Lakshminarayanan Duraiswamy.
The Indian real estate sector has been experiencing a significant boom in recent quarters, driven by factors such as rapid urbanisation, policy reforms, increase in disposable income and a continuous growth in consumer sentiments. Last year, the sector registered remarkable progress, consolidating its position among various other sectors.
And indeed, the Finance Minister has given a big boost to this segment in the Budget, with a huge allocation of ₹10 lakh crore for both rural and urban areas under the Pradhan Mantri Awas Yojna credit-linked subsidy scheme. This also sends a strong message of the continued focus and thrust on driving the growth of affordable housing in the country, consistent with the Union government’s stated intent of ‘Housing for All’. I see a growth spurt in the affordable housing sector on the back of this announcement, which will also boost the cement and steel sectors, and create additional employment.
Long-term impacts
Another positive for the real estate sector has been the announcement of a lower duty for women purchasing property. This is an initiative to enhance property ownership and financial security for women, and is likely to drive the growth of more first-time home buyers. In the long run, this is likely to diversify ownership, provide financial independence to women, and reduce the age of first-time home buyers.
The digitisation of land records — in both urban and rural areas — is a welcome development and will improve transparency, boost revenue compliance, and improve overall credit flow. This, in turn, will have a positive effect in the long run on the demand for housing.
Priorities: jobs and MSMEs
This Budget is a very focussed one, that addresses two major priorities of the economy: employment generation, and micro, small, and medium enterprises (MSMEs). The move to provide funds to first-time employees, with commensurate benefits to companies, will ensure that there is an incentive to hire more people.
The interests of the MSME sector have been addressed through the credit guarantee scheme and the push for more bank lending. This will also feed into additional job creation and have cascading effects on consumption. There are lending opportunities to the MSMEs, besides housing. At the micro level, education loans will also lead to an uptick in demand.
All these measures will provide a stimulus for infrastructure-related industries like cement, steel, and machinery, with the real estate sector witnessing a revival in affordable housing.
Reining in the fiscal deficit
The fiscal deficit has been estimated at 4.9%, compared to the 5.1% indicated in the Interim Budget, and it is commendable of the FM and her team to peg it at this level. Also, the size of the Budget has gone up only marginally, by around ₹50,000 crore. This will ensure that the government’s borrowing plan will largely remain neutral.
Overall, it is a good Budget for the housing sector, with a number of positive developments, and will provide a fillip to this sector to continue its growth trajectory.
(The writer is MD, Sundaram Home Finance)
