Finance Minister Nirmala Sitharaman while presenting the Union Budget on February 1, 2023, said the document was the blueprint for ‘India at 100’. Outlined on the basis of seven priorities, the main focus of the Budget is facilitating ample opportunities for citizens, providing impetus to growth and jobs and strengthening the macro facility, she said.
While the real estate segment, which has shown resilience despite the present market conditions, was expecting incentives that would give the segment a further push, the Union Budget 2023-24 has come out with initiatives that will indirectly boost this sector.
Here is what industry players have to say about the Budget 2023-24.
Dhruv Agarwala, group CEO, Housing.com, PropTiger.com and Makaan.com
“Overall, the FM presented an inclusive, growth oriented and fiscally prudent budget. Rationalisation of income tax, especially at the lower end of the income spectrum, would provide extra funds in the hands of middle-class families and alleviate the burden of increasing interest rates. It may also encourage those on the fence to purchase a home, which is the most trusted asset class for Indians. The demand for housing is already very robust and the Budget 2023-24 would further galvanise growth for India’s real estate sector.
Also, the increase in overall capital expenditure, the increased outlay for PMAY, the setting up of the Urban Infra Development Fund and the record capital allocation for the railways, will help create better infrastructure and provide a further boost to the real estate sector”.
Ramesh Nair, CEO, India and MD, Market Development, Asia at Colliers
“Union Budget 2023-24 makes a commitment towards ‘Green Growth’, while focusing on augmentation and enhancing urban infrastructure, technology and inclusive development. The capital outlay for infrastructure at Rs 10 lakh crore, or 3.3% of GDP is significant as it can lead to multiplier effect across sectors and set a strong footing for a resilient growth. Dedicated investment of Rs 10,000 crore through the urban infra development fund will result in creation of quality of urban infrastructure thereby improving quality of life and translate into higher demand for housing and commercial real estate.
The government has also increased the allocation for Pradhan Mantri Awas Yojana (PMAY) by 66% to about Rs 79,000 crore. The increase in outlay will go a long way in bridging the gap between demand and stock in affordable housing. This will provide opportunities for associated stakeholders such as construction companies, contractors etc. Further, expected changes in income tax slabs will result in higher disposable incomes, boding well for prospective homebuyers, mainly in the affordable and mid segment.”
Dr. Samantak Das, chief economist and head of research and REIS, India, JLL
“The 2023 Budget, in a pre-election year, sought to build on the roadmap laid down by previous budgets, focusing on inclusive development, fostering growth and job creation while keeping the macro-economy in a stable yet growth-oriented mode. It has given more money into the hands of individuals and households which would, to a large extent, ease out the increasing pressure on account of home loan EMIs and rising home prices.
Addressing the need for creating sustainable cities of tomorrow through urban planning, ease of land availability and promoting TOD schemes will be key towards sustainable development moving forward. Focus on overall infrastructure development and on Tier 2 and 3 cities will be key to overall economic development. The Budget is a balanced one for the economy while missing out on key real estate sector demands.”
Sachin Bhandari, executive director and CEO, VTP Realty
“Specific to the real estate industry in India, HNI customers will have more money in hand because of this budget. The Budget is effectively reducing their tax outflow from 43% to 39% ensuring a net savings of 4% for HNIs. For example, if an HNI is having an annual income of Rs 5 crore, his or her net savings due to this change will be approximately Rs 15 lakh per annum. This Rs 15 lakh saved will give that person an additional Rs 1.5 crore of home loan eligibility thereby allowing that customer to buy a more costlier home. Alternately, because of the additional Rs 15 lakh in hand, that person will be able to spend more on travel, leisure, consumer durables or even invest more in the markets. Having more money in the hands of the HNI customer is going to help the economy to circulate more money and create a positive cascading effect.
Increase in infrastructure investments has gone up by 33% to Rs 10,000 crore. This will create huge employment across all levels, especially in the labour class. Therefore, money circulation in the economy is expected to increase drastically leading to increased spending in the consumer segments- FMCG, real estate, consumer retail etc. Special impetus given to the agriculture sector and farmers will also have the same positive effect on the economy. However, due to the increase in demand in the real estate sector, prices for steel, cement and other raw materials can go up resulting in increase in construction costs and the same would be pushed forward to the final consumer.
Lastly and most importantly, the real estate sector is completely ignored in the entire budget speech. Real estate sector is the second largest contributor to the GDP of our country, it is also the second largest employer in the country. It has phenomenal cascading effect on multiple allied industries. In spite of all that, there is not a single initiative to incentivize the real estate sector and that is disappointing for the whole sector”.
Sahil Virani, managing partner, Empire Realty
“Union Budget 2023-2024 did not emphasise much on the real estate sector. The sole focus was on ‘PMAY’ with the increased budget allocation and CLSS benefits. It looks positive to boost the demand amongst the LIG and EWS groups. However, the industry was hoping for some boost in terms of lowered interest rates, subsidies for first-time homebuyers, reduced cost to production (reduction of prices for steel, cement), provision of single clearance window, better credit facility to developers, sound policies to support women homebuyers, etc. to further boost the demand in the real estate segment on a large scale.”
Shrinivas Rao, CEO, Vestian
“The Union Budget 2023-24 held much significance, given that several issues required priority consideration, this being a run-up to the electoral year in 2024. Expectedly, it has put increased emphasis on infrastructure, agriculture, green energy, job creation and restructuring direct taxes, in order to boost an economy affected by global slowdown while assuaging voters as well. With the government accentuating technology-led investments, proposing to reduce cost of compliance and assist stakeholders in private investment in infrastructure, these would essentially enhance ease of doing business.
Meanwhile, with India committing to net zero carbon emissions by 2070, sustainable development programmes for green fuel, green farming, green mobility and green buildings, amongst other plans, have been proposed, that would eventually help in reducing carbon intensity of the economy and generate green job opportunities. Thus, despite the absence of a strong real estate sector perspective, the Budget has altogether striven to touch upon several key issues impacting the economy and we believe these programmes would further bolster the country’s profile on a global platform.”
Himanshu Chaturvedi, chief strategy and growth officer, Tata Projects Ltd
“Budget 2023 continues to lay focus on infrastructure development as being the growth engine of the Indian economy. Last year, the government had taken a bold step by increasing capital investment outlay to Rs 7.5 lakh crore. This outlay along with enhanced support to state governments for capital investment would go a long way in strengthening the infrastructure backbone of the country. The increased outlay for railways, attempt to prioritise the 100 critical transport infrastructure projects and regional connectivity is quite commendable. This investment along with PM Gati Shakti launched last year to provide multimodal connectivity infrastructure to all economic zones of India would help reduce the logistics cost in India.”
Dr. Niranjan Hiranandani, vice chairperson, NAREDCO
“Setting up of the Urban Infrastructure Development Fund managed by NHB will ensure governance, speed in execution and timely delivery under PPP ties. The capital gain tax benefit on the sale of property above the value of Rs 10 crore is sought to be withdrawn. Families are liable to pay capital gain tax which will disincentivize families to buy multiple properties as a security provision for their children. Emphasis on skilling to foster research and knowledge-based economy will garner a job ready workforce for the highly labour-intensive real estate sector.”
Atul Goyal, CFO, Brigade Enterprises Ltd
“The extension of tax benefits to funds relocating to GIFT City till 2025 will enhance business activities in the region. The reduction in personal income tax and indirect taxes will enable individuals to have additional disposable income which enables them to look at investment options including buying homes. The capping of the capital gains benefit at a maximum of Rs 10 crore for house property will however have a negative impact on the demand for ultra-luxury homes.”
Murali Ramakrishnan, MD and CEO, The South Indian Bank
“Effective implementation of schemes like opening of Rs 47.8 crore PM Jan Dhan bank accounts will benefit common citizens. The enabling of the Digital locker for MSMEs for securely storing and sharing documents online with various authorities, regulators and other entities will encourage seamless business.”
Aryaman Vir, founder and CEO, MYRE Capital
“Startups see an impetus from the government via enhanced limits of MSMEs and professionals in regards to the presumptive taxation. Credit guarantee schemes have been extended for MSMEs. The announcement of 50 additional airports, heliports, water aerodromes, and advanced landing zones to be revitalised will benefit the local communities and lead to development of commercial and residential real estate in these cities. FM has stated her objective to encourage women investors and has announced the Mahila Samman Saving Certificate scheme offering 7.5% interest for 2 years deposit.”
Sudheer Perla, country head, Tabreed India
“With India’s G20 presidency as a backdrop, this year’s budget has listed ‘Green Growth’ as one of the seven priority areas. With a budgetary allocation of Rs 35,000 crore for transition to a low-carbon intensity, green and secure economy, 2023 may be a turning point for the country. India is moving swiftly to achieve its net zero targets by 2070, implementing a multi-pronged approach focussed on supply and demand side measures including introduction of more and more renewables and hydrogen in the energy mix, focus on energy efficiency as well as behavioural aspects through programs like LiFE and Green Credit Programme, waste to wealth plans to promote circular economy, etc.
