The Union Budget and its impact on Real Estate
Since the beginning of time, owning your own house has been viewed as a milestone in everyone’s lives. One of the few things everyone aspires for is to live in a clean, safe place they can call “home”; but not everyone gets this privilege. A recent United Nations Survey about inadequate housing concern states that 1.6 billion people live in inadequate housing worldwide. 1 billion people live in slums and informal settlements. To help you understand how grave this situation is, these statistics imply that about one in four people is forced to live in conditions that can cause serious health conditions.
In India, roughly 6 crore people cannot afford adequate housing. To reduce this number, The Government of India launched a “Housing for all” Mission in 2015 till 2022, when India completes 75 years of Independence. The mission seeks to address the housing requirement of the urban poor including slum dwellers through slum rehabilitation projects, subsidiaries for beneficiary-led construction of independent homes, promotion of affordable housing projects by way of credit-linked subsidiaries, and partnerships within the private and public sectors.
The Government also launched the “Pradhan Mantri Awas Yojana” in 2015, under the “Housing for All'' Mission. The program aims to provide adequate housing for the urban poor with a credit-linked subsidy scheme (CLSS), offering an interest subsidy to applicants for a home loan under PMAY. As of 2022, a total of 17.35 Lakh beneficiaries have availed of the subsidy on housing loans through the CLSS.
During the Union Budget 2022, Rs. 48,000 crores have been allocated to the Pradhan Mantri Awas Yojna for the fiscal year 2022-23, which is a whopping 75% more than the Rs. 27,500 crore that had been announced for the previous year. Industry experts termed this Union budget as a “growth-inducing budget” for Real Estate. It also announced the completion of 8 million houses under the scheme. This is a concentrated effort by the government to ensure safe housing for all the citizens, thus increasing demand for properties, which in turn is likely to give the Real Estate sector a much-needed boost.
Focus on Tier 2 and Tier 3
The Covid pandemic has changed the way companies across the globe operate. The concept of “work from home” was highly unpopular pre-covid but has now become the new normal for even large multinational corporations. This change resulted in many employees returning to their hometowns in tier 2 and tier 3 cities, causing an increased demand for urbanization and development in these areas.
Therefore, the 2022 Union Budget has specifically focussed on the modernization and development of these Tier 2 and Tier 3 cities by proposing to establish a high-level committee on the urban sector that drives modernization of buildings by-laws, and reforms on transferable development rights (TDR), transit-oriented developments and sustainable development. The proposed focus on the development of tier II-III cities is likely to boost real estate infrastructure and create more jobs in the process. The goal is to have sustainable urbanization in these cities and gradually increase the standard of living of the people. This will ultimately lead to more real estate opportunities and hence is great news for the industry.
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