The Indian Government is gradually enhancing the interest subsidy linked with revised carpet area, providing a thrust to the housing sector, in order to achieve the goal of ‘Housing for All by 2022’. The positive impact of this move will be felt in peripheral areas of Metro Cities, such as peripheral locations in NCR, MMR and Bengaluru, as also in Tier 2 and 3 cities. The impact of this will be in form of enhanced economic activity and will result in improved demand. It will provide a boost to construction activity, which will result in enhanced supply and will assist the housing sector. Increased construction activity will also have a cascading effect on core sectors like Cement, Steel, Machinery and other allied sectors, while on the other hand, increase in construction activities will result in more job creation for both skilled and unskilled workers.
From the perspective of real estate, it would be ideal if the Government’s investment in interest subsidy scheme which is around Rs. 50,000 crores currently, can be increased to Rs. 75,000 crores. This can also give a boost to rental housing if buyers of second homes are also brought under the scheme – these can create an enhanced rental housing stock, concluded Dr. Niranjan Hiranandani.