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The Union Budget 2018-19 was low on specifics but stressed on the roadmap laid down by the previous budgets of the government.

With no tangible benefits accruing for real estate on the broader points of industry status, GST reduction on under-construction houses or relaxation in personal income tax, there were, however, announcements from where some positive sentiment can be gleaned.

We look at the major announcements under different heads:

Real Estate – Affordable Housing, Property Transactions

The biggest real estate-related news was setting up of a dedicated Affordable Housing Fund under the aegis of National Housing Bank and to be funded by the priority sector lending shortfall and government authorised serviced bond.

Additionally, as per proviso to Section 50C of Income Tax Act, for immovable property transactions if the assessable value of the property for stamp duty calculations is within 105% of the consideration, then the transfer value shall be considered as the full value of the consideration, unlike the earlier provision, where higher of the two was considered. This will facilitate smoother property transactions going forward.

Agriculture, Rural Sector, Healthcare

As expected the focus was on agriculture and rural economy, with a major announcement for Healthcare where a National Health Insurance Scheme to cover 10 crore poor families (50 crore individuals) with insurance support of INR 5 lakh for secondary and tertiary hospitalisation is a precursor to a Universal Healthcare agenda.

Also with the announced increase in Minimum Support Price to 1.5X the production cost, the government seeks to improve income levels for farmers.  This has the ability to improve consumption levels in rural areas.


The good news was on food processing and agri processing logistics parks. With the food processing industry growing at 8%, the outlay towards the sector has been enhanced to INR 1400 crore and under Operation Green, INR 500 crore has been allocated towards agri logistics and processing.

With the potential for India’s agri exports to increase to USD 100 billion form the current USD 30 billion, set up of mega food parks has also been announced. All this has direct linkage to development of logistics parks, cold storage facilities for the agriculture sector.

Within the education and healthcare sector, there is greater emphasis on higher expenditure for setting up universities and hospitals. This has direct linkage towards the alternative asset class, particularly in the creation of student housing, rental housing for medical tourism in newer locations.


With the infrastructure story going strong and Smart Cities plan progressing at a decent pace, there are now 142 cities which are considered investment grade. This can put life in the moribund municipal bond market in India with such cities likely to be able to attract better response to their bond issues.

The focus on the development of secondary airports under the UDAN scheme, funding the expansion of airports using the Airports Authority of India balance sheet for fund-raising, redevelopment of 600 railway stations, we can expect more Transit Oriented Corridor developments and release of lands for commercial exploitation, providing opportunities for developers as well as investors.

There was also increased spending announced for strengthening the suburban rail network for Mumbai and Bengaluru (linking with Namma Metro) which enhances the focus on improving urban transportation networks.

The increased spending on Bharatmala (connecting the interior, rural and border towns) will also spur development of new logistics and warehousing corridors to service the peri-urban and rural areas which are witnessing increased consumer demand.

Investment Markets

The budget announced measures to ease VC Funding and AIF norms, which bodes well for domestic investment and fundraising going forward.

While there were no announcements with respect to REITs, we expect that with NHAI allowed to create an SPV for all operational roads under its control, such a portfolio might be of interest to global investors and we may also see an InVIT listing with these assets.

Long Term Capital gains tax has been re-introduced at 10% for gains above INR 1 lakh. This has the potential to increase taxation and disclosure related documentation while likely to have a slight dampening effect on stock markets’ performance.

With the easing of investment grade norms wherein BBB rating is also considered at par with investment grade for corporate bonds, many more companies will be able to access the corporate bond market to raise funds for their growth.

Push Towards Transparency And Digital Economy

The budget announced the allocation of unique Aadhar IDs to enterprises. Also, the government has increased spending under Digital India for skilling programmes for Artificial Intelligence, Machine Learning, robotics etc.

There was also a mention of Blockchain as a means of tracking transaction history and there is the likelihood of the government moving ahead on utilising this technology for linking bank accounts, benefit transfers and even land ownership records.

The resultant need for Big data and data warehouses will also spur the demand for data centres and is likely to see investments in this new emerging asset class going forward.

Corporate And Personal Tax

There was good news for the MSME sector as firms with annual turnover of up to INR 250 crore were to be taxed at a lower corporate tax rate of 25% from the earlier 30%.

This will benefit many small and medium-sized, local developers as well, allowing them some much-needed breathing space.

While there was no change to the personal tax slabs, standard deduction returned with INR 40,000 allowed for miscellaneous medical expenses and transport allowance.

On the flip side, 1% additional cess was announced for healthcare and education, taking total cess levy to 4%.

For senior citizens, a windfall was announced with no TDS payable on interest income up to INR 50,000. Also, they could claim an additional INR 50000 towards health insurance premium.

More money in the hands of senior citizens is likely to have positive implications for senior and assisted living residential formats.

Macro-Economy And Banking

India’s growth though blighted due to the demonetisation and GST implementation roadmap has managed to bounce back with the GDP growth at 6.3% in the second quarter of FY 2017-18 and forecasted to growth at 7.2-7.5% over the 2018-19 period.

Though GST revenue was received for only 11 months, the fiscal deficit managed to be at 3.5% for the current year, as the slack was picked up by the government over-achieving its disinvestment target.

With the bank recapitalisation process to infuse INR 5 lakh crore more into the banking system for lending, this is likely to kick-start the lending-borrowing cycle for many industries, which is the precursor to increased production and positive economic activity, leading to greater capital formation.

In Conclusion

This government has been making the right noises throughout its tenure about big-bang reforms. In fact, the Budget has been about giving specifics and/or updates about key reforms.

This budget was not anticipated to be big on announcements, but provide additional support to its larger agenda of inclusive growth and being industry-friendly.

While it misses out on key real estate sector expectations, it is a quite balanced document that seeks to address the concerns of the larger population and industry.

Overall Rating of Budget 2018-19 — 6/10

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