India’s real estate hotspots like Mumbai, Delhi, Kolkata etc are in for a sigh of relief. Political stability must come first before social and economic growth. India’s ruling coalition has returned to power in the recent Indian election with Manmohan Singh as the incumbant position of Prime Minister.

Indian real estate market has been impacted greatly by the fall of global demand for real estate. Foreign investment in real estate by NRIs in foreign countries have fallen since 2006.

It is widely anticipated that in the upcoming budget that is to be debated in parliament would include a stimulus package that would help to jump start the ailing real estate sector and the related industries supplying to it. This includes building materials, professional services like architects, civil engineers and interior designers etc.

Calls from industry for more incentives and sweeteners to help the real estate sector recover. These include:

•  Re-introduce ‘tax pass through’ status for domestic venture capital funds that invest in the Indian real estate sector; Clarify that the Real Estate Mutual Funds are to be treated as equity oriented fund; Extend the external commercial borrowing scheme to the entire Indian real estate sector including Special Economic Zones and not just 100 acre township, hotels, hospitals in view of the moderate international costs of borrowing;

•  Encourage states to reduce stamp duty to 5 percent and to provide a system of credit for each stage of sale i.e. levy on value addition. • Increase in deduction available under section 24(b) to Rs 300,000, against, existing limit of Rs 150,000 for self occupied houses. • Increase the basic exemption limit under provisions of Wealth tax Act to Rs 50 lakhs against existing limit of Rs 15 lakhs keeping in perspective the price of property, etc. • Service tax provisions should be amended as follows:

It is also widely seemed that developments originally planned for luxury apartments are redesigned for more affordable apartments for middle and low income groups.  Such signs are duplicated in the nation’s capital as well as in Mumbai. In Mumbai, especially in the city’s western suburbs where some developers are converting premium projects into affordable ones for the lower income group. “The stable government should invest in infrastructure and do something about liquidity. We expect these steps soon. If they are taken, the market will be attractive again,” says Anuj Puri, MD of realty consultancy Jones Lang LaSalle Meghraj.