Indian Budget 2008-09 and a few suggestions for housing sector

By krsna Khandelwal - A veteran market analyst

Friends,

Budget is round the corner. The direct tax kitty is robust. There is lobbying going on by the India Inc for wresting some concessions in the name of spurring growth. I may tell that growth is not going to be any lower at the current level of taxes and the concessions may rather not be granted but the tax rupee should be used to help the poor. It is the wealthy who have got become wealthier and therefore the tax rates should not only be maintained but the myriad concessions should be done away with for the individual tax paying class and also the corporates. Simply a flat rate beyond Rs 2 lac of income should be applicable at a certain rate of tax till the level of average income of middle class. Beyond this a higher flat rate should apply for incomes. This will leave a substantial surplus in the govt. hand which should be judiciously used as under:

The best would be to spend the extra tax income for providing fully developed housing sites to poor and disadvantaged people who may build houses according to their means and over time. This will take care of the slums and of problem of ghettoizing. The expenditure for such scheme also would be not be at risk of being frittered away. The distribution should be carefully effected under control of the state head himself. The delivery of other benefits will also be easier. Only thing is to ensure that there is enough number of plots to give to every needy family. Th plot size should be between 40 square meters to 70 square meters and the rich will have no interest in dubiously occupying these. Since it will be something that would not be disappearing over night, any wrong doing in distribution can always be corrected. The criteria of qualifying may be fixed as per the local conditions. A small rent may be from those who would not be in position to pay a nominal cost but they should retain the right to pay and be absolute owner whenever their means are enough.

Do you think the govt will ever think on these lines. If you find this OK , please spread a word around and give the thought a momentum. May I tell you that the concession for purchase of house makes it difficult for the poor to stand up to compete with the ones who get concession for the purchase of the same flat or plot. Do you see nature and effect of housing related concessions. The govt even has made the tax saving possible even for a second house. How does one reconcile with the fact of some having two houses some having none at the instance of govt.

Hari Om

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