Budget 2021 | Monetisation of infrastructure assets and unutilised land parcels a welcome move: CEO, CBRE India

By Anshuman Magazine,

Continuing with its commitment towards boosting economic growth, Finance Minister Nirmala Sitharaman today presented a progressive budget which touched upon aspects that are critical to economic development and wellbeing. The budget focused on six pillars covering Health and wellbeing, infrastructure, inclusive growth, human capital, R&D and minimum government, and maximum governance.

In line with previous years, the focus of the government remained on infrastructure development. The government had previously set an ambitious target of investments in infrastructure which was successfully achieved via the National Infrastructure Pipeline (NIP) with 217 projects worth over Rs 1 lakh crore completed till date.

In the current budget, the FM also ensured that various modes/aspects critical for infrastructure building viz. ports, railways, metro-rails, airports, highways, roads, housing, and skill development are allocated funds to ensure all-encompassing development.

To address the issue of stressed assets, the FM announced that an asset reconstruction and management company will be set up for stressed assets of banks which in turn should
provide the much-needed relief to real estate as well as to HFCs and developers from a liquidity perspective.

Another welcome move is the announcement on monetisation of infrastructure assets and unutilized land parcels. In a move to extend efforts towards an unorganised labour force, the launch of a new portal (to collect information on gig, building, and construction-workers among others) will enable targeted relief measures like labour monitoring and provision of various benefits/schemes for these workers.

This is likely to be beneficial for the real estate sector as the realty continues to be a leading employment generator in the country. The real estate industry also appreciates the fact that FM extended the interest deduction for home buyers and the tax holiday for affordable housing projects (both by a year) which should also catalyse more growth.

Additionally, to provide for housing for migrant workers, the FM proposed tax exemption for notified Affordable Rental Housing Projects. Details on this tax exemption are awaited.

Proposing to make dividend payments to REIT (Real estate investment trusts) and Infrastructure investment trusts exempt from TDS this year is another great move as it will be helpful in addressing the liquidity situation in the real estate industry.

Debt Financing of InVITs and REITs by Foreign Portfolio Investors has been enabled by suggesting amendments in the relevant legislations. This is likely to ease access of finance to InVITS and REITs thus augmenting funds for the infrastructure and real estate sector.

It is also important to note here that all of these reforms indicate PM’s Modi’s efforts towards a budget which is in continuation of government efforts to revive sectors impacted by
pandemic.

Needless to say, today’s budget has provided the hope to infrastructure and real estate industries and will go a long way in ensuring an integrated development of both the sectors.

(The author is the Chairman and Chief Executive Officer, India, South East Asia, Middle East & Africa, CBRE)