The upcoming Union Budget 2024-25 presents a crucial opportunity for the Indian real estate sector to address various challenges and drive growth, particularly in the affordable and luxury housing segments. With the longest election in India’s history now over, all eyes look expectantly to the new budget announcement. In the past the government has shown a strategic focus on balancing economic growth and fiscal discipline, while also prioritizing infrastructure development and enhancing logistical connectivity.
Particularly promising has been the significant capital expenditure by the government, indicating a long-term commitment towards infrastructure development that continues to bolster the real estate landscape. This has not only encouraged investment in Indian real estate, but also created a conducive ecosystem for future development projects. Simplifying GST to reduce costs and relaxing FDI norms to attract foreign investments are seen as critical steps to enhance affordability and foster development within the luxury segment. With the Indian real estate sector contributing 8% to the national GDP, stakeholders have high expectations for reforms that could further boost investment from both foreign and domestic sources.
The real estate industry is looking for policies that not only benefit developers but also make homeownership more accessible to a broader segment of the population. To incentivize homebuyers, stakeholders are calling for an increase in the deduction limit on home loan interest. Raising the home loan interest deduction limit from ₹2 lakh to ₹5 lakh is proposed to significantly benefit middle-income homebuyers and stimulate demand. Additionally, there is a push to revise affordability housing caps under the Pradhan Mantri Awas Yojana (PMAY), increasing the price cap from Rs 45 lakh to better reflect market variations across different cities.
An allocation of additional funds to the Special Window for Completion of Affordable and Mid-Income Housing Projects (SWAMIH) fund is also suggested. Increasing the allocation to the SWAMIH fund is crucial for resolving stalled projects and enhancing liquidity in the sector. An additional corpus of ₹50,000 crore is suggested to help bring stalled projects to completion. Encouraging policies that promote eco-friendly and innovative designs are essential for sustainable luxury housing. This could include incentives for developers to incorporate eco-friendly amenities.
Stakeholders are also advocating for raising the affordability cap of housing from ₹45 lakhs to ₹75 lakhs in metro cities like MMR and NCR to make housing more accessible. Reintroducing the Credit-Linked Subsidy Scheme (CLSS) under PMAY is seen as a way to incentivize first-time buyers of affordable homes. Increasing tax exemption limits on principal and interest paid on home loans is also recommended by the real estate sector.
Industry Expert’s Opinion:
Mr. Gaurav K Singh, Founder & Chairman, Womeki Group
“As a real estate company, we anticipate the government to introduce measures that will drive sector growth and investment in the budget. Key expectations include tax incentives, such as reductions in GST rates on construction materials and real estate transactions, which would lower costs and improve affordability. We also hope for increased tax deductions on home loan interest and principal repayments to encourage home purchases. Additionally, we expect enhanced regulatory and infrastructural support from the government. Implementing a single window clearance system to streamline project approvals will reduce delays and increase efficiency. We also hope for increased investment in urban infrastructure, such as roads, water supply, and sewage systems, alongside affordable housing schemes like the Pradhan Mantri Awas Yojana (PMAY) to support new housing developments. Incentives for green building practices and smart city initiatives are anticipated to promote sustainable and technologically advanced urban development, enhancing the sector’s long-term appeal and functionality.”
Looking Forward
The real estate sector is optimistic that the Union Budget 2024-25 will introduce supportive policies that address affordability, stimulate demand, and foster sustainable growth across all housing segments. The visionary approach of the central government in encouraging real estate growth, coupled with key infrastructure developments, positions the Indian realty sector for accelerated growth and economic vitality. With the government pushing renewable energy and eco-friendly construction, there is growing expectation that the upcoming budget would encourage sustainable development. With the world watching the phenomenal Indian growth story, the upcoming budget will provide the template for future growth and development in the country. As builders of India’s future, the Indian real estate sector stands ready to deliver on the hopes and dreams of the nation.
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