Budget 2022: Real estate sector gets push from Budget announcement under PMAY Scheme

In FY23, under PMAY Scheme, 80 lakh homes are expected to be constructed and for this, the government has allocated Rs 48,000 crore.

At the time of the closing bell, the shares of select companies such as Oberoi Realty, DLF, and Sobha were up by 5.8 per cent, 4.25 per cent & 2 per cent, respectively. 

Finance Minister Nirmala Sitharaman on February 1 announced the completion of 80 lakh homes under Pradhan Mantri Awas Yojana (PMAY) and for this, allocated Rs 48,000 crore under PMAY for urban & rural in FY23.  

Pradhan Mantri Awas Yojana addresses housing shortage among the EWS/LIG and MIG categories including the slum dwellers by ensuring a permanent house to all the eligible households.  

The demand for affordable rental housing has risen due to factors such as rising inter-state migration rates along with the urban population. The real estate sector, which employs about seven million (70 lakh) people, contributes 6-7 per cent to the country’s GDP and is expected to reach 10 per cent by 2030. 

Ahead of the Union Budget, Nifty Realty index was 2.2 per cent up from the previous day’s close. Homebuyers are expecting the limit of home loan interest for tax rebate to be raised to Rs 5 lakh from Rs 2 lakh, at present. They also expect a reduction in the tax rate on capital gains. The overall reduction of costs must be ensured so that more people enter the market as potential home buyers. Lower stamp duty and registration charges could significantly lower the costs.   

Since the Budget has to be balanced in every aspect, a lot of expectations could not be met. Despite this, realty companies are still trading in green. This might be due to a great push in infra spending, which caused a multiplier effect on the realty sector.