July 23, 2024: Finance Minister Nirmala Sitharaman announced an allocation of Rs 11.11 lakh crore towards capital expenditure for the fiscal year 2024-25 during the Union Budget 2024 presented at the Lok Sabha today. The allocation, which is 3.4% of the GDP, was announced in the interim budget 2024 and remains unchanged. The finance minister emphasised the government’s plan to provide strong fiscal support for infrastructure over the next five years. She added that the significant investments made by the government over the years in enhancing infrastructure had a strong multiplier effect on the economy.
Further, the finance minister announced the launch of phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) and made key announcements to boost infrastructure in states.
Infrastructure investment by state governments
While announcing the capex allocation, the finance minister said that the government would encourage states to provide support of a similar scale for infrastructure, subject to their development priorities. Keeping this in view, the government has made a provision of Rs 1.5 lakh crore for long-term interest-free loans for this year as well aimed at supporting the states in their resource allocation.
Badal Yagnik, chief executive officer, Colliers India, shared his views on the Budget 2024 announcement and said, “The Union Budget 2024-25 clearly defines the nine priority areas revolving around employment and upskilling, inclusive growth, augmentation in manufacturing, urban development, infrastructure growth, innovation and newer reforms. This lays the foundation for future budgets and envisions India’s growth trajectory over the next five years. The capital outlay of over Rs 11 lakh crore for infrastructure at 3.4% of GDP will boost equitable real estate growth in Tier I and II cities.”
Dr Niranjan Hiranandani, chairman, Hiranandani and NAREDCO, said, “With sustained infrastructure impetus, reflected in the Rs 11.11 lakh crore Capex allocation, we anticipate a significant boost in affordable rental housing for industrial labourers.”
Private investment in infrastructure
The government aims to promote investment in infrastructure by the private sector through viability gap funding and enabling policies and regulations. For this, it will devise a market-based financing framework as announced during the budget.
Pradhan Mantri Gram Sadak Yojana (PMGSY)
The finance minister said that Phase IV of PMGSY will be launched to provide all-weather connectivity to 25,000 rural habitations that have become eligible due to the population increase. The PMGSY (Pradhan Mantri Gram Sadak Yojana) is a flagship programme of the central government for the development of rural roads in India.
Expressing his views on Union Budget 2024, Ravi Shankar Singh, managing director, residential services, Colliers India, said, “Further boost to the Pradhan Mantri Aawas Yojna would help in reducing housing shortage and generating employment.”
Transit Oriented Development
The government will formulate Transit Oriented Development (TOD) plans for 14 large cities with a population above 30 lakh, along with an implementation and financing strategy, the finance minister said. TOD involves combining land usage and transport infrastructure to develop sustainable urban growth centres.
Investments to boost religious tourism
With a significant focus on boosting the tourism sector, the government made key announcements in the Union Budget 2024. The government plans to undertake comprehensive development of the Vishnupad Temple Corridor and Mahabodhi Temple Corridor in Bihar, modelled on the successful Kashi Vishwanath Temple Corridor. The focus will be to transform these sites of immense spiritual significance in India into world-class pilgrim and tourist destinations.
A comprehensive development initiative will also be undertaken for Rajgir, which is another prominent destination of religious significance. Further, the government aims to support the development of Nalanda as a tourist centre, in addition to reviving Nalanda University’s glorious status.
The government will provide assistance for the development of tourism in Odisha, with focus on its scenic beauty, temples, monuments, craftsmanship, wildlife sanctuaries, natural landscapes and pristine beaches.
Plans to augment connectivity and strengthen key industrial corridors
Sitharaman emphasised the government plans to boost road connectivity in key states in eastern India. She announced the Purvodaya scheme aimed at the all-round development of Bihar, Jharkhand, West Bengal, Odisha and Andhra Pradesh to achieve the vision of ‘Viksit Bharat. Under this plan, an industrial node in Gaya will be established on the Amritsar-Kolkata industrial corridor.
Further, several road connectivity projects such as the Patna-Purnea Expressway, the Buxar-Bhagalpur Expressway, Bodhgaya, Rajgir, Vaishali and Darbhanga spurs will be undertaken. Further, a two-lane bridge over river Ganga at Buxar in Bihar will be developed at a total cost of Rs 26,000 crore.
To boost industrial development, the government will allocate funds, under the Andhra Pradesh Reorganization Act, for essential infrastructure such as water, power, railways and roads in Kopparthy node on Vishakhapatnam-Chennai Industrial Corridor and Orvakal node on Hyderabad-Bengaluru Industrial Corridor.
Plans to develop industrial cities
In another major announcement that will help in the creation of futuristic industrial cities, the government will sanction 12 industrial parks under the National Industrial Corridor Development Programme.
The finance minister announced the government’s plan to develop investment-ready ‘plug and play’ industrial parks in or near 100 cities, with complete infrastructure, in partnership with the states and private sector, by better using town planning schemes.
Sharing his views on the key announcements made by the finance minister, Avneesh Sood, director of Eros Group, said, “Establishing industrial parks with a Plug & Play model near 100 cities and the emphasis on rental housing with dormitory-type accommodation for industrial workers in PPP mode with VGF support will further enhance infrastructure and provide affordable housing options. These initiatives will not only invigorate the construction sector but also generate millions of jobs, positively impacting allied industries.
Shishir Baijal, chairman and managing director, Knight Frank India, said, “We welcome the announcements presented today in the Union Budget by the Honourable Finance Minister. The Union Budget for FY 2024-25 has further strengthened the government’s commitment towards long-term social and infrastructure development. The 11.1 lakh crore outlay for capital expenditure, which has risen from 3.3% of GDP in FY 2023-24 to 3.4% in FY 2024-25, will continue to support the agenda for the development of railways, roads and overall logistics infrastructure in the country. The 12 industrial park projects identified under the National Industrial Corridor Development Program are massive undertakings with the potential to grow economic hubs and boost real estate development along their alignment.
We also welcome the initiatives taken to boost tourism corridors in states like Bihar and Odisha, in addition to the 15,000 crore allocation toward the development of the capital of Andhra Pradesh, which will boost corollary real estate development, ”he added.
Housing.com News Viewpoint
The Union Budget 2024, presented by Finance Minister Nirmala Sitharaman, highlights the government’s continued focus on infrastructure development, which is pivotal for the country’s economic growth. Initiatives such as Transit Oriented Development (TOD) plans for 14 large cities and various road connectivity projects in the eastern states are expected to generate greater demand for employment and housing, which will significantly boost real estate development in these regions.
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