Real Estate Boost Budget FY25 Impact

While the FY25 budget provided a direct and indirect push to the real estate sector, beyond budget, the Modi government is taking several measures to give a further boost to the real estate and housing sector.

  Vinod Behl

In a further push to budget provisions to construct 3 crore new houses (including 2 crore rural and 1 crore urban houses) across the country under PMAY, the Union cabinet approved Rs 3.6 lakh crore to be spent over the next 5 years. Out of this, the central government will contribute Rs 2.06 lakh for rural housing and Rs 1.6 lakh for urban housing, states will fund Rs 1.03 lakh crore for rural housing and Rs 70000 crore for urban housing.

It has been decided that for urban housing, the corpus of the Credit Risk Guarantee Fund Trust will be tripled to Rs 3000 crore to provide guarantees to lenders against defaults on affordable housing loans. Beneficiaries taking loans up to Rs 25 lakh with a house value of up to Rs 35 lakh will qualify for a 4 percent interest subsidy (subject to conditions), capped at 1.80 lahks in 5-year instalments. The central government has set a deadline of March 2029 to complete the construction of 3 crore new homes.

Further post-budget, the government is broadening the scope of affordable housing under PMAY 2.0. It is finalising fresh guidelines and new income slabs for middle-income groups (MIG). Presently, under PMAY, the annual income criteria for eligibility under the MIG-1 category is Rs 6-12 lakh; for the MIG-2 category, it is Rs 12-18 lakh. As part of the revised guidelines under PMAY 2.0, an increase in the maximum loan amount of Rs 12 lakh for availing loan subsidy, is being contemplated.

Post-budget, the Centre has reworked the LTCG regime to provide relief to property owners while selling the property. In the budget, the indexation benefit under LTCG was withdrawn and to compensate for this, LTCG tax rate was decreased from 20 percent to 12.5 percent. But now under the revised LTCG policy, the property sellers are given a choice to opt for either lower tax without indexation benefit or higher tax with indexation benefit.

This year’s budget provided a  big boost to infrastructure development. As infrastructure is a key to real estate growth, the union government, post-budget approved 8 high-speed corridors for road projects worth Rs 50665 crore. Moreover, a new revised financing structure for Bharatmala is being envisaged. Under Bharatmala, a total road length of 34800 km is to be constructed in 31 states and union territories, covering over 550 districts.

Under its 100-day plan, the Modi government will be providing a Rs 5000 crore boost to urban development under AMRUT 2.0, As part of this, civic infra projects covering water supply, sewage treatment, rejuvenation of water bodies under Atal Mission for Rejuvenation & Urban Transformation -AMRUT 2.0, will be taken up.

On the metro connectivity front, post-budget NCR metro connectivity is going to get a major push. The Union cabinet has approved two new corridors of Inderlok-Indraprastha and Lajpat Nagar- Saket G Block corridor under Phase 4 of Delhi Metro at a cost of Rs 8399 crore. Haryana Mass Rapid Transport (HMRTC) has planned several new metro routes. Apart from an early start of construction work on the 27 km approved metro extension line from Millennium City Centre metro station to Old Gurgaon and Dwarka Eway, new metro routes are in the works. These include a 36 km link from Sector 56 to Panchgaon including an interchange with Rapid Metro, Millennium City to AIIMS Jhajjar, Palam Vihar to Sector 21 Dwarka and Gurgaon to Faridabad.

These post-budget initiatives will provide an augmented fillip to the growth of the real estate sector.