Budget 2023 disappointing for real estate sector, says Tata Realty CEO

On Feb 2, 2023

New Delhi, 2nd Feb 2023: Union Finance Minister Nirmala Sitharaman on Wednesday announced the union budget 2023-24.

Commenting on the budget, Sanjay Dutt, MD & CEO, Tata Realty and Infrastructure Limited said, “Green Infrastructure, Green Energy and Green Homes are the key highlights from Budget 2023. The finance minister presented a balanced budget which is oriented towards growth and capital expenditure with a special emphasis to empower women and is aimed at increasing job opportunities. We welcome the Government’s focus on urban development and green energy & sustainability, estimating the Indian economy to grow at 7% in FY23. The budget this fiscal has been explicitly articulated through 7 priorities namely inclusive development, reaching the last mile, infrastructure and investment, unleashing the potential, green growth, youth power and finance sector. The increased capex allocation is a big move for the coming fiscal year. At Rs 10 lakh crore, the Centre’s capex target for 2023-24 is 33 percent higher than the budget estimate of Rs 7.5 lakh crore for 2022-23. The government’s decision to increase the capital expenditure to Rs 10 lakh crore (3.3% of GDP) will help drive job growth and boost consumption. Thrust to infrastructure development with 50 additional airports and 2.4 lakh of spend for railways is likely to improve connectivity, boost ecommerce and tourism. Growth in J&K, Ladakh & North-eastern states deserved special attention as a part of the budget announcement.”

Dutt termed the budget as ‘disappointing’ for the real estate sector. he said, the minister had announced an SEZ Amendment Act last year, to allow domestic companies to be able to operate in IT SEZ’s which was missing this year. The sector was taken aback by the capital gains set off on investment in residential homes under Section 54, which is now capped to INR 10cr. which is done to remove the speculative nature of the asset class with HNI/UHNI’s. The industry actually wanted the real estate sector as an asset class to be encouraged with investors. However, Rs 10,000 crore to be invested for urban infra development fund along with Rs 79,000 crore allocation for affordable housing scheme, up by 66% is a welcome move.

On rise in allocation to PMAY, he said, with allocation to the Pradhan Mantri Awaas Yojana rising by 66% to Rs. 79,000 crore next fiscal, more than 55% of the estimated gap in funding for projects under the scheme has been addressed. This should help in timely construction of newer affordable inventories under the ambit of Tata Value Homes to provide quality life spaces in Tier 2 and Tier 3 cities. The allowances given to the tourism sector aim to further boost luxury homes in holiday destinations, thus giving corporate developers an opportunity to further tap into tier 2 markets.

On income tax changes, he said, the new income tax slabs are definitely inviting for the middle class, but what real benefits shall come out of it in comparison with the old regime is a wait and watch for most of us. Lastly, India’s GDP growth is expected to weaken in 2023-24, however if the budget is executed correctly, India can potentially surpass the estimated economic growth in no time.”