The Maharashtra government this week announced that stamp duty on real estate will be lowered for seven months in an attempt to boost the stagnant real estate market. It is a positive step. An initial reduction of 3 percentage points may not seem particularly noteworthy. But the move should not be viewed in isolation. In the last few months, on average, interest rates on loans have softened. When the stamp duty cut is seen as part of a package, it does make a difference.

Given the economic hardship, governments are struggling to bring their budgets under control. But even in the current situation, it is possible to strategically lower tax rates in some areas to boost economic activity. The reduction in stamp duty is a good start and should serve as an example to other governments.