Union Budget 2022-23 is touted to be a turning point for the real estate industry. Many measures announced by our Finance Minister might have a positive outcome for the sector, yet the real estate developers are still concerned regarding the larger picture. There are a number of reasons for their trepidation, as well as for their hopes regarding the measures taken for the benefit of this sector
The Unfavourable Aspects:
In her 4th Union Budget, Our Finance Minister, Nirmala Sitharaman, announced many measures for growth and progress. Still, a lot of important and crucial suggestions put forth by real estate developers weren’t taken into account. For example, though infrastructure status is provided to data centres and digital ecosystems; tax relief for this industry was not featured in the financial bill. There was no reduction in the GST rates in under-construction properties as well as in raw materials. The limit of home loan interest for tax rebates also remains the same at Rs 2 lakhs. For a long time now, developers have been requesting industry status to be granted to this sector and also a single-window clearance in order to ensure smoother operations, but this wasn’t taken into account this time.
The Favourable Measures:
Despite some unfavourable aspects of this Budget, the developers haven’t lost all hope, as there is some upside to this too. There are many measures, which are expected to improve the condition of real estate developers.
With a forecast of economic growth at 9.2% for the Financial Year 2022-23 and planned capital expenditure of Rs 7.5 lakh crores, there are hopes of improved cash liquidity in the market. This can lead to a huge positive impact on the real estate sector.
Emphasis on Urban Planning in Tier 2 and Tier 3 cities
The Tier2 and Tier 3 cities have received special emphasis, as far as urban planning and development is concerned. The housing sector is up for a major boost, with sustainable and planned development in the offering. With the proposal of five centres of excellence for urban planning, the industry would be able to hire trained professionals. There are added proposals of forming a high-level committee of urban planners, economists and institutions; which would be used for recommending planning policies, implementation plans, capacity building and governance.
What is considered to be a very favourable point in this Budget, is the commitment to allocate Rs 48,000 crores for providing affordable houses. This will help in increasing the supply of low-cost housing under the Pradhan Mantri Awas Yojna, which in turn is expected to be beneficial to about 80 lakh families in the coming year.
Moreover, quite a lot of emphasis has been given to the overall infrastructural development. In the budget, it was announced that the National Highways would be exceeding 25,000 km. With the purpose of developing cargo terminals and expressways, a plan for a coordinated strategy is proposed, called The PM Gati Shakti plan. This, along with other infrastructural developments, would certainly add to the overall growth and development. Several announcements were made to spur the growth of the logistics sector in the country. The Special Economic Zone Act is expected to be replaced with new legislation, which is further expected to make export-led parks attractive for investments. This in turn is expected to aid the technology companies, who export services that have a positive bearing on commercial office real estate. Thus, overall development has been
Land Records Management
For the purpose of managing digital land and records, a Unique Land Parcel Identification Number has been proposed by The Union Budget. This will ensure higher transparency in real estate transactions. Rapid measures are being taken to translate land records from regional languages. The “anywhere registration” of deeds and documents under the “One nation One-Registration Software” is being touted as a phenomenal step for the real estate sector in India.
All in all, The Union Budget 2022-23 can be considered as laying a positive roadmap, which has elements of a promising growth outlook. It has a lot in store as far as the real estate sector is concerned. A lot of focus has been placed on urban planning and rural developments, which in turn pins the real estate sector’s hopes towards sustainable growth.