Urban development is one of the nine priorities outlined by the Finance Minister Nirmala Sitharaman in her speech on July 23. The support extended to affordable housing is expected to give a renewed push to the segment that has been witnessing challenges. The government also proposed a unique identification number for land or ‘Bhu-Aadhaar’ in rural areas and digitisation of all urban land records as part of several land-related reforms in the Budget.
With ₹10 lakh crore being allocated for the development of 3 crore additional houses under the Pradhan Mantri Awas Yojana (affordable housing scheme), construction activity is expected to increase in the urban and rural areas and also result in a cascading effect on allied sectors. Rationalization of stamp duty across states with an emphasis on women homebuyers will boost home-buyer sentiment across major cities of the country, said real estate experts.
The finance minister said in her speech that states will be incentivized for land-related reforms and actions within the next three years through appropriate fiscal support. “Land-related reforms and actions in rural areas to cover land administration and planning. In urban areas, it will cover urban planning, usage and building bylaws,” she said.
Rural land related actions will include ULPIN or Bhu-Aadhaar for all lands, digitization of cadastral maps, survey of map sub-divisions as per current ownership, establishment of land registry, and linking to the farmers registry. These actions will facilitate credit flow and other agri services, she said.
“Land records in urban areas will be digitized with GIS mapping. An IT based system for property record and tax administration will be established. It will improve the financial position of urban local bodies,” she said.
Experts said that the specific measures to introduce technological reforms within the regulatory framework for land, such as the digitization of land records and cadastral maps via GIS mapping, will vastly improve transparency in the sector.
Urban development proposals
The finance minister in her seventh straight budget said that three crore additional houses under the Pradhan Mantri Awas Yojana in rural and urban areas in the country have been announced, for which the necessary allocations are being made.
Under the PM Awas Yojana Urban 2.0, housing needs of 1 crore urban poor and middle-class families will be addressed with an investment of ₹ 10 lakh crore. This will include the central assistance of ₹ 2.2 lakh crore in the next 5 years. A provision of interest subsidy to facilitate loans at affordable rates is also envisaged, she said.
“The FM has made allocations to all key areas that are crucial for sustaining India’s growth story. Under the PM Awas Yojana-Urban, the housing needs of 1 crore poor and middle-class families will be addressed with an allocation of ₹10 lakh crore. This will include the central assistance of ₹2.2 lakh crore in the next five years. The FM also made an announcement of allocations for completion of 3 crore houses in rural and urban areas to enhance ‘Ease of Living’ and dignity for crores of Indians. These announcements reiterate the Government’s focus on ‘Housing for All’,” said Boman Irani, president, CREDAI.
“An outlay towards three crore additional homes under PMAY with ₹10 lakh crore allocated towards 1 crore homes in urban areas as well as considering bringing back interest subsidies is a positive step which will support the affordable housing segment,” said Samantak Das, Chief Economist and Head of Research & REIS, India, JLL.
The credit guarantee scheme for the MSMEs will help provide impetus to overall industrial development, and this can have a rub-off effect on the real estate sector. The pandemic had a catastrophic impact on the MSME sector, which slowed down the demand for affordable housing since 2020. Affordable housing demand may gain momentum once the economic impact of the pandemic subsides for this target audience, said Anuj Puri, chairman, Anarock.
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This is certainly pertinent as the affordable homes category (less than ₹40 lakh) has been seeing a decline in overall sales since the pandemic, to approximately 19% in H1 2024 from over 38% in the period before the pandemic in 2019, he said.
“ The ambitious plan to build 3 crore houses is likely to attract investors in the mid-income housing segment, addressing significant housing needs. This initiative aims to benefit over 1 crore middle-class urban poor, ensuring inclusive urban development, stimulating the construction industry, and creating millions of jobs,” said Adil Zaidi, EY Partner and Leader – Economic Development Advisory.
Cities as growth hubs
Urban development will be among the top priority of the government. The FM said that the government will facilitate development of ‘Cities as Growth Hubs’. “This will be achieved through economic and transit planning, and orderly development of peri-urban areas utilising town planning schemes,” she said.
Brownfield redevelopment of existing cities
For creative brownfield redevelopment of existing cities with a transformative impact, “our government will formulate a framework for enabling policies, market-based mechanisms and regulation,” she said.
Transit Oriented Development
The FM said that Transit Oriented Development plans for 14 large cities with a population above 30 lakh will be formulated, along with an implementation and financing strategy.
Rental housing
In addition, enabling policies and regulations for efficient and transparent rental housing markets with enhanced availability will also be put in place, the FM said in her speech.
She said that rental housing with dormitory type accommodation for industrial workers will be facilitated in PPP mode with VGF support and commitment from anchor industries.
“The initiatives taken to boost rental housing, such as the planned setting up of a regulatory framework and the specific creation of dormitory-style rental housing for industrial workers, mark the beginnings of a much-needed rental housing market in the country. The 1.48 lakh crore outlay dedicated to employment generation should play an important role in boosting incomes for homebuyers in the affordable housing segment,” said Shishir Baijal, chairman and managing director at Knight Frank India.
Lower stamp duty on properties purchased by women under urban development scheme
The FM said that the government will encourage states which continue to charge high stamp duty to moderate the rates for all, and also consider further lowering duties for properties purchased by women. This reform will be made an essential component of urban development schemes.
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“Lower stamp duty would reduce property acquisition cost,” said Ravi Shankar Singh, Managing Director, Residential Services, Colliers India.
Appropriate changes to be made to IBC
The Finance Minister Nirmala Sitharaman said appropriate changes will be made to the Insolvency and Bankruptcy Code (IBC) and steps will be taken to strengthen tribunals in the country. She also proposed an integrated technology platform for improving outcomes under the Code, besides additional debt recovery tribunals to be set up in the country.
She said that the IBC has resolved more than 1,000 cases, which has resulted in realisation of ₹3.3 lakh crore to creditors.
Defaults worth ₹10.2 lakh crore have been settled at the stage of pre-admission of insolvency cases since the inception of IBC in 2016, and more than one-fifth of the companies undergoing resolution process are from the real estate space, the Economic Survey said on July 22.
₹15,000 crore financial assistance for Andhra Pradesh for the purpose of development of Amaravati
The FM said in her Budget speech that concerted efforts will be made to fulfill commitments under Andhra Pradesh Reorganisation Act. ₹15000 crore will be arranged in the current financial year to develop Andhra Pradesh’s capital.
The Central government will provide ₹15,000 crore financial assistance for Andhra Pradesh for the purpose of development of Amaravati, Union Finance Minister Nirmala Sitharaman said on July 23. “Our government has made concerted efforts to fulfill the commitments in Andhra Pradesh Reorganisation Act. We are recognising the state’s need for a capital. We will facilitate special financial support through multilateral development agencies. In the current financial year, Rs15,000 crore will be arranged with additional amounts in future years,” she said.