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The Economic Times - - The Edit Page - M Venka­iah Naidu

Fi­nance min­is­ter Arun Jait­ley’s an­nounce­ment of pro­vid­ing ‘in­fra­struc­ture’ sta­tus to af­ford­able hous­ing in his Union Bud­get speech last week has am­pli­fied the fact that the wel­fare of the com­mon man lies at the core of this gov­ern­ment’s ini­tia­tives. Apart from in­creas­ing the al­lo­ca­tion to .₹ 23,000 crore un­der the Prad­han Mantri Awas Yo­jana (PMAY), this move will spur growth.

It also comes at the right time when banks are flush with sur­plus liq­uid­ity in the wake of de­mon­eti­sa­tion. As higher in­vest­ments flow into this sec­tor at lower lend­ing rates, the sup­ply of hous­ing will get a boost and the gap will in­creas­ingly get re­duced.

The real es­tate sec­tor is the sec­ond­largest em­ployer af­ter agri­cul­ture in In­dia and ac­counts for 9% of the GDP. So, an over­ar­ch­ing reg­u­la­tion to en­sure the con­sumer is not at the wrong end of the stick is nec­es­sary. Among oth­ers, the Real Es­tate (Reg­u­la­tion and De­vel­op­ment) Act has made it manda­tory for projects of 500 sq m and above, or eight apart­ments and above, to be reg­is­tered with the Real Es­tate Reg­u­la­tory Author­ity (Rera) and de­posit 70% of the amount re­alised from the project in es­crow ac­count.

The law was meant to en­sure trans­parency and timely ex­e­cu­tion of projects, pro­tect con­sumers, pro­mote fair play, and curb black money and spec­u­la­tive in­vest­ments in the sec­tor. While an es­ti­mated 15 lakh houses were con­structed in ur­ban ar­eas in 2016, with real es­tate de­vel­op­ers ac­count­ing for nine lakh of them, ac­cord­ing in­fra­struc­ture sta­tus to hous­ing gives a push to a sec­tor that had slowed down af­ter de­mon­eti­sa­tion.

Pro­vid­ing in­fra­struc­ture sta­tus will open up new fi­nan­cial av­enues for de- velop­ers. It will also en­able the fi­nan­cial in­sti­tu­tions to look pos­i­tively at the real es­tate sec­tor as it re­duces risk weigh­tage for hous­ing loans. It would also fa­cil­i­tate large pub­lic sec­tor in­vestors and in­sur­ance firms to in­vest in the hous­ing sec­tor.

With re­spect to 100% de­duc­tions of prof­its and gains from hous­ing projects un­der Sec­tion 80-IBA of the In­comeTax Act, the con­ces­sions given in last year’s Bud­get have been fur­ther lib­er­alised for af­ford­able hous­ing. The ben­e­fit is now ap­pli­ca­ble for five years in­stead of three.

To en­sure avail­abil­ity of larger af­ford­able houses to buy­ers, the scheme would now be ap­pli­ca­ble to 30 sq m and 60 sq m car­pet ar­eas in­stead of built-up ar­eas for both the cat­e­gories. While the 30 sq m stip­u­la­tion would be ap­pli­ca­ble to the four met­ros, the 60 sq m unit size would be ap­pli­ca­ble for the rest of the coun­try, in­clud­ing metro sub­urbs.

An­other ma­jor re­lief to de­vel­op­ers has been the re­moval of tax on un­oc­cu­pied hous­ing stock un­der no­tional rental in­come for one year from the date of is­sue of com­ple­tion cer­tifi­cate. This would pro­vide time to de­vel­op­ers to sell their in­ven­tory with­out the bur­den of ad­di­tional tax.

A fil­lip is ex­pected for home-buy­ing with re­duced lend­ing rates for home loans. A ma­jor step taken in this di­rec­tion is the man­date given to the Na­tional Hous­ing Bank to re­fi­nance in­di­vid­ual hous­ing loans to the ex­tent of .₹ 20,000 crore in 2017-18.

The re­duc­tion in the hold­ing pe­riod un­der ‘long-term cap­i­tal gains’ from three to two years, and chang­ing the base year for the de­ter­mi­na­tion of cost in­fla­tion in­dex from 1981 to 2001 would go a long way in re­duc­ing the tax bur­den of home­own­ers. An­other ma­jor con­ces­sion has been to make the Joint De­vel­op­ment Agree­ment li­able to cap­i­tal gains tax only on com­ple­tion of the project. It would lead to the avoid­ance of the bur­den of dou­ble tax­a­tion and help re­duce prices across all seg­ments.

Sim­i­larly, for in­creas­ing the flow of in­vest­ments into the hous­ing sec­tor, ex­ter­nal com­mer­cial bor­row­ings have been made more at­trac­tive. This has been done by in­creas­ing the pe­riod for with­hold­ing of 5% in­ter­est up to June 30, 2020, in­stead of June 30, 2017.

The in­ter­est sub­ven­tion scheme for mid­dle-in­come groups (MIG) an­nounced by the prime min­ster on De­cem­ber 31, 2016, will also pro­mote home pur­chases. The in­ter­est sub­sidy would be 4% for loans up to .₹ 9 lakh for those hav­ing a house­hold in­come up to .₹ 12 lakh. It would be 3% for .₹ 12 lakh loans for in­comes up to .₹ 18 lakh. A 6.5% sub­sidy ex­ists un­der the PMAY for loans up to .₹ 6 lakh for eco­nom­i­cally weaker sec­tions (EWS)/low-in­come groups (LIG).

Ad­di­tion­ally, GoI is pro­vid­ing as­sis­tance of .₹ 1-2.3 lakh per ben­e­fi­ciary be­long­ing to EWS, LIG and MIG with in­comes up to .₹ 18 lakh a year un­der PMAY. Also, un­der PMAY (ur­ban), 15.61 lakh houses have al­ready been sanc­tioned with an in­vest­ment of .₹ 84,150 crore and cen­tral as­sis­tance of .₹ 24,670 crore. Of these, the con­struc­tion of 4.32 lakh houses has be­gun and ten­ders have been called for over 8.5 lakh houses.

In the fi­nal anal­y­sis, the hous­ing sec­tor would see a re­bound in the com­ing months as both the de­vel­op­ers and con­sumers will ben­e­fit. Search­ing for the next gen­er­a­tion of busi­ness lead­ers rep­re­sents one of the big­gest headaches for any or­gan­i­sa­tion. Most, in our ex­pe­ri­ence, rely on de­vel­op­ment pro­grammes that ro­tate vis­i­ble high­fliers, em­pha­sis­ing the im­por­tance of leadership at­tributes such as in­tegrity, col­lab­o­ra­tion, a re­sults-driven ori­en­ta­tion and cus­tomer-ori­ented be­hav­iour.

Many, un­der­stand­ably, also look out­side the or­gan­i­sa­tion to fill key roles de­spite the costs and po­ten­tial risks of hir­ing cul­tural mis­fits. Far fewer, though, scan sys­tem­at­i­cally for the hid­den tal­ent that often lurks un­no­ticed within their own cor­po­rate ranks. Some­times, those over­looked lead­ers re­main in­vis­i­ble be­cause of gen­der, racial or other bi­ases. Oth­ers may have un­con­ven­tional back­grounds, be re­luc­tant to put them­selves for­ward or have fallen off (or steered clear of) the stan­dard de­vel­op­ment path.

Re­gard­less of the cause, it’s a wasted op­por­tu­nity when good lead­ers are over­looked, and it can leave in­di­vid­u­als feel­ing alien­ated and de­mo­ti­vated. To iden­tify promis­ing can­di­dates for pro­mo­tion who are not on the list of usual sus­pects, com­pa­nies need to ap­ply more rigour and bet­ter tools than many cur­rently use. Proac­tive ef­forts are the key — think ‘hunt­ing’ as op­posed to ‘har­vest­ing’ those who present them­selves.…

The first ex­pla­na­tion is size: in large or­gan­i­sa­tions, it’s easy for hid­den tal­ent to stay hid­den or be drowned out by the noise of com­plex or­gan­i­sa­tional pro­cesses.

The writer is Union min­is­ter of ur­ban de­vel­op­ment From “Find­ing Hid­den Lead­ers”

Fi­nally, the hous­ing sec­tor moves

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