said.

"The Carleton University and CICE had already carried out considerable work with the Indian Smart Cities Mission. CICE had developed a portal called Smart Cities Navigator to identify market opportunities in India for Canadian investors and companies," Harry Sharma, manager, CICE said.

The proposal aims at training at least 150 official urban planners and designers and builds localised platforms and tools for efficient and predictable planning and execution of "smart cities", they said.

The initiative, researchers said, comes at a time when there are reports that only 7 percent of the Rs 600 crore released by India could be utilised by the municipalities due to lack of governance and capacity building. 

Source- The Tribune