Tag BUDGET 2024

Bengaluru, 26th July 2024: Following the union budget 2024 announcement, TeamLease Services has analyzed the detailed provisions and identified the top sectors with the maximum potential for job creation in the coming year. The budget’s focus on job creation has paved the way for significant employment opportunities across various industries, promising robust economic growth.

Top Sectors with Maximum Job Creation Potential:

1. Financial Services:

The budget presents several employment opportunities in the BFSI sector through various initiatives. These include ₹10 lakh crore under PMAY-U 2.0 for affordable housing, expected to drive a 15-20% growth in job opportunities. Establishing over 100 new branches of India Post Payments Bank in the North Eastern region could result in an 8-10% increase in jobs within the payments bank sector. Additionally, a credit guarantee scheme for MSMEs, an increase in Mudra loan limits to ₹20 lakh, financial support for shrimp farming through NABARD, and new branches of SIDBI are set to boost rural and MSME employment, particularly in roles related to credit, sales, and relationship management, with an anticipated 10-15% increase in business loan-related positions. The budget’s emphasis on technology adoption, digitization, and GST simplification is expected to drive increased demand for fintech and digital banking specialists.

2. Power & Energy:

The government’s PM Surya Ghar Muft Bijli Yojana will provide free electricity to 1 crore households via rooftop solar installations, generating approximately 2000+ jobs in manufacturing, installation, and maintenance. Significant funding for the National Green Hydrogen Mission will create employment in research, production, and infrastructure. Developing Bharat Small Reactors and AUSC thermal power plants will also generate jobs in construction, operation, and maintenance. Power projects, including setting up of a new 2400 MW power plant at Pirpainti, and NTPC and BHEL will set up a full-scale 800 MW commercial plant using AUSC technology, creating approximately 1200-1500 jobs.

3. Infrastructure:

The budget lays a strong foundation for job creation and skill development through significant infrastructure investments. Projects like the Amritsar Kolkata Industrial Corridor, major road projects, and new power, airport, and medical facilities will drive regional development and create around 20 lakhs direct & indirect jobs in functions like industrial construction, manufacturing, logistics, civil engineering, plant construction, operation, maintenance etc. in eastern India, including states like West Bengal, Bihar, and Punjab. With funds provided for Visakhapatnam-Chennai Industrial Corridor and Orvakal node on Hyderabad-Bengaluru Industrial Corridor, it will eventually create jobs in the southern region as well. The ₹1.5 lakh crore interest-free loans to States and a total capital expenditure of ₹11,11,111 crore emphasize the government’s commitment to fostering employment and economic growth.

4. Manufacturing:

The credit guarantee scheme for MSMEs will facilitate term loans for machinery without requiring collateral, aiding in small business expansion. This will boost employment in states such as Maharashtra, Gujarat, Uttar Pradesh, and Madhya Pradesh. With nearly 50% of MSMEs based in rural areas, job opportunities in these regions will also see a significant increase.

The budget has allocated resources to facilitate the creation of investment-ready “plug and play” industrial parks with fully established infrastructure in or around 100 urban centers. By attracting diverse enterprises, these parks generate demand for a wide range of skills, thereby creating opportunities for both skilled and unskilled positions. Consequently, there is a potential to mitigate local unemployment rates significantly

The Employment Linked Incentive scheme aims to incentivize additional employment of 50 lakh jobs and benefit 30 lakh youth by reimbursing EPFO contributions. The three schemes under Employment-linked incentives include an allocation of Rs 1.09 lakh crore for job creation over the next five years, promising to generate additional job opportunities especially for the formal workforce across various sectors. Additionally, 1 crore youth will receive valuable exposure through internships in 500 top companies including Manufacturing industry over five years. These measures collectively promise a significant boost to employment and skill development.

5. Healthcare and Pharmaceuticals:

The government has proposed the exemption of customs duties on three cancer medicines and the reduction of duties on certain medical technologies like x-ray tubes and flat panel detectors under the Phased Manufacturing program, which is a significant move to enhance domestic healthcare capabilities. Although these measures fall short of expectations, they will make advanced cancer treatments more affordable and accessible, addressing a critical need due to the high costs of such treatments. The government has also allocated ₹2,143 crore for PLI for the pharmaceutical industry. Additionally, this initiative is expected to stimulate job creation in the healthcare sector, particularly in roles such as medical technologists, healthcare manufacturing workers, and supply chain coordinators. Major cities like Bangalore, Hyderabad, and Pune are likely to see a boost in employment opportunities, driving growth in medical technology and related industries.

6. Agriculture and Agri-Tech:

The Union Budget 2024-25 will significantly impact job creation in agriculture. Over two years, 1 crore farmers will be trained in natural farming, creating a minimum of 1 lakh jobs in training and bio-input centers. A review of agriculture research will generate roles in R&D, supported by private sector funding. The rollout of Digital Public Infrastructure (DPI) will also create jobs in IT, data management, and digital training as a digital crop survey is conducted in 400 districts. Effectively, the Agri-tech industry is likely to have about 20% job growth vis-à-vis last year.

7. Retail and E-commerce:

The establishment of dedicated e-commerce export hubs aims to boost online trade. Additionally, the Govt has reduced TDS on e-commerce from 1% to 0.1%. Currently, India’s e-commerce exports stand at a modest $2 billion compared to China’s $350 billion. The potential for growth is immense, with estimates suggesting that India’s e-commerce exports could reach $350 billion by 2030. While challenges such as banking issues persist, the government initiative is a crucial step towards tapping into this massive opportunity. The development of these hubs will not only enhance India’s global trade presence but also generate significant employment opportunities in logistics, technology, customer service, and marketing sectors. By fostering a robust e-commerce export ecosystem, India can create a multitude of jobs, driving economic growth and prosperity.

8. Tourism and Hospitality:

The government’s initiatives to enhance key religious and historical sites aim to boost tourism and create jobs across various sectors. Inspired by the successful Kashi Vishwanath Temple model, development projects at Vishnupad and Mahabodhi Temple corridors will boost tourism, creating jobs in hospitality, guiding tourists, and local services. Rajgir’s comprehensive development will create jobs in hospitality, retail, and local tourism services. Supporting Nalanda as a major tourist center will generate roles in tour operations, cultural preservation, and local crafts. These developments will significantly impact Gaya, Bodh Gaya, Rajgir, Nalanda, and various parts of Orissa, creating numerous job opportunities in these regions.

9. Education and Skill Development:

The Union Budget for 2024-25, with an allocation of ₹1.48 lakh crore for education, employment, and skilling, is set to create diverse job roles and boost employment in various cities. Key initiatives include: upgrading 1,000 ITIs, launching a new skill development scheme to train 20 lakh youth, and revising the Model Skill Loan Scheme to aid 25,000 students annually. Financial support for higher education loans will benefit 1 lakh students each year. This will generate roles such as vocational training instructors, content writers and developers, and skill development trainers. Major cities like Delhi, Mumbai, Bangalore, and Chennai, along with educational hubs like Pune and Hyderabad, will see significant job growth. Industrial towns and tourist centers like Rajgir and Nalanda will benefit, creating jobs in manufacturing, MSMEs, tourism, and hospitality. The initiative aims to enhance job security, foster a skilled workforce, and drive economic growth across urban and rural areas.

“The union budget has effectively addressed the need for job creation across several key sectors. The introduction of the employment-linked incentive scheme in the budget marks a significant advancement in reducing informal employment in the country. TeamLease Services is committed to supporting these initiatives and implementing strategies that will translate these policies into tangible employment opportunities, driving sustained economic growth,” said Kartik Narayan, CEO- Staffing, TeamLease Services.

Mr. Faiz Askari, Founder of SMEStreet shares an overview on Modi 3.0’s Budget 2024 presented by FM Nirmala Sitharaman on 23rd July 2024.

Mr Faiz Askari stated, “The Union Budget 2024 sets forth an ambitious blueprint aimed at transforming India into a developed nation. Central to this vision is substantial investment in infrastructure, encompassing transportation networks, energy projects, and digital connectivity, all designed to bolster economic growth and enhance nationwide connectivity. The healthcare sector sees a significant boost, with increased funding for public health infrastructure, expanded health insurance coverage, and improved access to essential medicines, ensuring a healthier population. Education and skill development are prioritized, with allocations for digital education, vocational training, and higher education to cultivate a skilled and future-ready workforce.

In alignment with global sustainability goals, the budget promotes a green economy through initiatives encouraging renewable energy adoption, carbon emission reduction, and sustainable practices. This includes incentives for electric vehicles, solar energy projects, and the integration of green technologies. Agriculture and rural development receive focused attention, with measures to improve credit access for farmers, modernize agricultural practices, and enhance rural infrastructure, aiming to double farmers’ incomes and secure food supplies.

To drive technological advancement and innovation, the budget invests in research and development, supports startups, and fosters a culture of innovation, enhancing India’s global competitiveness. Financial inclusion initiatives ensure broader access to banking and financial services, particularly for underserved and rural populations, through digital banking and financial literacy programs.

Social welfare schemes are bolstered to support marginalized and vulnerable populations, with increased provisions for affordable housing, social insurance, and aid for senior citizens and differently-abled individuals. The ease of doing business is improved through streamlined regulatory processes, reduced bureaucratic hurdles, and incentives to attract entrepreneurship and foreign investments. National security is strengthened with increased defense spending, modernization of the armed forces, and enhanced border security measures.

From SMEStreet’s perspective, the Union Budget 2024 is particularly promising for the MSME sector. The enhanced allocation for the Credit Guarantee Scheme is seen as a crucial step in bridging the credit gap for small businesses, ensuring they have the necessary financial support to thrive. Tax relief measures and simplified compliance procedures are expected to ease the financial burden on MSMEs, fostering a more conducive environment for growth and formalization. Investment in digital infrastructure will enable MSMEs to adopt digital tools and technologies, enhancing their competitiveness in a rapidly evolving market. Skill development programs tailored for MSMEs are poised to upgrade the workforce, promoting productivity and innovation within the sector. Additionally, export promotion measures, streamlined regulatory processes, and incentives for green technologies are set to empower MSMEs, driving their growth and sustainability. Overall, SMEStreet views the budget as a comprehensive plan that not only aims to build a developed India but also ensures that MSMEs play a pivotal role in this transformation.”

With the announcement of Budget 2024 now behind us, industry experts are sharing their initial thoughts on the proposed economic measures. This year’s budget has generated a spectrum of reactions from leaders across different sectors, each providing valuable viewpoints on its anticipated effects. In this roundup of expert quotes, we highlight their analyses and predictions, offering a glimpse into how the budget might shape the business landscape and economic outlook for the year ahead.

Viswanath PS, MD & CEO, Randstad India:

“The sharp focus on employment in this year’s budget, particularly through the Employment Linked Incentive Schemes, is a transformative step for job creation in our country. By investing in skilling and bridging the talent demand-supply gap, the budget paves the way for a more robust and future-ready workforce. The provision for internships with top 500 companies, coupled with an internship allowance, will empower our youth with the necessary skills and experience for the ever-evolving job market. Furthermore, the creation of industrial parks in 100 new cities along with the establishment of dormitories and women’s hostels will ensure that companies have access to the right talent, while also enhancing women’s participation in the workforce. The decision to allow companies to use their CSR funds for training and internships is a commendable move, reinforcing the commitment to fostering a skilled and employable generation. All in all, there are a lot of positive takeaways for both employers and the talent community from the announcements made in this budget. It is indeed a significant milestone in driving employment-led growth and shaping a prosperous future for India.”

Anirban Aditya, Chairman, Aditya Group:

“The Union Budget 2024 marking a significant step forward for education and skill development, with Rs 1.48 lakh crore allocated for education and a plan to skill 20 lakh youth over the next five years. Initiatives like financial support for higher education, the e-voucher system, and direct benefit transfers for first-time employees enhance accessibility and formal employment opportunities. The Rs 3 lakh crore allocated for women-led schemes, including hostels for working women, is commendable. With a 30% increase in the budget for education, skilling, and employment, we at Aditya Group with Aditya Group of Schools, are enthusiastic about contributing to this transformative journey.”

Mr. Sanjay Dighe, CEO of Krystal Integrated Limited Services:

“The Union Budget 2024 presented by Finance Minister Nirmala Sitharaman outlines a comprehensive vision for India’s growth, with a strong emphasis on job creation, skill development, and social justice. The government’s focus on employment generation and upskilling initiatives is particularly encouraging for the facility management and staffing sector.

The introduction of three key schemes under the Prime Minister’s package is a significant step towards boosting the job market. The government’s commitment to support 210 lakh first-time employees, incentivize job creation in the manufacturing sector, and reimburse employers for additional hires will undoubtedly stimulate employment opportunities. The plans to upgrade 1,000 Industrial Training Institutes and the new centrally sponsored scheme to skill 20 lakh youth over five years are welcome moves. These initiatives, coupled with the focus on women’s participation in the workforce through working women hostels and specific skilling programs, will foster a more inclusive and skilled labour force. These progressive measures lay a strong foundation for building a more prosperous and skilled India.”

Mahankali Srinivas Rao (MSR), CEO, T-Hub:

“Budget 2024 marks a significant milestone for the Indian startup ecosystem, with initiatives that will undeniably foster innovation and growth. The abolition of the Angel Tax for all classes of investors is a pivotal move that will create a more supportive environment for angel investments, ultimately benefiting startups and paving the way for India to become a global innovation hub. The establishment of a ₹1,000 crore venture capital fund dedicated to boosting the space sector is another forward-thinking initiative. This substantial investment will propel growth in the space economy by supporting innovative startups and groundbreaking research, positioning India at the forefront of space technology and exploration.

Moreover, the introduction of the Anusandhan National Research Fund and a financing pool of ₹1 lakh crore to spur private sector-driven research and innovation is a game-changer. This fund will power basic research and prototype development, driving commercial-scale innovation and enabling startups to bring cutting-edge solutions to the market.

At T-Hub, we are excited about these developments and the positive impact they will have on our vibrant startup ecosystem. These initiatives will provide startups with the necessary resources and support to thrive, innovate, and contribute significantly to India’s economic growth and technological advancement.”

Mr. Niranjan Kirloskar, Managing Director, Fleetguard Filters Private Limited:

The Union Budget presented today aligns well with the Government’s vision of a Viksit Bharat. The budget highlights several positives aimed at boosting economic growth, employment, sustainability, and inclusive development.

Special focus and reiteration of skilling, employment, manufacturing, strong infrastructure development, agriculture, and R&D, among other mentions, should positively reassure companies to focus on investing in all levels of its employees – especially newer ones, and also concentrate on becoming future-proof, by investing in rigorous research and development.

In addition to the above, proposing a climate taxonomy or climate finance to encourage greener businesses and, in turn, create a greener economy in the long run, signifies the important role of Indian companies in the fight against global climate change and aligns with global ESG goals which can make Indian companies attractive for FDI. Overall the government aims to balance economic growth with sustainability and inclusivity ensuring long-term benefits across various sectors.“

Mr. Amar Ambani, Executive Director, YES SECURITIES:

“Barring the capital gains tax dampener for the investor community and removal of indexation benefit, the Union Budget was balanced and consistent in policy. Brushing aside concerns around more populism, the target set for the fiscal deficit at 4.9% is a huge positive. Agriculture package of Rs1.5 lakh crores is along expected lines and will help provide a fillip to the rural economy. The slight relaxation in personal income tax slabs helps on the consumption front as well. There has been a material push in uplifting the financial health and borrowing ability of MSMEs. The capital expenditure outlay of the government of 3.4% as a percentage of GDP is also robust and in line with their policy. Notably, the government is focusing on further digitizing the economy with land and house registry. I sense an even better budget next year, with the finance minister mentioning about a comprehensive review of the Income Tax Act to simplify taxation and reduce disputes, as well as a customs duty rate structure overhaul to correct inverted duty structures.”

Mr. Priyam Patel, MD, NK Proteins Pvt Ltd (Tirupati Edible Oils):

“The Union government has maintained a strong focus on enhancing agricultural productivity and resilience. The substantial allocation of Rs 1.52 lakh crore for agriculture and allied sectors underscores this commitment. Initiatives for self-sufficiency in pulses and oilseeds, particularly groundnut, sesame, and sunflower, are pivotal for Atmanirbharta in the edible oil sector. The emphasis on digital crop surveys and strengthening storage and marketing infrastructure will greatly benefit farmers, ensuring a robust and stable agricultural sector. These measures will significantly support the growth and stability of our industry, fostering sustainable development and economic growth.”

Mr. Priyam Patel, MD, NK Proteins Pvt Ltd (Tirupati Edible Oils):

“The Union government has maintained a strong focus on enhancing agricultural productivity and resilience. The substantial allocation of Rs 1.52 lakh crore for agriculture and allied sectors underscores this commitment. Initiatives for self-sufficiency in pulses and oilseeds, particularly groundnut, sesame, and sunflower, are pivotal for Atmanirbharta in the edible oil sector. The emphasis on digital crop surveys and strengthening storage and marketing infrastructure will greatly benefit farmers, ensuring a robust and stable agricultural sector. These measures will significantly support the growth and stability of our industry, fostering sustainable development and economic growth.”

Market Outlook ~ Key Positives

Strong GDP growth India maintains a world leading GDP growth rate.

Deleveraged Corporate Balance Sheets: Indian corporates have significantly reduced their leverage, and the banking sector is well-capitalized.

US Tightening Cycle Nearing End: This could trigger Foreign Institutional Investor (FII) buying in India, as they have been underweight due to the rising dollar and US interest rates, causing redemptions in their Emerging Market funds.

Stable Political Mandate: This ensures fiscal prudence and hopefully a stable tax regime.

Above-Average Monsoon: Expected in July, which will positively impact rural-centric businesses.

Moderate Inflation Inflation in India is relatively moderate compared to other countries

Our Budget Expectations

 Fiscal deficit and borrowing programme will continue to be same i.e 5.1% fiscal deficit as mentioned in Interim budget.

-> The deficit will be managed prudently with assumption of 11% nominal GDP growth and resultant growth in GST and Income tax collection plus RBI cheque of Rs 2.11 lac crores will further provide cushion on fiscal front.

-> Infrastructure will continue to be the focus are so capex driven growth will continue mainly led by Housing, Defence, Railways, Renewable, Power, Energy Transition, Rural Infrastructure like power, water and roads for everyone will continue.

-> Focus on manufacturing to create jobs in sectors like Garments, textiles and electronic manufacturing.

-> We are of the view disinvestment target will be kept realistic but sincere efforts will be made to monetize in this stock market rally through OFS in PSUs at right prices and right time and strategic sales in PSUs like SCI or Concor will be undertaken in coming few quarters.

-> In order to make this happen logically they will not change the current capital gain tax structure although either in budget or outside budget some changes to reduce speculation in future and option market will be taken which might cause some volume drop in markets. However, we believe that this will not change intrinsic values of any business apart from capital market linked stocks.

-> Some increase in Kisan Nidhi allocation where they are giving Rs 6,000 to farmers can come but that will not upset fiscal maths.

-> Strong focus on affordable housing and building – 3 crores pakka houses by increasing subsidy for affordable housing will be done.

-> Some increase in disposable income of middle class by increase in tax limit is possible so that consumption can get some boost.

Companies set to benefit due to this (Our budget picks)

1) Larsen & Tourbo (CMP 3636 , target 4400)
2) Ambuja Cement (CMP 685, Target 800)
3) Jyothy Labs (CMP 493,Target 575)

These are budget specific themes but we continue to like IT stocks like Infosys due to free cash flow generating nature of business and likely bottoming of IT spending as Interest rates have clearly peaked due to inflation cooling off in US.

Comfortable CD ratio banks like ICICI, Federal Bank, City Union Bank, SBI, and DCB where they can grow at higher then their deposits and PEG wise or ROA/Price to Book or ROE/Price to book ratios are attractive, although the peak margins and growth in banking are behind us.

Budget 2024 Expectations Highlights: As the Union Budget 2024 approaches, various sectors are abuzz with expectations for significant policy shifts and financial allocations. Finance Minister Nirmala Sitharaman took part in the traditional ‘halwa’ ceremony, marking the final stage of preparing the Union Budget 2024-25. The Budget is set to be presented in the Lok Sabha on July 23rd. In the lead-up to the presentation, ‘halwa’ is prepared and served to the officials and staff of the finance ministry involved in the budget’s preparation.

Budget 2024 Expectations : Sunil Bedi, Founder, JMD Group says rising real estate costs frequently result in higher rent, which puts more strain on tenants’ finances in light of the approaching 2024 budget.

He further went on saying that India is anticipated to have a significant impact on the housing sector, particularly in terms of tax relief.

Mr Bedi hopes that there might be an increase in the deduction limit for interest paid on home loans, which currently stands at ₹2 lakhs per annum and an increase in this limit would provide greater relief to homebuyers.

It’s hard to say housing will get more affordable.

He believes higher property prices often translate into increased rent, putting additional financial pressure on tenants.

Commenting on the GST imposed on the services provided, he claims that since no services are provided in a joint development, there should be no GST applied. Why pay GST when we are already paying stamp duty on agreements in JDAs?, he queries.

To encourage the construction of affordable housing, the budget could offer extended or new tax incentives to developers who focus on this segment. This might include tax holidays or reductions in GST rates for affordable housing projects, he concludes.

Budget 2024 Expectations : Ashish Kakkar, CEO & Co- Founder, Harmony Systems says on Sustainability, Business Ecosystem and GST Reduction

In order to maximize the long-term benefits of joining GVCs, India has been actively working to move upstream of the manufacturing value chain over the past few years. As a result, government initiatives were especially directed towards the manufacturing sector, with positive results. We expect this momentum to continue with the upcoming budget focusing more on building a business ecosystem, ensuring a business-friendly environment. With India’s ambitious clean energy targets and commitments under the Panchamrit goals, there are expectations around GST reductions. For Indian furniture manufacturers, following international standards and attracting eco-sensitive consumers can make their products more sustainable than ever as global markets increasingly gravitate toward sustainability. The government is anticipated to speed up its Free Trade Agreement negotiations with Oman, the UK, the EU, the South African Customs Union, and the Gulf Cooperation Council in order to support export and meet the aggressive $2 trillion export target by 2030.

Budget 2024 Expectations : Arvind Khanna, Director, Interior Inc says on MSME, Technology and Rural & Urban Employment

As the budget is around the corner, the MSME sector, especially small and micro enterprises in furniture manufacturing, is looking forward to increased budgetary allocations. They want more marketing and exhibition incentives to showcase their products and expand market reach. MSMEs contribute 30% to the Indian economy and employ over 110 million people. The furniture industry in this sector is a reflection of India’s rich cultural heritage as it combines traditional craftsmanship with modern technology, supports rural and urban employment and has huge export potential. Recent surveys show that 70% of MSMEs face challenges in marketing due to lack of funds. By allocating more funds towards marketing and exhibition support the government can empower these enterprises and boost growth and competitiveness. This will be in line with India’s vision of becoming a $5 trillion economy by 2025.

Budget 2024 Expectations : Mehul Sethi, Principal Designer, Remax Furniture says on Make in India initiative, Tax incentives and Job Opportunities

The “Make in India” initiative is expected to be reinforced in the upcoming Union Budget. This initiative can significantly benefit the Indian furniture sector by fostering local production. According to DPIIT, the furniture industry in India was valued at ₹1,34,250 crore in 2020, with a projected growth rate of 12.91% from 2021 to 2026. By promoting local manufacturing, the government can help reduce the import bill, which stood at approximately ₹12,750 crore for furniture and bedding products in FY2020. Additionally, increased domestic production can create job opportunities and boost the GDP contribution from the manufacturing sector, aligning with the target to increase the sector’s share to 25% of GDP by 2025. This coupled with potential tax incentives and subsidies outlined in the budget, can enhance the competitiveness of Indian manufacturers in the global market, ultimately leading to a more self-reliant and robust furniture sector.

Budget 2024 Expectations : Gaurav Batra, Manager, ExportersIndia.com says on Global Trade Market and MSME

Exporters in India are expecting a few major measures in the coming budget to push growth. Expectations include enhanced export incentives, cutting red tape in customs procedures, and improved trade infrastructure.

“For the Micro, Small, and Medium Enterprises, which serve as a building block for the export sector in India, access to credit would rise, the burden of compliance would lower, and indeed schemes would make them entitled and bring in competitiveness in the markets around the world,” says Mr. Batra.


Other than that, exporters also look towards the budget for support in the form of tax relief, better initiatives on the access of markets, and mitigation of the impact of global trade disruptions. Overall, the budget is expected to focus on creating an export-friendly environment, ensuring sustained growth, and global market penetration for Indian exporters and MSMEs, he concludes.

Gurugram, India, 16th July 2024 – Over the last 2-3 years, the real estate sector has seen robust growth across various asset classes led by strong demand and a favourable economic environment. With the full-fledged Union Budget for 2024 just round the corner, the real estate sector is eagerly waiting for policy measures that could determine the sector’s trajectory and the likely outcome for the next few years. Indian real estate has continued to remain upbeat during the first half of 2024 across all asset classes, a reflection of prevailing optimism in domestic markets. Office and residential sector witnessed steady growth, while institutional investments remained sturdy asserting positive business sentiments. Office leasing activity in H1 2024 across the six major markets of the country has already almost touched 30 msf, almost 20% higher than the corresponding period in 2023. Stable interest rates, moderate inflation levels and strong high-frequency economic indicators further supported demand growth across key real estate verticals.

Delivering on the expectations of stakeholders, the Union Budget 2024 has the potential to become a defining moment and can play a crucial role in the sector reaching USD 1 trillion by 2030. Stakeholders’ expectations for Union Budget 2024 are across diverse aspects, and encompass focussed announcements on housing, infrastructure, sustainability, affordability & liquidity enhancement, taxation reforms and regulatory simplification.

“The upcoming Union Budget 2024, under the newly elected government, is set to focus heavily on infrastructure development, a critical aspect for the real estate sector. With real estate sector expected to contribute 13-15% of the Indian GDP by 2030, stakeholders are hopeful for grant of ‘infrastructure’ status, a long-standing demand. This could significantly ease access to institutional credit and reduce borrowing costs for developers, fostering growth and investments. Additionally, standardisation in definition of affordable housing can improve consistency in financing criterion across institutions and potentially simplify access to credit for interested homebuyers within the segment.”, said Badal Yagnik, Chief Executive Officer, Colliers India.

Housing sector expected to remain at the forefront during Union Budget 2024

The momentum in residential real estate across major cities has been on the upswing for the last few years. Homebuyers and developers expect further impetus from the government in the upcoming budget. Targeted measures can buoy homebuyer sentiment, providing a demand-side boost and simultaneously alleviate pressing developer concerns, providing a supply-side boost.

Homebuyers’ wish list for budget include:

• Separate & higher deduction for housing loan principal repayment (upto INR 500,000), currently capped at INR 150,000 under section 80C.
• Limit on tax deduction on interest paid should be increased from the current INR 2 lakhs to about INR 4-5 lakhs in case of self-occupied property.
• Extension of tax benefits under 80EEA which was applicable for loans (first time homebuyers in affordable housing segment) availed till March 2022 and increasing the current capping of INR 150,000.
• Standardisation and rationalisation in “Affordable Housing” definition across government schemes and financial institutions can help eligible homebuyers qualify for availing lucrative financing options in the particular category.
• Tax exemption on rental income to boost housing demand especially amongst investors.

Developers expect tax rationalisation and incentives for green buildings:

• GST reduction on key raw materials such as cement, steel and aluminium will help in controlling project costs.
• Re-introduction of Input Tax Credit (ITC) for under construction properties
• 100% tax holiday for affordable housing projects under Section 80IBA can be re-introduced.
• Increased fund allotment through SWAMIH fund for improving liquidity in stressed residential projects.
• Extension of PMAY timelines beyond December 2024 encouraging greater developer participation in affordable housing segment
•  For increased emphasis on sustainable development, tax holiday can be provided for green buildings. Incentivisation of green buildings through minimum alternate tax or tax breaks similar to infrastructure sector will be particularly beneficial.
•  For development of senior living facilities, provision of tax-based incentives, relaxation in development charges and other supportive policy measures will provide a thrust to developers and institutional investors to increasingly foray in the segment.

Industrial segment expects supportive government policies and concessional tax rates

Stakeholders expect supportive government policies and higher allocation in infrastructure expenditure to provide a thrust to the industrial and warehousing segment. With government’s continued focus on development of multi-modal logistics parks and logistics corridor, clear governance mechanisms and an enabling environment would be pivotal for successful implementation and timely completion of logistics infrastructure. Improved and effective logistics network can be critical in demand growth for warehousing spaces, particularly in tier I & tier II cities. MSMEs also expect rationalization of GST in the initial years of establishment, subsidized loans and reduction in income-tax slabs. Further, there could be an increase in allocation of funds towards upskilling and vocational training in manufacturing sector which will spur growth in the sector. Key expectations include:

• Rationalization of import-export tariffs expediting India’s integration into global supply chain.
• Rationalization of GST for MSMEs in the initial years of establishment
• Extension of concessional corporate tax rate of 15% for manufacturing start-up companies, which expired on March 31, 2024 to boost manufacturing in the country and support the Make-In-India initiative.

“Infrastructure has consistently been at the core of the budget and this is reflected in the invariable increase in outlay every year. Increased allocations towards infrastructure for increasing connectivity through roads, rail, ports and airports under the aegis of flagship schemes such as National Logistics Policy (NLP) and PM Gati Shakti, are likely to drive significant real estate growth in smaller cities. Moreover, clear governance mechanisms and an enabling environment would be pivotal for successful implementation and timely completion of logistics infrastructure. The overall emphasis on infrastructure can unlock the potential of tier II and III cities, fostering economic growth and urban expansion,” said Vimal Nadar, Senior Director, Research, Colliers India.

Increased budgetary considerations for a sustainable future

Sustainability and green initiatives are becoming increasingly important worldwide, and India’s real estate sector is following suit. Promoting investment in green bonds and renewable energy can help India achieve net-zero emissions by 2070 and meet sourcing 50% of energy needs from renewable sources by 2030. The government can consider incentivising users to replace grey hydrogen with green hydrogen, providing incentives for R&D particularly with respect to energy storage and transmission. Other key expectations include:

•  Incentivising investment in green bonds and renewable energy business
• Extended subsidies for EVs under the Faster Adoption and Manufacturing of Hybrid and Electric Vehicles (FAME) scheme, including light to heavy commercial vehicles.
• Production-linked incentives for companies involved in EV charging stations and battery manufacturing. Viability gap funding for startups in battery swapping and on-demand battery technologies.

Enhancing ease of doing business in real estate

The upcoming budget should focus on enhancing the ease of doing business by further reducing compliance burdens. Simplifying the tax and regulatory framework for private equity players, venture capitalists, and start-ups will also help foster a healthy business environment. Key expectations include:

• Reducing excess compliance and adopting a single-window clearance mechanism for new businesses
• Expediting the digitization of land records, especially for industrial and commercial use

Keeping global uncertainties and financial volatilities in mind, overarching measures towards rationalization of taxes and increasing disposable income can be particularly well received. Expectations include measures aimed at easing the tax burden on individuals, possibly through revised income tax slabs, increased deduction limits, or other progressive reforms. Moreover, simplification of capital gains tax regime can also be a welcome move. Further, investments made in REITs can get tax exemption which can provide a thrust to retail investors.

In conclusion, the upcoming budget can build upon the groundwork that has been in progress for the last few years and take actionable measures towards the next phase of economic growth. Infrastructure, construction, and real estate, by virtue of the ripple effect, will continue to support India’s journey in becoming the third largest economy by 2030.

New Delhi, 16th February 2024: The interim budget 2024 has brought a fresh ray of hope to millions of middle-income households who aspired to buy their own homes, but are forced to stay on rent. In a positive move, 2-crore more houses will be built under PM Awas Yojana Scheme in the next five years to enable middle-class living in rented premises to build their own homes.

R&R, in its recent report, highlighted that the housing for the middle-class scheme will enable mid-income individuals to realise their homeownership dreams, while at the same time, giving impetus to the construction and associated sectors, thereby creating more opportunities for all.

The soon-to-be-launched housing scheme is expected to revitalise the affordable or mid-housing segment. The Interim Budget underscored the government’s recognition of the significance of homeownership. India’s middle class is set to double up to 61% of the total population by 2047, up from 31% in 2020-21. The housing scheme will give confidence to an increasing number of people falling into this category every day.

Vishesh Prakash of R&R, says, “While the Interim Budget 2024 made no big-bang announcements, it continued its focus on infrastructure upgrades and building connectivity across the country, which would benefit real estate growth in not just the top cities, but also in Tier 2 and Tier 3 cities across the country. Infrastructure continues to be the focus area of the government. With an outlay of 3.4% of the GDP, the benefits of such focused and continued efforts will percolate down to all real estate segments. Tier 2 and 3 cities can expect heightened real estate activity around the near-mid term. All said and done, the budget has a lot more to offer than what meets the eye, which will propel the real estate sector directly or indirectly in a significant way.”

The industry insiders feel that while the interim budget didn’t directly address the real estate sectors’ key demands, the upcoming union budget might hold more concrete measures addressing the industry concerns, potentially impacting the market trends.

Looking ahead, the real estate sector is expecting industry status, believing it would unlock benefits like easier access to credit, tax breaks, and infrastructure development. Besides, tax incentives and benefits for homebuyers, such as increasing the deduction limit on home loan interest under Section 24, are also being expected from the Union Budget to follow in the coming months.

Keeping up with these expectations will only make the housing sector in the country more dynamic than ever. With eyes now set on the upcoming Union Budget, the real estate sector is hopeful of its robust growth in the future.

Steps in the right direction:

· Despite all the challenges, the implementation of this scheme continued, achieving the target of close to 3 crore houses, and now aims for 2 crore more houses to be taken up in the next five years, which is a step in the right direction.

· The Government will launch a scheme to help the deserving sections of the middle class, living in rented houses or slums, or chawls and unauthorised colonies, to buy or build their own houses.

· Extending tax benefits to startups for another year is yet another move in the right direction. This may help the real estate to rejuvenate and grow at a pace, which might be considered an opportunity in disguise for them.