Union Budget 2024
Strengthening fundamentals to ensure sustainable growth and development of India’s real estate sector
During an election year, the government unveiled the interim budget, which laid down a comprehensive roadmap for fostering inclusive development, to reach the goal of ‘Viksit Bharat’ or ‘Developed India’ by 2047. Several growth-oriented schemes were announced in conjunction, with special emphasis on fiscal consolidation in order to strengthen macro-economic fundamentals and ensure sustained economic growth. The government is making rapid strides towards its target of achieving a fiscal deficit of below 4.5% by 2025-26 with budgeted estimates for 2024-25 at 5.1%.
On the real estate front, while there were no big bang announcements, the key themes of ‘green growth’, infrastructure augmentation, housing for all, and creation of tourist centres will be important elements in creating a robust ecosystem for the sustainable growth of India’s real estate sector.
Promoting green growth
In line with India’s commitment of ‘net-zero’ by 2070, there were incentives for harnessing wind energy and support for the manufacturing and charging infrastructure for electric vehicles. This will lead to a surge in the demand for real estate dedicated to EV manufacturing and charging facilities. Also, landlords and occupiers will increasingly focus on making real estate more responsible, both in terms of higher green building certifications and adoption of green leasing practices.
Infrastructure augmentation and dispersed development
Building on the massive increase in capital expenditure in the past four years, the Budget increased the outlay by 11.1% to 11.11 lakh crore, which represents 3.4% of the GDP. The capex outlay augmentation will have a multiplier effect on real estate value, demand, and overall growth. The focus on creating multi-modal connectivity through new rail corridors, airport expansion, road infrastructure enhancement and metro rail connectivity will support the overall logistics ecosystem while fostering new growth corridors. Also, there are plans for ‘aspirational districts’ and development of the eastern region with the aim to create new engines of dispersed economic development, thereby creating opportunities in associated real estate.
Housing for all
The government plans to promote housing for all, including 2 crore additional rural houses over the next five years, and the reintroduction of a housing scheme for the middle class. This will positively impact the residential and allied sectors
Development of iconic tourism centres
The announcement on creating and enhancing tourist centres will bring hospitality-related development in sharp focus while creating the need and opportunity for associated real estate development (holiday homes, second homes, commercial and social infrastructure) in such locations.
The Budget also promotes domestic and foreign investments through the extension of tax benefits (from March 2024 to March 2025) to start-ups as well as sovereign and pension funds. Overall, the interim budget underscores the Government’s commitment to inclusive development with fiscal consolidation as its guiding principle. Furthermore, the budget lays out a detailed plan to stimulate key sectors of the economy, encouraging investments and spurring job creation. It focuses on infrastructure development, innovation, and entrepreneurship, thus paving the way for a thriving business environment that fosters sustained economic growth.
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