Rs.35,000cr for net-zero commitment and energy transition
The Union Budget 2023 focuses on driving consumption and capital investment to support economic growth which will have a multiplier effect on various sectors such as real estate, says Ramesh Nair, Chief Executive Officer, India & Managing Director, Market Development for Asia at Colliers.
“At the same time, the government’s commitment towards affordable housing continues with a significant jump in PMAY allocation,” he said on 2 Feb 2023, a day after the budget was presented in Parliament.
“On the commercial front, the continuous push to startups will give a fillip to activity in commercial office space. Further, the budget has brought in parity in taxation of incomes for REIT/InvIT unit holders by bringing in ‘repayment of debt’ under the tax bracket,” said Nair.
The allocation for Pradhan Mantri Awas Yojana (PMAY) has been increased by 66% to about Rs.79,000 crore. The increase in outlay will bridge the gap between demand and stock in affordable housing.
The budget also provides more disposable income in the hands of homebuyers, which would help prospective buyers in the affordable and mid segment. Increased investments will provide opportunities for construction companies and contractors.
On the other hand, reducing the surcharge rate from 37% to 25% in the new tax regime is likely to give some thrust to the luxury segment housing.
Innovation in India is set to rise high through the colossal uplift provided to start-ups in Budget 2023-24, believes Nair.
The budget has announced certain start-up centric incentives such as extension of the date of incorporation of income tax benefits for another year. This can lead to strengthening and deepening of the start-up ecosystem and will translate into higher demand for commercial office space.
“Further, setting up 100 labs for developing applications using 5G services will open a range of opportunities in the technology sector,” he said.
The Government has announced multiple incentives for battery production in the country. Viability gap funding will support 4,000 MWH battery storage capacities.
Further, there would extension of the custom duty exemptions on import of capital goods and machinery required to manufacture lithium-ion cells. Such incentives would give a thrust to the EV ecosystem and spur investments.
The government has reduced more than 39,000 compliances and decriminalized more than 3,400 legal provisions for enhancing the ease of doing business.
A Unified Filing Process is also planned to ease out the information submission process in different government agencies. These provisions will help to set up new businesses in lesser time and lower approval-related costs for businesses.
The Government has taken strong initiatives to fuel the growth of sustainability measures in the Budget 2023-24.
Further, Rs.35,000 crore is allocated towards net- zero commitment and energy transition.
The Government also announced Green Credit Programme in the Environment Protection Act to incentivize companies and local bodies who help in mobilizing sustainable actions.
The Rs.10 lakh crore capital outlay for infrastructure announced in the Budget is 3.3% of GDP. This is expected to have a multiplier effect across sectors and set a strong footing for a resilient growth.
Measures announced and steps taken to make municipal and state finances more viable would give them more elbowroom to incur expenditure and make them financially healthy in the long term.
Further, a dedicated amount of Rs.10,000 crore per annum has been allocated through urban infra development fund for tier II and tier III cities.
This will result in creation of quality urban infrastructure thereby improving quality of life. This will also translate into higher demand for housing and commercial real estate, said Colliers. fiinews.com
