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Budget fails to lift builders’ spirits
Source : The Hindu Property Plus Published On : 2009-02-28 City : Kochi

     Not enthused by the cut in excise duty either     

       The State Budget presented last week was not to the expectations of the builders.

       They, however, are going ahead with projects in the hope that the economic slowdown will clear sooner than later and investments in land and property will look upwards again.

       The relief that the industry was looking for in the budget has not come in, says M.D. Jairaj, president of the Kerala Builders’ Association.

       The cut in tax on raw materials sourced from outside the State from 8 per cent to 3 per cent is no relief at all. Very few builders source it that way.

       Kennel Antony, secretary of the Kerala Builders’ Forum, says that while this seems to give the impression that the builder is at an advantage, the proposal only brings in parity in sourcing from inside the State and outside.

       The tax concession, as the budget shows, simply cannot be passed on to the consumer. It gives false hopes.

Energy scenario

       The bright side of the budget has been the tax cut on compact fluorescent lamps, Mr. Antony says. He believes that these lamps should come with subsidies and ordinary incandescent bulbs have to be phased out. The State will be thus able to save electricity and bring down the energy deficit.

        The budget looks into the possibility of earning revenue from sand accumulated in the dams. This is a sure winner for the State and the construction sector, Mr. Antony says.

         As a pilot project, sand from the Malampuzha dam will be collected and sold at an estimated Rs.300 crores.

        There is relief for crusher units, Mr. Jairaj says. But the concession is for setting up plant and machinery and not for running the business and, hence, will not benefit consumers.

        The proposals of Finance Minister T.M. Thomas Isaac for development and public spending to stimulate the economy and the public-private partnership in infrastructure development sound good, Mr. Antony says.

        However, there have been no specifics. The development package lacks a vision. In the backdrop of unmet promises of projects such as Smart City, people may take the proposals with a pinch of salt, he adds.

        Builders wonder if the State will be able to attract investment as it has been unable to get much even at the peak of economic boom.

        Earmarking funds alone is not enough; spending it makes a difference, Mr. Antony says.

        An allocation of Rs.20 crores has been made for land acquisition for the Kochi Metro. But people are yet to get an idea whether the railway line will be laid on a new alignment or not.

        The sum earmarked for the Rs.3, 000-crore project will not be enough to acquire land on Mahatma Gandhi Road in the city.

Excise cut

        The cut in excise duty announced by the Centre has led to a marginal difference in the price of steel by about Rs.2 a kg. The price is hovering around Rs.35-38 a kg. However, the benefit that the builder can pass on to the consumer on this account is about 0.5 per cent, Mr. Jairaj says. “The cost of construction will be down by Rs.10 a square foot,” he says.

        The lower excise duty will make cement cheaper by Rs.5. But there are charges that some companies working in a cartel have pushed up the prices.

SHYAMA RAJAGOPAL
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