For realty, nothing much to cheer about in Budget

In the Union Budget for FY23, the central government has made a decisive move towards significantly strengthening the public capital expenditure. The budget has a sharp hike in the capital expenditure budget by 24.47 per cent to Rs 7.5 lakh crore (compared with the revised estimate for 2021-22 at Rs 6.02 lakh crore), which is almost 2.9 per cent of the GDP.

Finance Minister Nirmala Sitharaman allocated for Rs 48,000 crore for Pradhan Mantri Awas Yojana (PMAY) under which 80 lakh homes will be built during the next financial year. This will give a big boost to affordable housing sector. The announcement of five centres of excellence for urban design and planning is a positive step that will complement and support the real estate sector.

Enhancing multimodal connectivity through the expansion of roadways by 25,000 km and the inclusion of 2,000 km of rail network under indigenous technology is a welcoming move.

All these are good signs because this helps in employment generation, which will in turn help the real estate sector.

It is good to hear that the central government will work with the State governments for reduction of time required for all land and construction-related approvals, for promoting affordable housing for the middle class and economically weaker sections in urban areas.

Emergency Credit Line Guarantee Scheme (ECLGS) is extended till March 2023 and guarantee cover expanded by Rs 50,000 crore, which comes to Rs 5 lakh crore. Allowing one-year moratorium extension for loans availed under the ECLGS would help current liquidity issues.

Overall, if we look at it, the focus is mostly on capex, digitisation, roads, banks but there is nothing for home buyers.

The interest exemption for an individual when buying a property is 2 lakh per annum now and we expected the government to extend the limit as the prices of the properties have been increasing due to variety of reasons and the limit has not been increased in many years. But this has not been done this time, disappointing home buyers. The long-pending demand of realtors for industry status in the sector was also not considered in this Union Budget. As we all know, real estate sector is the highest employment generator and many other industries are depending on it directly/indirectly. Therefore, it must be given top priority. That has not happened in this Budget.

On the other hand, prices of construction materials have gone up, piling up problems for real estate companies. But we are optimistic that boost to affordable housing through PM Awas Yojana will help the sector to some extent.

(The author is Founder, Chairman and Managing Director of Ark Group)