'Reducing GST on sanitaryware will boost Swachh Bharat'

Rajesh Mehra

Director & Promoter, Jaquar Group 

Given the macroeconomic climate in the country, and the stress on the real estate sector over the past few years, easing liquidity for the sector will be the primary expectation from the Union Budget 2020-21. Some positive measures in the real estate and infrastructure will help reduce the overall liability on the consumers and redefine the sectoral outlook could be the following.

Lower GST rates - Alternative investment funds for stressed residential projects and GST recalibration on construction raw materials will reduce the price burden passed on to home buyers – especially in Tier 3 and 4 markets and boost construction in those markets.

The current GST rate on sanitaryware stands at 18%. Further reduction will encourage construction of houses and bathrooms. A necessary leverage for the government’s Swachh India Abhiyan would be to make sanitaryware products affordable in order to encourage adoption of cleaner habits.

Affordable housing –- Data suggests that the premium and luxury real estate sectors in the top cities in the country have reached a saturation in terms of demand. The focus, therefore, will on initiatives that boost the affordable housing sector. Initiatives from the government that act as consumption boosters t like rebates on housing interest loans, would greatly help put back the power into the hands of the consumers.

Move towards energy efficiency – Connected lighting plays a significant role in the expansion of smart cities. The LED market is one of the emerging sectors in the country with a CAGR of 56.1% in the last five years. But due to low awareness and premium pricing, the industry is still at a nascent stage. With this budget, the focus should lie on incentivising consumption for LED lighting which will, in turn, pave the way for energy conservation overall.

A few tweaks in this direction from the Budget will move India further towards the goal of achieving the $5 trillion economy mark by 2024.