Budget boost for housing sector

The upcoming Budget may make it more affordable to own a house. A lot of churning is going on in the government either to give some excise duty relief to capital goods sectors like cement and steel or re-adjust the existing duty structure on them so as to make their manufacturing more affordable.

Housing sector is on the priority list of the government after Prime Minister Narendra Modi made a commitment to provide housing for all by 2022. This is expected to give rise to demand for cement and steel in the medium to long term.

In their pre-Budget meeting with Finance Minister Arun Jaitley, industry leaders urged the government to trim the high excise duty on cement. Currently, excise duty on cement is levied at 12 per cent, in addition there is a levy of Rs 120 per tonne. This is far more than other commodities such as coal, steel and the likes.

Several industrial sectors like electronics hardware, steel, tyres, electrical equipment and medical instruments have an unfavourable duty structure, also called inverted duty structure, which makes Indian manufacturing uncompetitive.

“There are several such ideas on which the work is going on. There are suggestions ranging from cutting excise duty in small proportion to tweaking the existing duty structure. We will see how it works out, the idea is to have more low cost affordable housing,” a senior government official told Deccan Herald.

“We are working to strike a balance between industry demand and the government’s ability to fund them. The anomaly will be corrected wherever it exists. The government is committed to reforms as you have already seen,” he said.

The correction in inverted duty structure will be helpful in bringing down prices in others sectors too such textiles, tyres, electronics. Under the inverted duty structure, import duty on finished products are lower than on parts or components used in manufacturing of the parts. Modi on Wednesday also chaired a review meeting on the progress of his housing for all mission .