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P Chidambaram asks Finance Secretary to ‘re-examine’ his house loan theory
Former Union finance minister shed light on how housing loan can become a part of saving after the Finance Secretary dismissed the concept in a recent interview.
Former Union finance minister P Chidambaram asked Finance Secretary T V Somanathan to re-examine his theory on housing loan. The Congress leader was referring to the Finance Secretary's recent interview to The Hindu where he said a housing loan is not a saving from the macroeconomic aspect but “merely a push towards certain things”.
"The Finance Secretary asks "Is the housing loan a saving?" His answer is 'No'. I wonder how many people will agree with the Finance Secretary," Chidambaram said in a series of tweet.
Also read: ‘For gaining wealth…’: Chidambaram terms Kerala budget ‘Faustian bargain’
He further explained how a housing loan could be a part of saving. In the preceding tweets, he said payments of interests and installments is a part of expenditure. However, this expenditure is later converted into an asset, making it a saving.
“Suppose you spend the same money on a holiday or at a race course: there will be no asset at the end. The Finance Secretary should re-examine his theory that a Housing Loan is not a saving,” he added.
Somanathan was explaining the beneficial differences between the new and old tax regimes when he mentioned how a housing loan is not a part of saving. He disagreed that the old tax regime encourage savings.
Also read: What's new about the new tax regime?
“If you look at the structure of the tax deductions, half of them are for savings and half of them are for dis-savings like housing loan or interest on housing loan. Is the housing loan a saving? So overall macro economic impact, it’s not a savings push at all but merely a push towards certain things. Government wants you to do housing, insurance or pension. But it’s not necessarily a savings push or influence the savings rate in the country,” he told The Hindu.
