BUDGET MAY BRING RELIEF TO GOVT EMPLOYEES AND PENSIONERS
As we have just stepped into the month of the Budget Session 2016-17, which is to commence from 23rd February, 2016; all eyes and ears will be fixed upon our Honourable Finance Minister Mr. Arun Jaitley for what he has in store for the nation’s citizens. Real estate sector in particular is most eagerly waiting for the Budget announcements as it holds the key to this sector’s unprecedented growth. Apart from the regular demands of Industry Status, Single window clearance, RERA, Land Acquisition and GST; this sector is relying heavily upon the announcements of ‘Seventh Pay Commission’ and ‘One Rank, One Pension’, as it is sure to provide a massive push to country’s residential real estate and gradually, commercial segment as well, in the upcoming few years.
“Announcements for OROP and seventh pay commission will act as a fuel to propel the realty demand specially for the housing segment in India. It is to be noted that over 2 crore people account to government service and around 32 lakh people towards OROP. This segment of our population will cater to the demand for second homes, holiday homes and too some effect, affordable housing as well. This news is thus significant from the realty sector’s perspective as well, as it will open the gates for the players to provide this demand with multiple options of providing homes”, shares Mr. Ashok Gupta, CMD, Ajnara India Ltd.
7th Pay to Cloud 7
There exists a direct relation between housing demand and one’s purchasing power. If the Union Budget this year announces the seventh pay commission, there will be an increment in the existing salaries along with distribution of arrears, according to the time served. Once the increased salary effect takes place, the pension, post-retirement will become higher as well. Moreover, the already retired will also receive the benefits of the seventh pay commission to some extent, and this entire scenario will push the housing demand forward. “A huge chunk of the buyer group today comprises of government employees and with their pays expected to go up by as much as 23.55%, we are sure to see a spike in the people ready to invest across the sector. The need is always there because most of them have been using government accommodations as their residences throughout their period of service but once retired, they would be required to vacate the same thereby fuelling the future demand of housing in the sector”, avers Mr. Rupesh Gupta, Director, JM Housing.
Adding further and putting light upon how second home buying option will become prominent post this effect, Mr. Kushagr Ansal, Director, Ansal Housing states “Overall, there are around 2 crore government employees who would directly be receiving the benefits of this proposed pay hike. It can well help estimate the number of families which will be ready with a bulged pocket. This coupled with the positive steps taken up by RBI last year is sure going provide much needed consumer influx for the sector, as their prime motive is end use of property which might even give them an investment option through second property buying because of increased income.”
It is been projected that the potential beneficiaries from OROP is about 26 lakh ex-servicemen and 6 lakh widows, which includes war widows, as well. Therefore, there is a combined total of 32 lakh, of whom about 86 percent are widows, NCOs, JCOs, and other ranks, about 14 percent are officers. Out of the estimated outlay on OROP of Rs. 8400 crore, about Rs. 6200 crore will be on account of widows, NCOs, JCOs, and other ranks, and about Rs. 2200 crore for officers. Speaking on a macro level, we are catering to another set of demand which is 32 lakh in number. “In a sector where the demand for housing is taking a toll, every single potential customer is extremely important. If the upcoming budget gives a go ahead to OROP, we will have a huge pool of potential customers ready to buy or invest. There might then be a rise in demand for affordable homes and second homes or even holiday homes as post retirement or for pensioners, the time after retirement is perfect to live the desires planned during the service days”, says Mr. Sushant Muttreja, CMD, Cosmic Group.
Putting more weight on the same, Mr. Rajesh Goyal, Vice President CREDAI-Western U.P. & MD, RG Group explains “We are looking at a segment where 32 lakh citizens deserve a wonderful life for the efforts that they had put in order to take our country to another level. Most of the retired or old aged people in India are without a roof due to unaffordability reasons. This causes them to drift towards old age homes, where still there aren’t enough facilities available for them. Thus, if OROP gets through this budget session, a fresh demand will be there for the realty players to cater to, that will open a wide variety of doors. Affordable housing and projects based on themes for old aged people will become available in abundance.”
With the seventh pay commission, purchasing power of the existing government officials will increase and at the same time, it will attract more and more youth towards the public sector. OROP will greatly strengthen the faith of the pensioners towards the government and will also allow private players to cater to a much broader but a niche audience. “If the Seventh Pay Commission and OROP gets a green signal in this Budget Session, we are talking about almost 2.5 crore potential customers. It is just a matter of analysing their demands and providing the correct supply. This coupled with 2 crore housing shortage, answered through Housing For All, and with Smart India Mission already underway, housing sector in India will witness a boom in the upcoming few years, which will gradually make the commercial segment also grow. Thus, this Budget Session will be a make or break event for the real estate sector in particular”, concludes Mr. Vikas Khurana, Co-Founder, HomzCart.