India…July 23, 2024… Finance Minister Nirmala Sitharaman unveiled the first budget of the Modi 3.0 government today. Here are the reactions from industry experts across the real estate, education and manufacturing sectors.
Mr. Domnic Romell, President, CREDAI-MCHI, the apex body of the real estate industry in the Mumbai Metropolitan Region (MMR):
“The Union Budget 2024-25 has brought forth a comprehensive and ambitious vision for the real estate sector, particularly benefiting urban centers like Mumbai. CREDAI-MCHI finds several aspects of the budget to be highly encouraging and potentially transformative. The Union Budget 2024-25 presents a robust framework for the growth and development of the real estate sector. The emphasis on affordable housing, urban infrastructure, industrial development, and digitalization are particularly beneficial for a dynamic and densely populated city like Mumbai. CREDAI-MCHI is optimistic about the opportunities these initiatives will bring to the real estate sector and to the economy.
Boost to Affordable Housing
The announcement of constructing 3 crore houses under the Pradhan Mantri Awaas Yojana (PMAY) in both rural and urban areas is a significant step towards addressing India’s housing shortage. Specifically, the allocation of ₹10 lakh crore to meet the urban housing needs of 1 crore individuals under PMAY will provide a much-needed impetus to the affordable housing segment in Mumbai. This massive investment will likely stimulate demand, making homeownership a reality for many and driving growth in the sector.
Urban Development and Infrastructure
The budget’s focus on Transit-Oriented Development (TOD) for 14 large cities, including Mumbai, is a game-changer. TOD plans will not only improve connectivity and reduce congestion but also enhance the livability and attractiveness of urban areas. By integrating residential and commercial spaces with public transport networks, Mumbai can look forward to more sustainable and efficient urban development.
Industrial Parks and Employment Generation
The development of industrial parks with complete infrastructure in partnership with state and private players across 100 cities, including the 12 parks under the National Industrial Corridor Development Program, is a strategic move. This initiative will spur industrial growth, create employment opportunities, and boost economic activity. For Mumbai, known as a financial and commercial hub, these developments will enhance its industrial and logistical capabilities.
Rental Housing and Worker Accommodation
The facilitation of rental housing with dormitory-type accommodation for industrial workers through the Viability Gap Funding (VGF) model is a commendable initiative. This addresses a critical need for affordable, decent housing for the workforce, which is essential for sustaining Mumbai’s industrial and manufacturing sectors.
Stamp Duty and Property Purchases
Encouraging states to moderate high stamp duties and consider lowering duties for property purchases by women is a progressive step. In a city like Mumbai, where real estate prices are among the highest in the country, reducing stamp duty can make property transactions more affordable and stimulate market activity. Additionally, promoting gender equity through lower duties for women purchasers is a socially responsible move. CREDAI-MCHI was advocating for the same since a very long time and we are glad that our prayers have been addressed.
Digitalisation of Land Records
The digitalisation of land records in urban areas with GIS mapping and an IT-based system will greatly enhance transparency and efficiency. For developers in Mumbai, this means smoother and more secure transactions, reducing the risks associated with property disputes and unclear titles. It will also facilitate better urban planning and management by providing accurate and accessible land data.
Capital Gains Tax Adjustments
The increase in the long-term capital gains tax rate to 12.5% from 10%, along with a new exemption limit of ₹1.25 lakh per year, and the rise in the short-term gains tax rate to 20% from 15%, will have a mixed impact. Real estate which had a 20% LTCGT so far will benefit. CREDAI-MCHI looks forward to collaborating with the government and other stakeholders to implement these plans effectively and drive the real estate sector towards a prosperous future.”
Mr. Rohit Gera, Managing Director, Gera Developments:
“The move to align long term capital gain tax for real estate with other financial assets is a positive move and will make investment in real estate more attractive. Eliminating indexation will hurt people who have long term investments in real estate.”
Mr. Hemant Sapra, President, Global Sales & Marketing, KARAM Group:
“We appreciate the government’s comprehensive focus on MSMEs and the manufacturing sector in this year’s budget. The Credit Guarantee Scheme for MSMEs in the manufacturing sector is a significant step towards empowering small businesses with essential financial support without collateral. The new assessment model for MSME credit and mechanisms for credit support during stress periods are commendable initiatives that will help businesses maintain operations and avoid becoming NPAs.
Additionally, reducing the turnover threshold for mandatory onboarding on the TReDS platform from Rs 500 crore to Rs 250 crore will unlock vital working capital for MSMEs, ensuring smoother cash flows. Enhancing the Mudra loan limit to Rs 20 lakh for those who have previously availed and successfully repaid loans under the Tarun category will provide additional support for business expansion. Expanding SIDBI coverage to 168 clusters and opening 24 new branches in MSME clusters within three years are positive moves to enhance direct credit access.
Moreover, the budget’s focus on substantial hiring of first-time employees in the manufacturing sector is particularly encouraging. Corporate employers and non-corporate entities with a three-year EPFO contribution track record will be eligible, provided they hire at least 50 previously non-EPFO enrolled workers or 25% of the baseline, whichever is lower. This initiative will significantly boost employment and support economic growth. Overall, these measures are poised to strengthen the MSME sector, boost employment, and ensure sustainable growth.”
Mr. Nitin Gupta, Founder and Managing Director, Maestro Realtek:
“The Union Budget 2024-25 has charted a progressive course for the real estate sector, promising substantial benefits for urban regions. The budget’s comprehensive framework targets critical areas such as affordable housing, urban infrastructure, and digital transformation, setting the stage for significant advancements in the real estate market.
A notable highlight is the allocation of ₹10 lakh crore under the Pradhan Mantri Awaas Yojana (PMAY) for urban housing, poised to address the housing shortage and stimulate the affordable housing segment. The emphasis on Transit-Oriented Development (TOD) for major cities will enhance connectivity, reduce congestion, and promote sustainable urban growth.
The establishment of industrial parks through public-private partnerships is another strategic initiative, expected to bolster industrial development and generate employment. The provision of rental housing for industrial workers via the Viability Gap Funding (VGF) model addresses a crucial need for affordable accommodation, supporting the workforce essential to the economic ecosystem.”
Mr. Gautam Rajgarhia, Pro Vice Chairman, DPS Varanasi, Nashik, Lava Nagpur, and Hinjawadi:
“The government’s allocation of Rs 1.48 lakh crore for education, employment, and skilling is a transformative move that will significantly impact the sector. This investment, aimed at training 20 lakh youth and upgrading 1,000 institutes, is especially beneficial for those pursuing vocational routes. It equips individuals with practical skills, fostering excellence in their fields and integrating more youth into the formal economy. The establishment of manufacturing bases in or near districts reduces the need for urban migration, promoting hyper-local job creation and bolstering the manufacturing sector. These initiatives are pivotal in driving India towards becoming a $10 trillion economy within the next 7-10 years.
Furthermore, the model skill loans scheme, which provides aid of up to Rs 7.5 lakhs, is set to benefit over 25,000 students. Current education loan policies already offer loans up to Rs. 7.5 lakhs without collateral and Rs. 4 lakhs without a co-applicant, aligning institute fees with these amounts. However, addressing employability concerns remains crucial. Additional measures, such as Rs. 10 lakh loans for higher education, e-vouchers for 1 lakh students, and internships with a Rs. 5,000 monthly allowance from top companies, provide comprehensive support. This holistic approach empowers youth, supports startups, and fosters sustainable growth, ensuring that all segments of society benefit from India’s evolving economic landscape.”
