New Delhi, 6 February 2025: The Union Budget FY26 introduces several strategic initiatives aimed at strengthening India’s economy. With a focus on urban redevelopment, financial support for stalled projects, and incentives for real estate investment, the budget lays the foundation for transformational progress. Key measures such as SWAMIH Fund 2.0, tax exemptions, and increased allocations for urban infrastructure are expected to boost confidence in the real estate sector and drive economic momentum. Additionally, the tax exemption on income up to ₹12 lakh for the middle class is expected to encourage investment and spending, further stimulating economic growth. The real estate sector has welcomed these provisions, praising the budget for its forward-looking approach.
Mr G Hari Babu, National President of NAREDCO Said, “Urban Challenge Fund, aimed at redeveloping cities and improving water and sanitation infrastructure. This fund will support up to 25% of bankable projects, with a requirement to raise at least 50% of funding through bonds, loans, and PPPs. Additionally, ₹15,000 crore has been allocated for the rapid completion of 1 lakh dwelling units, contributing to the affordable housing sector.
Notably, the government has made a good move with SWAMIH Fund 2.0, with an additional ₹15,000 crore earmarked for the completion of housing projects that were previously stuck due to financial distress. Under the current SWAMIH Fund scheme, 50,000 dwelling units in such stressed projects have been completed, and an additional 40,000 units are set to be finished in 2025. This move directly benefits middle-class families, many of whom are juggling EMIs for home loans while also paying rent for alternative accommodation. the decision to exempt income up to ₹12 lakh from taxation under the new regime is a significant incentive for the middle-income group, making homeownership more accessible and encouraging investment in the housing sector.
Dr. Niranjan Hiranandani, Chairman of NAREDCO and Hiranandani Group, said, ‘From the vantage point of the real estate and infrastructure sectors, Budget FY26 sets the stage for transformative growth. Central to this budget is its unwavering focus on infrastructure enhancements. Notably, it incentivizes the purchase of a second flat, encouraging real estate investments. Moreover, the introduction of SWAMIH Fund 2.0 seeks to alleviate the burden on constrained homebuyers by delivering stalled projects, while the hike in TDS on rentals up to ₹6 lakhs promises to bolster rental investments. By expediting mergers and acquisitions, the budget aims to initiate new real estate projects under innovative business models. Additionally, addressing the skill gap through the establishment of new centres of excellence will help bridge the widening talent chasm. However, the concern over inadequate long-term investment allocation remains a hindrance to achieving the ambitious Viksit Bharat growth targets.
The middle class, a crucial driver of demand, stands to benefit immensely from tax incentives that translate their aspirations for an improved quality of life into tangible home-buying prospects. This is expected to generate a positive demand curve in the real estate sector. Banks have reported a notable 40% increase in retail home loan portfolios post-COVID, and the anticipated reduction in home loan interest rates will further fuel this sustained demand. Emerging growth corridors featuring new projects with integrated amenities are poised to attract even more buyers.
The budget also shines a spotlight on labour-intensive sectors to ensure that quality, productivity, and competitiveness are enhanced, positioning India as a formidable global player. A strategic highlight is the finance minister’s announcement of a ₹1 lakh crore Urban Challenge Fund. This fund aims to address land and development obstacles, foster robust social infrastructure in key urban centers, and drive infrastructure development across urban corridors. The focus on new airports, shipping ports, and inland waterways is set to transform India into a competitive logistics hub, reducing product costs and boosting economic efficiency.”
Mr.Anantharam from Manasum Senior Living said, “The recent income tax changes are a brilliant move. The income tax slab has been increased to ₹12 lakh, leading to more disposable income, which will boost spending and the economy. Senior citizens will benefit from a doubled limit of ₹1 lakh, increasing their spending power. Higher taxable income slabs for employees will also drive employment growth. Additionally, the increase in TDS slab for rental income will benefit landlords, especially senior citizens, providing them more disposable income through their rentable apartments. The foreign tour tax slab has also risen from ₹7 lakh to ₹10 lakh, which will boost various sectors like education. These moves offer significant tax benefits across various segments.”
The emphasis on tax incentives, increased infrastructure spending, and policy reforms is expected to boost investor confidence, enhance employment opportunities, and accelerate urban transformation. As the government continues to drive initiatives aimed at economic expansion, stakeholders across the real estate and infrastructure sectors remain optimistic about the positive impact of these policy measures in the years ahead.
