Higher Allocation To Pradhan Mantri Awas Yojana To Be Welcome Move: CARE

Ratings agency CARE has said that the government's fiscal situation for 2018-19 has been an area of concern with revenue not keeping up with targets.

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Higher Allocation To Pradhan Mantri Awas Yojana To Be Welcome Move: CARE

With less than a week left before the government presents its budget in Parliament, all eyes remain on any key announcements in the annual event. Analysts will watch any announcements with respect to the country's real estate sector, wherein a slowdown in demand across segments has highlighted many challenges ahead. Listing its expectations from the Budget with respect to various sectors, credit ratings agency CARE has said it expects the government's allocation for the Pradhan Mantri Awas Yojana to be in line with its earlier allocation of Rs 31,500 crore.

In Budget for 2018-19, Pradhan Mantri Awas Yojana (Gramin) was allocated Rs 33,000 crore while the urban programme of the scheme was allocated Rs 31,500 crore.

"Even though the implementation of the scheme has been happening at a slower pace than expected, making adequate allocation would ensure there is no abrupt departure from the current pace of implementation of scheme," said CARE Ratings in its note dated January 18.

"A higher allocation would be a welcome move for the industry."

Besides, the ratings agency also expects the government to reduce the holding period of real estate investment trusts (ReITs) to be eligible for the long-term capital asset benefit.

"ReIT segment is yet witness any listing, this measure may be viewed as an enabling measure to help create a larger pool of investors," said CARE Ratings.

"The government needs to take aggressive measures, albeit temporary, to mitigate stress in FY20. To stimulate housing demand in FY20, the budget should aim at policies to reintroduce income tax deduction on principal and interest on a second home loan," said Khushru Jijina, managing director, Piramal Capital & Housing Finance.

The ratings agency has said that the government's fiscal situation for 2018-19 has been an area of concern with revenue not keeping up with targets, with the gross fiscal deficit having breached the whole year target in the first eight months itself.

Against this backdrop, the government's budget presentation would be closely watched for insights into the state of finances of the Union government, and its estimates for income and expenditure for financial year 2019-20.



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