Karnataka Budget 2015: Impact on Real Estate
Karnataka Chief Minister Siddaramaiah announced the budget 2015-16 for the state in March this year. While the CM focused on upliftment of the backward classes, especially those in agriculture and farming, in the budget, there are finer measures in the document to regulate the real estate sector. A separate allocation was made for the construction of new homes by BDA (Bangalore Development Authority) in FY 2015-16 that would be used to construct and allot 5,000 flats in Karnataka. An allocation of Rs 1,000 crore has also been made to the Nagarothana Scheme meant for widening important roads.
Here are the Karnataka budget 2015 highlights pertinent to real estate sector in the state:
Homes for the Poor and Loan waivers
As part of the effort, the chief minister has introduced a new policy to purchase land for residential projects in rural and urban areas. The Karnataka budget session 2015 has also announced construction of 10,000 homes for special category persons, such as ex-servicemen. The Ashraya scheme has seen a change in waiving off the loans and interest for people. The Karnataka budget estimated the total cost to the state exchequer to be about Rs 2,488 crore. Around three lakh homes will be provided to the masses with revised subsidy benefits, and people without homes, such as slum dwellers and tribals, will be distributed around 20,000 plots in rural and urban areas. Also, HUDCO home schemes will see waive offs for loan amounting to Rs. 230 crore to provide homes for the families living in slums.
Land development and water supply
Karnataka will acquire land for development of 1.7 lakh properties. Drinking water supply schemes will be implemented across 14 zones and drainage schemes will be planned at an estimated cost Rs. 697 crore around the state. In addition, the Urban Infrastructure Development Scheme for Small and Medium Towns (UIDSSMT) will take implementation and planning of six water supply schemes. This will supply drinking water to 10 towns across Karnataka. Urban areas will benefit from proper water supply and sanitation facilities to Anganwadis.
Urban planning and waste management
Urban alleviation programme by the CM will reshape urban areas at an estimated cost of Rs. 25 crore and will be launched in 181 cities across the state. The Rajiv Awas Yojana will see construction of about 26,233 homes in 124 slum areas. Waste management has been a big problem faced by the state and, hence, the budget has allocated Rs. 75 crore for solid waste management. Cities will see more of open spaces with planned parks, development of lakes and stadiums within city corporation limits. Urban local bodies capacity planning will be increased, and energy saving measures will get priority as part of this budget. Mysore city will see growth as Rs. 100 crore has been allocated for city's infrastructure development.
Worry of service tax increase
The budget has increased the service tax by 2%, which means home buyers will now have to shell out more money while buying affordable flats in Bangalore, for instance. This tax will increase the overall costs for buyers, and the real estate market is disappointed. However, the real estate industry is happy with the clauses relating to curbing benami transactions, but the higher cost of buying a flat in residential projects in Bangalore has come as a dampener. In addition, stamp duty is exempted on subsequent sale deeds relating to the sites from BDA once the authority denotifies a plot of land.