Union Budget 2023: Big boost for affordable housing under PM Awas Yojana

Experts and key players hail announcements but lament that many of their other expectations remained unfulfilled

Aiming to boosting the ‘Housing for All’ mission, Union Finance Minister Nirmala Sitharaman announced a proposal to ramp up the PM Awas Yojana Fund by as much as 68 per cent to Rs 79,000 crore, in her Budget speech for financial year 2023-24 on Wedbesday.

The higher allocation to the scheme will help the affordable housing segment, say real estate experts. However, they were also disappointed as many of their other expectations remained unfulfilled.

“Measures such as an increased outlay for affordable housing, enhanced focus on tourism and development of unity malls in key cities across the country would give a fillip to the real estate sector,” said Anshuman Magazine, Chairman & CEO-India, South-East Asia, Middle East & Africa, CBRE.

Moreover, the proposed increase in the income tax exemption limit to Rs 7 lakh will help boost real estate investment. This tax break will encourage homebuyers to invest more while simultaneously increasing revenue, said Nirav Dalal, Executive Vice President-business development & chief investment officer, Shapoorji Pallonji Real Estate.

The Pradhan Mantri Awas Yojana–Urban (PMAY-U), a flagship mission of government of India, was launched in 2015 to provide housing for all. Last year, the government proposed an allocation of Rs 48,000 crore to complete eight million houses for eligible beneficiaries.

Avneesh Sood, Director, Eros Group, said the extension of the Credit Linked Subsidy Scheme (CLSS) will give homebuyers the financial flexibility to make their purchases, and help achieve the government's goal of completing eight million houses under PMAY.

While commending The Centre’s urbanisation initiatives, Sudhir Pai, CEO, Magicbricks, said, “The outlay of Rs 10,000 crore per annum for an Urban Infrastructure Development Fund (UIDF) for tier-2 and tier-3 cities would certainly give the required boost to the real-estate markets in these cities, which have emerged as real estate growth engines in the past few years.”

The higher allocation will speed up project deliveries and help poorer communities to own their houses.

“This allocated amount is expected to address more than 55 per cent of the estimated deficit in funds for projects under the scheme, and will provide a huge impetus in providing housing to those in need. It will bridge the gap between those without access to proper dwellings and those who do (own such dwellings),” said Sandeep Runwal, president, NAREDCO Maharashtra.

Pradeep Aggarwal, Founder & Chairman, Signature Global said the proposal will lead to more housing projects being taken up, in rural and urban, and will assist the Economically Weaker Section (EWS) and Low Income Groups (LIG) of society in owning a home.

Setting up of the Urban Infrastructure Development Fund managed by National Housing Banks (NHB) will ensure governance, speed in execution and timely delivery under PPP ties, experts say. The budget will boost not just the affordable housing segment but the industrial and logistics (I&L) sector as well.

Magazine added that sustained attention on manufacturing and improvement of urban infrastructure is likely to boost the I&L sector while spurring economic activity and job creation at the same time.

However, some demands of the real estate sector, such as industry status, single-window clearance and rationalisation of GST for raw materials remained unfulfilled.

Samantak Das, chief economist, and head of research and REIS, India, JLL said the budget is a balanced one for the economy, but missed out on key real estate sector demands.

Anuj Puri, chairman of Anarock, said, “From a real estate point of view, there were no major direct announcements that could be seen as immediate booster shots."

Unwavering focus on infrastructure will indirectly drive real estate growth over the next one year, he added.

However, the new tax regime offers no benefits that taxpayers can avail of under any sections, including Section 80C, Puri said.

The capital gain tax benefit on the sale of property worth over Rs 10 crore is sought to be withdrawn. This will deter families to buy multiple properties as a security provision for their children, said Naredco vice chairperson Niranjan Hiranandani.

Akash Pharande, managing director, Pharande Space feels that the Budget 2023 was not as beneficial for the residential real estate sector as the industry had hoped.

“One of the major changes is the introduction of a new tax regime, which offers lower tax rates for individuals who forgo exemptions and deductions. However, this regime also foregoes the previous deductions on housing loans, which cannot be seen as positive for homebuyers,” Pharande said.

All in all, it is a cautious budget which has not provided any of the boosts that the real estate industry had hoped for, he added.