Venkaiah Naidu, Union Minister of Urban Development, Housing and Urban Poverty Alleviation said, “We are focussing on the upliftment of classes and allocating resources accordingly so that the poor can move to the lower middle class, then to the middle class….”
India has been on the development path for the last few years but unfortunately, the reality is that the poor were becoming poorer while the rich richer, said Naidu. To correct this imbalance, the country saw concessions for the housing sector. Particularly, the interest subvention of three and four per cent for people with annual incomes of up to Rs 18 lakh and Rs 10-12 lakh, respectively.
Naidu told Magicbricks, “Even before the Budget 2017, my ministry had announced interest subvention of six and a half per cent for the economically weaker section.” He further explained that as of now there are three categories of interest subventions:
|Category based on income||Interest subvention given|
|Economically weaker section||6.5%|
|Up to 18L annual income||3%|
|Rs 10-12L annual income||4%|
With interest subventions allowed in the budget and the size of the units being changed to up to 60 sq mts built-up area instead of carpet area, it will enable more inflow of money into the real estate market. Investment in the sector becomes viable as interest rates are going down. Naidu said, “Other than the 4 metros, we have expanded the size range of affordable housing units to 60 sq mts. This will allow more people to join the sector.”
“We are focussing more on Affordable Housing to cater to the needs of the lower middle class, middle class. Others will take care of themselves,” said Naidu.
He also mentioned that the Finance Minister is trying to widen the tax net and lessen the burden of tax from the people. Lower income group people (Up to Rs 2.5 lakh) need not pay tax at all. People under the salary slab of Rs 2.5-5 lakh will need to pay only five per cent from the initial 10 per cent tax deduction. “It is an incentive to get people under the tax net. These measures will bring more people under the tax net which in turn will reduce the overall tax burden. If you have money and yet not paying tax, then you will have to pay a penalty of 45-60%. We are trying to bring money into the system,” said Naidu.
If these get implemented then there will certainly be more money in the hands of the lower income rung people and with interest subventions, the lower middle class and middle class will finally possess buying power.