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'The rural housing contribution of 2.5 million houses is a
good initiative'

BUDGET 2000

V Suresh

I welcome the Budget for stimulating growth in the housing, urban, and rural infrastructures.

Three good points: The rural housing contribution of 2.5 million additional houses is a good initiative, and the support to HUDCO of Rs 1 billion equity would help 900,000 houses. On retail housing, the extension of the period for interest payment benefits from March 2001 to March 2003 is welcome. The change in the ceiling of Rs 10,000 for the repayment of housing loan to 20,000 is beneficial to the customer.

So also is the abolition of the interest tax of two per cent. The benefit under 10(23G) for city infrastructure development for waste water treatment and solid waste management projects would help in increased investment, and also reduce the cost of funds.

I feel the benefit of interest payment on housing loan for income tax could have been increased to Rs 125,000 from the present Rs 75,000, keeping in view the increase for priority sector lending for housing from Rs 500,000 to Rs 1 million. The deemed export status for housing, keeping in view NRI investment, would have been an additional benefit for investments from NRIs.

New townships were expected to be included under the 10(23G) benefit for infrastructure development. Though it has not been directly announced, hopefully the benefits given for water supply, roads, sewerage and SWM for existing cities could also be extended to new townships.

I am looking at it from the point of investment made in housing and urban infrastructure development. Any investment that we make kick-starts the economy and produces increased demand for steel, cement and the 280 ancillary industries supporting construction, and also produces over 750 man years of employment for every Rs 10 million invested.

Last year, the steel sector registered a growth of nine per cent, the cement sector 22 per cent, and housing finance companies 35 per cent. From that point of view, and the additional support for housing and infrastructure development, I welcome the Budget.

V Suresh is Chairman & MD, Housing and Urban Development Corporation.

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