MUMBAI India's real estate firms, reeling under a fund crunch and falling property values, got no relief from the interim budget announced on Monday, as the finance minister referred to previous measures for the sector.
Realty firms were gearing up for incentives to boost middle income housing demand and funding. Instead, Acting Finance Minister Pranab Mukherjee promised higher spending later in the year to curtail job losses ahead of federal elections due by May.
"He just referred to both stimulus packages and said we've already tackled it...It was all 'we have', 'we have', there was no 'we are'," said Ravi Ramu, Chief Financial Officer of Puravankara Projects Ltd, describing the budget.
The interim budget, presented earlier on Monday, has a limited shelf life because of the nationwide elections in the world's largest democracy. Only the government formed after the elections can put in place more permanent spending plans.
Mukherjee highlighted the two stimulus packages the government had announced in December and January, which included cuts in key lending rates and classification of loans up to 2-million-rupees per house, per family, as priority sector lending.
The industry was expecting the government to take these measures forward, said Ramu.
"The first two stimulus packages started in the right direction but the momentum has just been lost with this interim budget," he added.
Analysts too had expected relief for the sector. "The market was expecting something. There was no tinkering with taxes. He didn't touch indirect or direct taxes," Shailesh Kanani, analyst with Angel Broking said.
The BSE Realty index was trading down 4.27 percent at 1,524.35 at 2.24 p.m. Prior to the speech, the index had risen as much as 3.7 percent while top-listed realtor DLF Ltd had risen as much 4.4 percent.
"I personally feel it was a non-event," Sarang Wadhawan, managing director of Housing Development and Infrastructure Ltd
(HDIL). "For HDIL there is nothing."
Mumbai-based property developer Orbit Corp also saw no relief. "I think it's flat. There's nothing positive, nothing negative," Pujit Aggarwal, managing director said.
"We were expecting a bit much than what could have been done...we have to wait for the new government to come and lobby with them."
(For comprehensive coverage of the interim budget please click here)