The Interim Budget 2024, presented by Finance Minister Nirmala Sitharaman on February 1, reflects a strong commitment to infrastructure development and overall economic growth of India. The substantial increase in capital spending by 11%, reaching 3.4% of GDP, and a record outlay for infrastructure, including the construction of three major railway corridors, establish a solid foundation for unprecedented development in the foreseeable five years.
“This augmented financial allocation, combined with the elevated outlay of Rs 11.11 lakh crores specifically earmarked for infrastructure in FY25, signals a determined stride towards unparalleled infrastructural growth. Furthermore, this financial commitment paves the way for achieving our national goal of becoming a developed nation by 2047,” said Sanjay Sharma, Chief Financial Officer, Tata Projects Ltd.
However, given its interim nature, the budget offered only a few announcements that impact real estate.
“Still, its commitment on advancing the ‘housing for all’ vision stands out with provisions under the PM Awas Yojana and a focus to enhance economic, digital and social infrastructure. These strategic initiatives are poised to generate additional employment opportunities and foster a positive ripple effect on the real estate sector. From a supply perspective, tax breaks such as a reduction in custom duties or GST would have been beneficial in accelerating new supply. In the current landscape where demand has surged to a decadal high along with a substantial increase in residential prices, such measures could have played a role in creating a balance and crafting a sustainable long term growth story,” said Sudhir Pai, CEO, Magicbricks.
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Yashank Wason, Managing Director, Royal Green Realty, said, “As expected, there was no direct benefit announced to the real estate developers or measures that can increase the buyer activity. However, the Budget reflects the government’s focus on infrastructure which will ensure expansion of real estate scope in newer areas. The positivity shown by the finance minister in economic growth and the acceptance that salaries have increased by 50% in the last ten years instils confidence in the sector that caters to the most basic need of people. We must also wait for the details of the Housing for Middle Class that the FM has announced. For office real estate, the announcement of extending tax benefits to startups may increase activity.”
Overall, the interim budget centers around infrastructure development across various sectors, aiming to enhance the livability index and assist in promoting homeownership.
Amar Sarin, CEO & MD, TARC Ltd, said, “The Union Budget 2024 exemplifies a visionary approach towards accelerating inclusive development and economic resilience. It astutely addresses the pivotal sectors of infrastructure, real estate, and urban development. The government’s commitment to augmenting metro connectivity, supporting electric vehicle manufacturing, and enhancing housing for the middle class subtly aligns with our mission to contribute to a robust and sustainable urban landscape.We see this as an opportune moment to redefine luxury living, leveraging the government’s focus on incentivizing green initiatives and infrastructure development. The budget’s emphasis on economic sustainability and technological advancements, backed by a projected fiscal deficit target of 5.1% of GDP for FY25, is set to further elevate the ultra-luxury real estate market, aligning perfectly with our commitment to crafting exceptional living spaces.”
LC Mittal, Director, Motia Group, said, “The union budget reiterates a healthy economic growth marked by improved tax receipt, doubling of GST tax base, revision of fiscal deficit, etc. A healthy economy will augur well for real estate. GOI will come up with better policies and incentives to support mid-income housing, which is a commendable step. Another factor to look into is the constant growth in infrastructure through constructive steps. GOI has announced plans to build more airports, railway corridors, metro lines, EV facilities, etc. This will naturally translate into higher realty demand.”
In the middle income segment, incentivizing the women buyers can be a constructive step.
“This will increase the participation of women in the property market while also uplifting the overall demand. Women are now an important force in the Indian economy, as it is essential to leverage their potential judiciously. Another prudent step is to reduce the rental income taxation. In India, the rental income is taxed at 30%, which is seemingly high and is touted as a deterrent. A lowered rate will incentivize investments in the rental markets and can be instrumental in bridging the existing housing gaps, especially in urban centers,” said Anurag Goel, Director, Goel Ganga Developments.
Ananta Singh Raghuvanshi, President, NAREDCO Mahi, said, “Benefits for women and first home buyers of a substantial nature will work as a catalyst in mid segment. Home buyers will be encouraged and rental income taxation will be reduced.”
Under the PM Gati Shakti Plan, 75000 crores have been invested in 2023-24 across 100 critical projects.
“The master plan is integral to India’s aim to build an inclusive, integrated, and comprehensive economy. Through systematic investments and capacity building it will improve productivity and enhance the overall business climate. The mega plan will be an absolute game changer for tier 2 and 3 cities in India through accelerated last mile connectivity, mass mobility, green growth, and financial investments. Naturally this will translate into increased demand for housing, commercial projects, warehouses, industrial parks, townships, etc,” said Gurmit Singh Arora, National President, Indian Plumbing Association.
Aman Gupta, Director, RPS Group, said, “PM Gatishakti project can bring a windfall for real estate markets in tier 2 and 3 cities in India. The multimodal logistic projects will comprise building new airports, mass transit systems, railway corridors, roadways, waterways, etc. It will create a framework for a more inclusive, integrated, multi-phased growth in India. This will act as an economic growth multiplier with increased capacity development, employment creation, and investment inflow. Naturally this will push ahead real estate demand.”