India’s real estate fraternity has reacted positively to the Union Budget 2023 presented by the Finance Minister on February 1st, 2023. The Union Budget for this year was primarily aimed at boosting the Indian economy and revitalising it.
Union Budget 2023-24
The real estate industry is optimistic about the incentives and schemes that were announced in the budget for their sector and is looking to leverage them for increased growth and development.
Pradeep Aggarwal, Founder & Chairman, Signature Global (India), Ltd., said, “The Finance Minister announced that infrastructure and investment will be the government’s third priority, and capital expenditures will be increased by 33% to accelerate the country’s development. This increased spending is expected to help create more jobs, spur economic growth, and create a more prosperous nation. Also, in order to convert cities from manholes to machine holes, an urban infrastructure development fund of Rs 10000 crore will be set aside every year for urban development. This fund will help enhance India’s urban living environment besides modernising India’s cities and towns.”
Among the most significant real estate announcements in this year’s Union Budget is the government’s decision to increase the Pradhan Mantri Awas Yojana fund allocation to Rs 79,000 crores by 66%.
Applauding this move, Santosh Agarwal, CFO and Executive Director, Alpha Corp, said, “With visionary growth in the affordable housing sector, FM has announced the allocation increased to 79,000 crores under PMAY. This will provide a much-needed impetus to the housing demand in the affordable segment. On the other hand, the emphasis given to the infrastructure-capex would help the potential tier II regions with opportunities for all in terms of employment, growth, and sustainable living.”
Additionally, a new annual budget for the Urban Infrastructure Development Fund has been announced by the government to encourage Tier II and tier III cities to implement urban planning reforms by focusing on the infrastructure segment. This fund can be used to build sustainable infrastructure in these cities.
Atul Banshal, Director Finance, Omaxe Ltd., said, “Despite massive global slowdown due to the pandemic and war, the Indian economy continued to shine. To further strengthen it, the government has brought in huge emphasis on infra development and promoting youth power along with other key development areas in this budget. The big takeaway from the budget is the emphasis given to capital investment and an increase in its allocation by 33 percent. Focused on infra upgradation and job creation, an Urban Infra Fund would be set up. This is likely to give a huge push to the realty markets, particularly in tier 2 and 3 cities.”
In a similar vein, Vineet Taing, Chief Executive Officer, Vatika Business Centres, said, “The Indian budget for 2023 does indeed place emphasis on the development of tier 2 and tier 3 cities, which are seen as key drivers of growth for the country. The allocation of resources and initiatives aimed at these cities is expected to provide a boost to their economic and social development, making them new hopes for growth and progress in India.”
The budget has also proposed several tax reforms which are expected to encourage investment in the sector and benefit the middle class. It has brought considerable relaxation in the income tax regime which will help in increasing the disposable income of the people. This could lead to an increase in demand for housing, which in turn, will catapult the residential real estate sector to new heights.
S K Narvar, Group Chairman, Trident Realty, said, “This year’s Union Budget is future-focused on Real Estate. The increase in PMAY’s budgetary allocation by 66% to Rs 79000 crores will help countless Indians to realise their dreams of owning a home, helping the government accomplish the ‘housing for all’ objective. Furthermore, the threshold for income tax rebates has been increased from Rs. 5 lakhs to Rs. 7 lakhs, which will result in higher buying power for the middle class. This move, aimed at providing relief to middle-class citizens, will encourage them to invest more in real estate. With higher disposable incomes, more people would be in a position to buy a home in Tier 2 and 3 cities, which in turn will increase housing demand and boost the emerging real estate markets.”
The change in income tax slabs, up to Rs. 7 lakh rebate under the new income tax regime has been greatly applauded by real estate players as it will increase disposable income for those in the middle-income bracket and boost consumer spending, which will directly benefit the overall real estate sector.
Aman Trehan, Executive Director, Trehan Iris, said, “With the increased funding, the government looks to vastly enhance the existing infrastructure and create a conducive environment for investment flow. This will attract more businesses, generate more job opportunities, and bolster the country’s economic growth. The announcement of the increase in the income tax rebate limit from Rs. 5 lakh to Rs. 7 lakh under the revised tax regime will significantly boost disposable income and empower aspirational middle-class consumers who are driven by aspirations when it comes to making purchasing decisions.“
The budget provided much-needed support and incentives to the real estate sector, making it an excellent opportunity to invest in the industry.