Union Budget 2022: Real estate sector hails it as a growth-inducing budget

Highlighting the role of the real estate sector in India's economy, industry experts termed the Union Budget 2022-23 as a growth-inducing budget.

Finance Minister Nirmala Sitharaman on Tuesday tabled the Union Budget for FY 2022-23.

During the budget speech, Sitharaman announced the completion of 80 lakh homes under Pradhan Mantri Awas Yojana (PMAY) and also informed that for this, allocated Rs 48,000 crore under PMAY for urban and rural in FY23. The demand for affordable housing has been increasing in the past few years.

Aditya Kushwaha, CEO and Director, Axis Ecorp said, "The real estate sector is the backbone of the economy and will play a pivotal role in this Amrit Kaal. The budget 2022 is growth-inducing and does the heavy lifting by sharply increasing capital expenditure. On the real estate aspect, the annual budget reinforces the Government's focus on affordable housing."

He said the government has also announced an outlay of Rs 20,000 crore toward Gati Shakti for integrated planning and coordinated implementation of infrastructure connectivity projects. In the budget 2022-23, there was also an emphasis on sustainable development with climate action being one of the central themes.

Kushwaha said during the budget announcement, the Finance Minister also mentioned that the tier-2 and tier-3 cities would have to step up in terms of development.

"In the last couple of years, we have already seen an incremental demand coming from these areas and we believe that with the right push, one can expect these pockets to post even better growth. In line with this, we were expecting the government to incentivize the secondary housing market but that has been left unaddressed. Another major concern area for the sector has been increasing prices of raw materials. Unfortunately, no relief in regard to this has been announced in the budget presentation," added Kushwaha.

Another significant announcement that was made in Tuesday's budget was in regards to the data centre segment.

Welcoming this move, Vinit Dungarwal, Director at AMs Project Consultants Pvt LTD said, "India is currently at the cusp of becoming the global data centre hub. We welcome the move to grant infrastructure status to data centres and believe that it is a step in the right direction. This move will facilitate the sector to avail long-term and cheap credit and grow faster as we leapfrog to become a digital-first country."

He said it was expected that there will be a significant announcement pertaining to the affordable housing segment and the budget does not disappoint in that regard. Finance Minister announced Rs 48,000 crore towards the Affordable Housing Scheme (PMAY). It was also announced that the NH Motorway network will be expanded by 25,000 km in 2022-23 and for that, the government will be mobilizing Rs 20,000 crore to complement public resources.

"The enhanced spending on public infrastructure projects along with enhancing the road network is laudable as it will give impetus to the employment generation and facilitate faster economic revival," added Dungarwal.

Ajay Harinath Singh, Group Chairman, Darwin Platform Group of Companies believes that the budget is promising and will lead to job generation.

He said, "Higher allocation for capital expenditure to Rs 7.5 lakh crore in 2022-23 would help in creating more employment in sectors like real estate and infrastructure thereby increasing employment. However, the Union Budget did not attempt to address a major problem with non-fund-based credit such as bank guarantees (BG) as it blocks a significant portion of project costs. We hope, before finalizing the Budget the government would consider this demand of the industry."

Dr Niranjan Hiranandani, National Vice Chairman, NAREDCO and MD Hiranandani Group opined that "As budget decodes Kaam, Kisan and Kamai as the focus, the outlays have comes out with a budget for the economy with sustainability and infrastructure investment as its underlying theme. Rating it at 7/10, the Budget is clearly about complementing macro-growth with micro-all-inclusive welfare, digital economy and fintech, tech-enabled development, energy transition, bolstering investment and climate action."

Apart from the measures that were announced, the sector was eyeing further sops. Given that the pandemic is not yet over, the players in the sector were looking for measures that will help in demand generation. Some of the demands from the sector included relaxation in GST on under-construction properties, a reduction of GST on key raw materials, a higher interest exemption for homebuyers and granting 'infra' status to the sector.