The Budget’s almost pointed negligence of the real-estate sector was most puzzling, especially since the previous Budget had envisaged an ambitious blueprint for the country’s economic future, said Anuj Puri, Chairman of Anarock Group.
“For realising the vision of making India a $5-trillion economy by FY24-25, the development and growth of its real-estate sector is imperative. Across developing and developed economies, real estate and economic growth are inseparable concepts,” he added.
Real estate is a key driver of economic growth, and by laying the groundwork for making it more organised and transparent, the government has already made it a more secure and attractive investment environment. “The fact that the latest Budget gave no more than a cursory glance at real estate is a missed opportunity to build further on this groundwork. To propel the Indian economy into the top league of global economies, the growth engine of real estate cannot be ignored,” said Puri.
AIF missing in the Budget
The Budget failed to provide clarity on the deployment of the previously-announced ₹25,000-crore alternate investment fund (AIF). Completing and handing over these stuck projects will increase buyer and investor confidence and help usher in a strong revival for the housing sector. Improved sales will lead to a strengthened housing supply pipeline and create jobs across the entire white-to-blue-collar segments of real-estate development.
“This factor cannot be ignored. After agriculture and manufacturing, the real-estate sector has the most potential for large-scale job creation. Associated with over 200 allied industries including cement, steel and sand, housing development has a multiplier effect on several allied sectors,” Puri explained.
Despite global headwinds and slow economic growth in the country, the India Brand Equity Foundation expects India’s real estate sector to grow to a market size of $1 trillion by 2030. It is also likely to contribute 14 per cent to the country’s GDP by 2025, almost double the current 7-8 per cent.
Puri said, “Over the years, real estate growth — particularly in housing — has been crucial in driving the Indian economy. Regulatory reforms such as RERA, GST and IBC and relaxation in foreign direct investment have already made the industry more transparent and credible, leading to increased end-user demand.”
“It was expected that the Budget would aim to keep this momentum going and thereby emphasise economic growth. To achieve this, radical changes in the taxation system as well as regulatory policies are of paramount importance,” he added.
Continued focus on infrastructure
While the Budget did not provide any real boost to real estate other than in terms of affordable housing, it continued to focus on infrastructure. Real-estate development goes hand-in-hand with infrastructure as the latter opens up peripheral areas and creates new avenues of growth.
Puri said, “Earlier, the government had already allocated ₹100-lakh crore for infrastructure investments to improve transport efficiency over the next five years. Multi-modal infrastructure development such as roads, rail and metro improves living conditions and spurs demand for residential, commercial, retail and warehousing real estate.”
(Source: Business Line)
