Budget 2023: Finance Minister Nirmala Sitharaman will be presenting the Union Budget 2023 on February 1. Industry leaders from different sectors are waiting anxiously for Sitharaman’s budget speech to see what she has to offer.
Real Estate Sector Expectations
The real estate sector in India is one of the highest contributing sectors and the second-largest employment generator after agriculture. Employment generation is a key objective for the government, post Covid. The sector has achieved a remarkable recovery despite the pandemic and made a substantial contribution to the economy.
The government should offer some key relaxations in taxes and waivers, and there should be some reduction on GST in raw materials like cement, steel, and tiles. The deduction limit for interest payment on home loans should be increased from the existing Rs 2 lakh a year to Rs 5 lakh and the 1.5 lakh limit of principal deduction on housing loans should be increased to 5 lakhs to push the affordable as well as luxury housing segment, which is the need of the hour. Commercial real estate too needs a greater push, especially in Tier 2 and 3 markets as there is huge scope for growth in those markets. A reduction in tax rate from 30 to 25% would definitely help the overall sector, Shiv Parekh, founder hBits, said.
Activity in commercial real estate (CRE) leasing has surged, despite challenges remaining in the economy, due to global issues. New business ventures rely heavily on leasing necessary facilities and associated infrastructure is the reason for the uptick in the commercial real estate market. The supply for commercial construction properties may be constrained due to higher GST in raw materials like cement and steel. The government needs to reduce the GST on construction materials to help developers reduce the cost of construction and bring in more inventories. Raising the tax breaks on interest and principal amount for residential housing on home loans from INR 2 to 5 lakhs will bring in much relief to customers and bring in more economic activity in the sector. Co-working spaces have emerged as a major contributor to the commercial real estate sector and 10% on the receipts lead to the blocking of capital. Reducing the tax rate by even 2% on the same will help them flourish and will be good for CRE, said Ankush Ahuja, co-founder of Propcatalyst.
The Indian economy is on a slow path to recovery as the COVID-19 crisis has more or less subsided. It has been established emphatically that the rural sector needs to be galvanised and brought back to the place of prominence as the driver of the national economy, in order to ensure that the kind of distress that was witnessed during the COVID-19 crisis does not repeat. A much-enhanced budget allocation has to be directed to revitalising the rural areas, especially in revamping agriculture. Agriculture (and livestock rearing) has to be incentivised so that it meets the household food and nutrition security (FNS) and a steady cash income. The focus needs to be on regenerative agricultural practices which will ensure ecological security and food safety. MSMEs, especially around food processing, need to be incentivised so that a lot of employment gets created at the level of the local economy. Well in line with the principle of “Vocal for local”, the government must invest in creating local production and marketing clusters. The rural sector thus requires two kinds of investments – one to expand the economic opportunities and the second to mitigate the existing distress.
From this perspective, a number of specific recommendations are as follows:
- Investments in solar power powered, community-based micro-irrigation @ Rs 7 lakh per scheme for 50,000 schemes of 10 ha each, providing assured rabi irrigation – Rs 35,000 crore.
- Revitalising water harvesting structures by excavating existing lakes and tanks @ Rs. 500,000 per tank for 100,000 tanks – Rs. 5000 crore
- Enhance MGNREGA allocation to Rs 200,000 crore to meet all the wage employment requirements, which in turn can build large-scale livelihood assets in terms of farm ponds and water harvesting structures. Increase the number of days to 200 in tribal areas and 150 in other areas; increase the wage to Rs 300/-
- Incentive for regenerative agriculture @ Rs. 5000 per hectare for 10 million hectares – Rs. 5000 crore
- Increase support to NGOs under the FPO support programme
- Incentivise Local investments in MSMEs, on food processing, and other start-up-s – cash incentives, tax breaks, and easy loans will be helpful to boost the MSME sector.
- Incentivise large manufacturing companies to invest in small and mofussil towns to create local employment in auxiliary and back-end firms, and invest/incentivise companies in building local ITIs to train youth in specific skills
- Increase area under FRA, and incentivise forest management groups with working capital of Rs 25 lakhs per group for resource management
- Enhance old age pension, and widow pension to at least Rs 3000 per month
- Increase farmer incentive under PM-KISAN to Rs 8000/- per hectare
- Incentivise girls for higher education – meet the cost of transport to nearby college
- Increase the corpus of Bharat Rural Livelihoods Foundation (BRLF) to Rs. 1500 crore
This year the Finance Minister has to give maximum to the sector which has a huge impact on the lives of people. One of the biggest requirements from the budget for the insurance sector is that there should be no GST on health insurance and life insurance. As a country, we have realized during covid that a very small percentage of people had insurance policies and paying hospital expenses made a huge impact on the financial health of families. The salaried class pays the maximum tax in terms of the number of people. The various tax provisions under section 80c and other sections should be enhanced so they can invest in insurance products by protection life insurance, Narendranath Damodaran, Integrator at Pradan, said.
There should be insurance provisions for senior citizens under which they should be denied coverage. As this age group, has worked all their lives and paid taxes and when they are retiring we shouldn’t be denying them coverage on health grounds for sicknesses and illnesses, Aatur Thakkar, Co-Founder, and Director at Alliance Insurance Brokers, added.
With the tightening of monetary policy, SMEs are feeling the heat on day-to-day liquidity; we recommend that Government should allow nationalized banks to use accrued GST credit as collateral to ease immediate liquidity. With raw material input costs going up due to global events, the Government should consider further lowering taxes for SMEs in the Wellness sector. The wellness industry is going to contribute immensely in the long run with a significantly large number of start-ups offering a wide range of products, and country-wide outreach, thus adding to government coffers as well. The industry was valued at INR 901.07 Bn in 2018 and is forecast to reach INR 2,463.49 Bn by 2024, expanding at a compound annual growth rate (CAGR) of ~18.40% during the 2019-2024 period. SMEs in the wellness industry should also be given PLI schemes to promote this growing sector,” Mohit Goel, Founder and Director Vedic Cosmecuticals
Every sector is eagerly awaiting the announcements in the Union Budget 2023-23 and hoping best things for their sectors.