The higher allocation to rural low-cost housing under the Pradhan Mantri Awaas Yojana- Gramin scheme to Rs 23,000 crore from Rs 16,000 crore in FY17 is likely to drive a 2 per cent increase in cement demand, Ambit Capital has said in a report.
On the other side, allocations to urban housing have been increased to merely Rs 1,000 crore, significantly disappointing expectations of a big push to urban affordable housing. The limitation of tax deductible loss from let-out housing property to Rs 2,00,000 could negatively impact real estate demand, and thus cement demand, especially in large cities.
Experts noted that infrastructure status for affordable housing projects would give the companies higher access to capital markets, since housing limits won't be applicable. This could boost housing projects and cement demand.