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Tag: cash-flow

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Real Estate’s Hopes from The Upcoming Union Budget

Jun 25, 2024 by Sujata 0 Comments #Affordable and mid-income housing, #affordable housing, #Akash Pharande, #Better Finance Access, #budget home projects, #builders, #cash-flow, #CLSS, #credit guarantees, #economic growth and employment, #emerging areas, #Enhanced Credit-Linked Subsidy Scheme (CLSS), #Fast Track Infrastructure, #financial assistance, #financial stress, #financing, #First-Time Buyers, #GST rate, #GST Reforms For Developers, #homebuyers, #Housing for All scheme, #housing projects, #Indian housing industry, #Indian real estate sector, #interest rates, #Interest Subsidies and Housing Loans, #interest subsidy for housing loans, #land acquisition process, #land records management system, #Land Reforms, #LIG and middle-class, #low and mid-income, #metropolitan areas, #metros and railways, #mid-income housing buyers, #Pharande Promoters & Builders, #Pharande Spaces, #policies and tax incentives, #Policy Measures and Provisions, #Pradhan Mantri Awas Yojana (PMAY), #real estate investment fund, #regulatory reforms, #Rental housing, #Rental Housing Policy, #rental income, #Single-window Clearance, #single-window clearance system, #stamp duty, #tax breaks, #Tax Deduction for Housing Loan Interest, #The Union Budget

akash

By Akash Pharande, Managing Director – Pharande Spaces

The Indian real estate sector is a crucible of economic growth and employment. The sector stands at a crossroads as the government prepares to present its Union Budget. Though it has massive potential, the Indian housing industry still faces numerous hurdles.

To generate more growth and address the housing needs of the growing population, particularly in the low and mid-income segments, the budget must include tax breaks, regulatory reforms, and financial assistance measures.

Affordable and mid-income housing

Affordable and mid-income housing is the foundation of the real estate industry, meeting the urgent housing needs of the enormous LIG and middle-class population. To significantly boost this section, the following strategies are critical:

Interest Subsidies and Housing Loans: Widening the scope of the Pradhan Mantri Awas Yojana (PMAY) and raising the interest subsidy for housing loans is the need of the hour. Doing this will make homeownership more affordable. Reducing interest rates will also lower the financial stress put on aspiring homebuyers.

Enhanced Credit-Linked Subsidy Scheme (CLSS): Extending and improving the CLSS can provide financial relief to mid-income housing buyers. Both the income eligibility threshold and subsidy amount should be raised.

Single-window Clearance for Affordable Housing: A single-window clearance system for budget home projects will help considerably to make the incredibly complex approval process more streamlined and simple. This, in turn, would help to decrease delays in possession of such units and reduce the overall costs.

Tax breaks to lighten the load

Tax breaks are critical when it comes to making homeownership more approachable, and they can also encourage builders to take on new affordable housing projects:

Raise Tax Deduction for Housing Loan Interest: Raising the tax deduction limit under Section 24(b) of the IT Act is long overdue and the need of the hour. The deduction limit should be increased from the current Rs. 2 lakh to at least Rs.3 lakh or even more.

Reduce Stamp Duty: The government can encourage state governments to cut their stamp duty rates, which account for a significant portion of the cost of homeownership. Even a temporary decrease or waiver of stamp duty on affordable and lower-middle-income housing can boost demand and sales.

Incentives for First-Time Buyers: First-time homebuyers should get further sentiment boosters. For instance, the government can raise the deduction limit under Sections 80EE and 80EEA for such buyers.

GST Reforms For Developers: GST rates applicable on construction materials and services can help lower overall project costs for builders. Also, a reduced GST rate for affordable housing projects would help attract more builders to this vital segment and to pursue such projects.

Policy Measures and Provisions: Indirect Increases

Apart from direct financial boosters, the budget can introduce many policy initiatives that will indirectly improve sentiment in the housing sector:

Fast Track Infrastructure: This government is certainly determined to develop infrastructure like roads and public transport such as metros and railways. This helps expand the metropolitan areas and boosts affordable housing, which is usually developed in emerging areas where land is cheaper and infrastructure is still catching up. However, we need a much faster roll-out of such projects so that connectivity to such areas improves at a faster pace.

Land Reforms: Simplifying the overall land acquisition process will help developers speed up their supply of new projects. There is an express need for an open and effective land records management system that reduces disputes and, therefore, project delays.

Better Finance Access: Developers always need access to financing, but smaller and medium-scale players are at a bigger disadvantage than big players. The budget could consider announcing a separate real estate investment fund and also credit guarantees to such builders so that their cash flow improves.

Rental Housing Policy: Rental housing would benefit from favourable policies and tax incentives for those who cannot afford to buy homes. Implementing a model tenancy law and providing tax breaks on rental income would help a lot.

The Union Budget is an ideal platform and opportunity for the government to give teeth to its Housing for All scheme. While the original 2022 deadline was not met, it is not too late to revive this dream and make it a concrete reality. The Indian real estate sector certainly looks forward to such boosts for both homebuyers and builders.

About the Author:

Akash Pharande is Managing Director – Pharande Spaces, a leading real estate construction and development firm famous for its township projects in Greater Pune and beyond. Pharande Promoters & Builders, the flagship company of Pharande Spaces and an ISO 9001-2000 certified company, is a pioneer of townships in the region. With the recent inclusion of Puneville Commercial into one of its most iconic townships, Pharande Spaces has taken a major step towards addressing Pune’s current and future requirements for fully integrated residential-commercial convenience

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U GRO Capital improves cash-flow for over 13,000 MSMEs, as per its impact assessment report

Jun 9, 2022 by Praveen 0 Comments #assessment report, #cash-flow, #U GRO Capital

U GRO Capital improves cash-flow and annual turnover for over 13,000 MSMEs, as per its impact assessment report

U GRO Capital, a listed, MSME lending fintech platform, today announced the release of its impact assessment report. The study, which was conducted in association with Sattva consulting, an impact first consulting firm in the development sector, reinforces stakeholders’ confidence in U GRO’s resolve towards sustainability and Impact creation. The report was recently released in the presence of honorary SIDBI Chairman, Shri Sivasubramanian Ramann at a physical event organized by the company.

This study would be one of India’s first such vendor social diligence undertaken by any Company, in hopes to encourage the entire lending ecosystem to measure, evaluate, and govern the impact performance for their customers.

As part of the study, Sattva Consulting independently surveyed 450+ existing customers and partners of UGRO Capital. As an outcome of this study, it was deduced that UGRO’s sectoral focused approach directly aids multiple SDG goals like Affordable and Clean Energy, Quality Education, Good Health and Well-being, Sustainable cities and communities and Zero Hunger.

The impact assessment report measured U GRO’s business impact on the broad parameters of MSME Business and Operations, Employment Generation and Diversity, Credit taking ability and Entrepreneurial Confidence. Following were some of its key findings:
• 73% MSMEs showcased healthier average bank balances resulting in 13,000+ estimated customers having improved cashflow situation
• 80% MSMEs reported increased annual revenue by ~5% to 20%, translating to 13,000 + estimated customers having increased annual turnover
• 17% MSMEs reported geographical expansion supporting 3,000+ estimated customers with new branches or stores
• 7 average additional permanent hires by MSMEs resulting in 1,16,000+ estimated additional employment generated
• 3.7 average additional female hires by MSMEs subsequently generating 64,000+ estimated additional female employment
• 70% entrepreneurs reported in increased risk-taking appetite

On the release of the Impact Report, Mr. ShachindraNath, Vice Chairman and Managing Director, said “Our founding belief at U GRO Capital has been to design a platform that brings the unserved or under-served MSMEs into the fold of formal lending. Impact has been at the forefront of all our business conduct. Our aim is not just to cater to the under-served segment but also enhance our impact at scale through a careful selection of channels and products. At U GRO Capital, we use a unique combination of intelligence & technology to understand each MSME’s potential for growth and their financial and non-financial needs, to create insightful loan products across 8 key sectors and 4 distribution channels. Today, we stand at more than INR 3,000 Cr in assets under management (AUM) and have disbursed over INR 5,600 Cr of loans till date. At one level, our business is often perceived as purely transactional, however when we delve a bit deeper, we realize how capital infusion, especially within the under-served sector, triggers a chain reaction of not just elevating business potential but also the entire social ecosystem. Being the catalysts to this, impact will continue to remain central to our mission at U GRO Capital.”

MSME lending by virtue of its nature aligns well with multiple SDGs (No Poverty, Gender Equality, Decent Work and Economic Growth, Industry Innovation and Infrastructure, Reduced Inequalities) and being an MSME focused lender the company becomes a substantial contributor towards fulfilling these goals.