The recently announced Union Budget 2023-24 has the potential to be a crucial turning point for the real estate industry in India. With the Finance minister presenting her fifth Union Budget, the measures outlined in the budget are expected to have a positive impact on the sector. In this blog, we will examine the key points from the budget and analyse their implications for real estate investors and agents.
Expectations and Downsides:
While the real estate fraternity had high expectations from the budget, some crucial suggestions put forth by developers were not included. The industry was hoping for infrastructure status, single window clearance mechanism, and tax relief, but these demands were not addressed in the financial bill. As a result, the budget has been seen as disappointing by many in the real estate industry. Sanjay Dutt, MD & CEO of Tata Realty and Infrastructure Limited, expressed his disappointment and mentioned that the budget lacked significant measures for the real estate sector.
Favourable Measures Announced:
Despite the shortcomings, the budget did include some favourable measures that are expected to promote the real estate sector, which has been under considerable strain since the COVID-19 pandemic.
1. Economic Boosters:
The Finance minister projected a seven percent economic growth for FY 2023-24, along with a 33% year-on-year increase in capital expenditure to ten lakh crore. This increase in capital expenditure is likely to stimulate economic growth and attract more investors. It will also improve cash liquidity in the market, benefiting the real estate sector.
2. Continued Push for Affordable Housing:
The budget allocated Rs 79,000 crore for Pradhan Mantri Awas Yojana (PMAY) houses, representing a 66% increase compared to the previous year. This significant commitment will help boost the supply of affordable homes under the PMAY, addressing the housing needs of the economically weaker sections of society.
3. Infrastructure Development:
The budget emphasized the upgradation of 50 airports and ports, which will have a positive impact on the transportation and logistics sector. The Infrastructure Finance Secretariat will also facilitate private investments in various infrastructure projects, including railways. Additionally, the budget announced the construction of over 25,000 km of public expressways and proposed the PM Gati Shakti scheme to enhance freight terminals and highways. These infrastructure development initiatives will enhance connectivity and create opportunities for real estate development along these corridors.
Conclusion:
While the Union Budget 2023-24 may not have fulfilled all the expectations of the real estate industry, it did introduce several favourable measures that can positively impact the sector. The projected economic growth, increased allocation for affordable housing, and infrastructure development initiatives are expected to stimulate investment, improve liquidity, and foster long-term growth in the real estate market. As the industry adapts to the evolving landscape, real estate investors and agents need to carefully evaluate the opportunities presented by the budget and align their strategies accordingly to thrive in the post-pandemic era.
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