Tuesday, 23 Jul 2024
Source/Reporter : Souptik Datta
The budget failed to address several pressing issues that the sector faces, experts said
As India continues to urbanise, the Union Budget 2024 focused on tackling urban housing woes through the digitization of land records and the development of cities as growth hubs.
Support for affordable housing is anticipated to provide a fresh boost to the shrinking segment across the country.
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Presenting the Budget on July 23, Finance Minister Nirmala Sitharaman said, "Working with the states, the government will facilitate the development of 'cities as growth hubs’. This will be achieved through economic and transit planning and orderly development of peri-urban areas utilising town planning schemes."
The Budget laid down Rs 11.1 lakh crore outlay for capital expenditure to maintain strong fiscal support for infrastructure over the next 5 years. The Budget announced that Rs 10 lakh crore will be invested in the flagship Pradhan Mantri Awas Yojana (PMAY) scheme including a central assistance of Rs 2.2 lakh crore over next five years, giving a further boost to the government’s programme to provide affordable housing. Additionally, the budget also said that Transit Oriented Development (TOD) plans for 14 large cities with a population above 30 lakh will be formulated, along with an implementation and financing strategy.
"We are focusing on several corridors, one from Vishakapatnam to Chennai and another from Hyderabad to Bengaluru. Additionally, building of the Gaya node from Amritsar to Kolkata is essential to build infrastructure in rural areas and attract investment," Sitharaman said while addressing journalists on July 23.
However, experts say the Union Budget has not addressed some of the key demands of the real estate sector, including granting of industry status, input tax credit, reduction of GST and single window clearance.
"There is only a marginal increase in savings on individual income tax under the new taxation regime. We urge the Union government to reconsider the focus on the real estate sector to include these demands," said Pavitra Shankar, managing director, Brigade Enterprises.
Experts say for individual taxpayers under the new tax regime, the increased standard deduction limit to Rs 75,000 from the previous Rs 50,000 along with the new income tax slabs implies savings - but hardly enough to boost housing demand.
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Anuj Puri, chairman - ANAROCK Group said that the credit guarantee scheme for the MSMEs will help provide momentum to overall industrial development, and this can have a rub-off effect on the real estate sector. "The pandemic had a catastrophic impact on the MSME sector, which slowed down the demand for affordable housing since 2020. Affordable housing demand may gain momentum once the economic impact of the pandemic subsides for this target audience," he said.
The affordable homes category (less than Rs 40 lakh) has been seeing a decline in overall sales since the pandemic, to about 19 percent in H1 2024 from over 38 percent in the period before the pandemic in 2019. Consequently, this segment’s percentage share of the total housing supply in the top 7 cities also fell to 18 percent in H1 2024 from nearly 40 percent in 2019.
"Increased allocation for PM Awas Yojana and call for a cut in stamp duty especially for women should enthuse the real estate industry a bit, though several other things such as input credit on GST, remain unaddressed," Ashish Khandelia, founder of Certus Capital & Earnnest.me said.
As India continues to urbanise, the Union Budget 2024 focused on tackling urban housing woes through the digitization of land records and the development of cities as growth hubs.
Support for affordable housing is anticipated to provide a fresh boost to the shrinking segment across the country.
Story continues below Advertisement Remove Ad
Presenting the Budget on July 23, Finance Minister Nirmala Sitharaman said, "Working with the states, the government will facilitate the development of 'cities as growth hubs’. This will be achieved through economic and transit planning and orderly development of peri-urban areas utilising town planning schemes."
The Budget laid down Rs 11.1 lakh crore outlay for capital expenditure to maintain strong fiscal support for infrastructure over the next 5 years. The Budget announced that Rs 10 lakh crore will be invested in the flagship Pradhan Mantri Awas Yojana (PMAY) scheme including a central assistance of Rs 2.2 lakh crore over next five years, giving a further boost to the government’s programme to provide affordable housing. Additionally, the budget also said that Transit Oriented Development (TOD) plans for 14 large cities with a population above 30 lakh will be formulated, along with an implementation and financing strategy.
"We are focusing on several corridors, one from Vishakapatnam to Chennai and another from Hyderabad to Bengaluru. Additionally, building of the Gaya node from Amritsar to Kolkata is essential to build infrastructure in rural areas and attract investment," Sitharaman said while addressing journalists on July 23.
However, experts say the Union Budget has not addressed some of the key demands of the real estate sector, including granting of industry status, input tax credit, reduction of GST and single window clearance.
"There is only a marginal increase in savings on individual income tax under the new taxation regime. We urge the Union government to reconsider the focus on the real estate sector to include these demands," said Pavitra Shankar, managing director, Brigade Enterprises.
Experts say for individual taxpayers under the new tax regime, the increased standard deduction limit to Rs 75,000 from the previous Rs 50,000 along with the new income tax slabs implies savings - but hardly enough to boost housing demand.
Story continues below Advertisement Remove Ad
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Anuj Puri, chairman - ANAROCK Group said that the credit guarantee scheme for the MSMEs will help provide momentum to overall industrial development, and this can have a rub-off effect on the real estate sector. "The pandemic had a catastrophic impact on the MSME sector, which slowed down the demand for affordable housing since 2020. Affordable housing demand may gain momentum once the economic impact of the pandemic subsides for this target audience," he said.
The affordable homes category (less than Rs 40 lakh) has been seeing a decline in overall sales since the pandemic, to about 19 percent in H1 2024 from over 38 percent in the period before the pandemic in 2019. Consequently, this segment’s percentage share of the total housing supply in the top 7 cities also fell to 18 percent in H1 2024 from nearly 40 percent in 2019.
"Increased allocation for PM Awas Yojana and call for a cut in stamp duty especially for women should enthuse the real estate industry a bit, though several other things such as input credit on GST, remain unaddressed," Ashish Khandelia, founder of Certus Capital & Earnnest.me said.