Increased Expenditure Allocation For Rural And Urban Development

March 8, 2010 - PRLog -- The Royal Institution of Chartered Surveyors (RICS) commends the budget for its phased approach towards fiscal consolidation, envisaging a gradual lowering of the fiscal deficit by a moderate 1.4% to reach 5.5% in 2010-11 from current 6.9% and further decline of approx 0.7% each year through 2011-13.

Despite the fiscal situation, the Government's strong commitment to investment in public infrastructure, which is critical for improved productivity to boost the long-term economic growth, has been demonstrated with stepped up allocation for infrastructure, rural infrastructure and housing, urban development, slum re-development and urban housing for the poor.

The promising Rajiv Awas Yojna whose draft guidelines have already been prepared by the Ministry of Housing, gets the much needed financial backing of Rs. 1,270 crores, marking a 700% increase from last year. RICS welcomes this initiative which holds promise to realise India's dream to be a slum-free nation.

A steep 61% increase in new and renewable energy funds will augment the country's mission towards Climate Change and the National Mission on Solar Power. Future plans for FDI policy to be made user-friendly with one comprehensive document are likely to encourage investment climate.

While the finance minister has initiated steps for a gradual rollback of stimulus including slight increase in the excise duty, the needs of the real estate and construction sector have been considered, evident from the announcement to allow housing projects to complete projects in five years instead of four years to avail tax break.

Although the housing sector was hoping for a number of direct as well as indirect tax reforms, no significant changes have been announced in the budget session. However given the reality that both the Direct Tax Code and Goods and Service tax code need further refinement to work out the overall revenue impact and implementation logistics, it has been only prudent to have minimal changes in tax structures for the time being. Retention of service tax at 10.3% amidst widespread belief of it being revised back to 12% is in line with the strategy to make consolidated tax reforms next year. Modification of the direct tax slab structure, resulting in relief to nearly 60% of taxpayers, has given the common man ample reason to cheer, and would leave more money in the hands of low to middle income groups for consumption as well as savings. This coupled with extension of 1% interest subsidy scheme on home loans upto Rs 20 lakh will maintain the recovery of the affordable homes segment.

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