Union Budget 2022 Evaluation By The Real Estate Sector
Budget 2022 would promote real estate growth in the long run due to the objective focus on infrastructure development, even though there hasn't been a particular action like extending tax exemption limits against house loan principal or interest. The significant capital expense the budget for 2022 has been properly described as growthoriented and was created with the Amrit Kal of India or the plan for the following 25 years, in mind.
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The budget for 2022 has come across as being future-focused with a focus on restructuring the nation's infrastructure & commitment to "Housing for All." The financial year (FY) 2023 will see increased real estate expansion in the affordable segment thanks to the Pradhan Mantri Awas Yojana's (PMAY) allocation of Rs 48,000 crore and aim to build 80 lakh homes. This budget also acknowledges the importance of growing Tier-2 and Tier-3 cities, which is encouraging for the long-term outlook of the housing market.
With 25,000 km of National Highways to be completed by FY 2023, Pradhan Mantri (PM) Gatisakti's seven engines for infrastructure growth include roads, railroads, airports, ports, mass transit, waterways, and logistic infrastructure. In order to achieve multi-modal
connectivity between mass urban transportation and railroad stations, funding for a new metro rail system, a national ropeways development plan, and 400 new Vande Bharat trains will result in the creation of world-class infrastructure and an increase in employment.
The budget also includes provisions for additional investments in renewable energy and urban infrastructure, as well as green bonds, a battery swapping and charging programme, and other sustainable development initiatives. The establishment of urban planning schools with the assistance of an expert level committee and the modernization of building bylaws would also benefit the industry.
To increase corporate productivity and long-term economic growth, numerous steps have been taken to promote digital adoption and ease of doing business. Additionally, the creation of a Unique Land Parcel Identification number for land records will begin, along with the integration of Central and State level systems through IT bridges.
To increase demand, more could have been done, though. The real estate sector is one of the pillars of the Indian economy and is the second-largest business generator in the nation after agriculture, thus it could have benefited from an additional boost given the sector's strong multiplier effect on the economy.
Home loan interest rates are currently between 6 and 7 percent. However, if a borrower takes out a loan for more than Rs 30 lakh, they would not be able to deduct all of the interest they have already paid. Section 24(b) of the Income Tax Act places a $2 lakh annual cap on the interest rate deduction. Instead of the current cap, the sector needs a minimum tax rebate of Rs 5 lakh. Therefore, under section 24(B) of the budget, the exemption on the interest of home loans needs to be increased in order to promote demand.
Since the government began allowing mortgage interest deductions under Sections 80EE and 80EEA, the housing market has been redefining what is considered cheap. However, the majority of people were unable to benefit from these discounts. The Reserve Bank of India (RBI) bases its definition of affordability on loans given by banks rather than the
borrowers' real financial situation. To make it more accessible for the general public, the government should redefine cheap housing in terms of cities rather than loans. As a result, by adjusting prices, more potential homeowners would be able to purchase homes, boosting their chances of doing so.
In order to provide affordable houses, it was still necessary to rationalise the prices of essential raw materials like steel and cement. Because the market for affordable housing is so price-sensitive, regular increases in the cost of these materials have made it more difficult for developers to introduce new models at a time when India's real estate sector is still suffering from the effects of the pandemic.
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