FM Sitharaman announced that the 2022-2023 budget would support economic growth through increased public investment as India, Asia's third-largest economy, recovers from the pandemic-induced recession. The budget is built on four pillars: inclusive development, increased productivity, energy transition, and addressing climate change, aiming to shape India's future from 75 to 100 years.
As the presented budget lists pressing needs to ensure the economy is robust, we bring forth the highlights of Budget 2023 for the construction sector alongside industry experts and real estate leaders’ views and reactions.
The Finance Minister has forecasted economic growth at seven percent for FY 2023-24. With a planned capital expenditure of Rs 10 lakh crore, a YoY increase of 33 percent, more development would be seen across the country, which would attract more investors. This would ensure improved cash liquidity in the market and thereby, benefit the real estate sector.
Creating urban infrastructure in tier 2 and tier 3 cities via the establishment of UIDF
The Finance Minister placed a strong emphasis on urban planning in Tier 2 and Tier 3 cities in the budget. With a focus on sustainable and planned development, the housing sector is expected to receive a boost.
The National Housing Bank will manage the proposed Urban Infrastructure Development Fund (UIDF), which will provide support for infrastructure development in Tier 2 and 3 cities. A budget allocation of Rs 10,000 crore has been proposed for this fund.
Additionally, five centers of excellence in urban planning will be established, providing the sector with access to trained professionals. A high-level committee comprised of urban planners, economists, and institutions will be created to formulate urban planning policies, implement plans, build capacity, and improve governance.
This year's budget announces the upgrade of 50 airports and ports. The Infrastructure Finance Secretariat will support private investments in various infrastructure projects, such as urban development, power, roads, and railways.
Last year's budget outlined the expansion of National Highways to exceed 25,000 km and introduced PM Gati Shakti plan for a coordinated strategy to develop cargo terminals, expressways, and other infrastructure.
Jayakumar Krishnaswamy, Managing Director of Nuvoco Vistas Corp. Ltd, states, "The 2023 Union Budget provides a substantial boost to the infrastructure sector, aiding the recovery and growth of the economy. The government's focus on green capital expenditure will address the industry's energy needs, making this budget a visionary approach to long-term growth."
Ease of doing business
The Union Budget 2023-24, includes a slew of measures for ease of doing business. About 39,000 compliances have been reduced and amendments to Central Acts have been proposed which will make governance friendly for businesses.
This year's Union Budget is expected to be a positive one for the real estate sector. The Finance Minister has proposed a 33 percent increase in capital expenditure for the sector, which would ensure improved liquidity in the market. Additionally, the proposed Urban Infrastructure Development Fund will provide support for infrastructure development in Tier 2 and 3 cities.
Apart from the above insights here are some of the key highlights of the Union Budget presented,
Fiscal deficit to be at a low of 5.9% in FY 24 from 6.4% in FY 23
Public expenditure to be more 10 Lakh Crores and 2.4 Lakh crores on Railway infrastructure n upgradation budget allocation
How much sum has been budgeted for Smart Cities in the Union Budget 2023-24?
The Government has allocated Rs 16,000 crore towards its Smart Cities Mission for FY24
Who will manage the Urban Infrastructure Development Fund?
The proposed UIDF will be backed by the National Housing Bank.
What is the budgetary allocation for the transition to a low-carbon economy?
A. A budgetary allocation of Rs 35,000 crore has been made for the transition to a low-carbon intensity and green economy.
Who will create urban infrastructure in tier 2 & 3 cities?
The National Housing Bank will manage the proposed Urban Infrastructure Development Fund (UIDF), which will provide support for infrastructure development in Tier 2 and 3 cities.