An increased PM Awas Yojana (PMAY) allocation towards low-cost housing and a credit-guarantee scheme for MSMEs in Budget 2023 signals good news for development of low-cost homes.

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In her budget address in Parliament, on Wednesday, Finance Minister Nirmala Sitharaman announced a whopping 66 percent enhancement in budgetary allocation towards PMAY or the 'Housing for All' scheme. “The outlay for PM Awas Yojana is being enhanced by 66 percent to over Rs 79,000 crore.”

However, that was not the only piece of good news for housing. An increased capital outlay for the third year running, to Rs 10 lakh crore (approximately 3.3 percent of the Indian GDP) has developers cheering, as does the Rs 9000-crore credit guarantee scheme for MSMEs.

"An increased capital outlay to Rs 10 lakh crore, the PMAY hike of 66 percent and the credit guarantee scheme will all have a multiplier effect on economic growth and help realize the prime minister’s vision of housing for all," said Harsh Vardhan Patodia, President, CREDAI National.

Also Read: Budget 2023: PM Awas Yojana allocation enhanced by 66% to Rs 79,000 crore

Further, experts believe the increase in rebate levels for those taxpayers in the new income tax regime is an added benefit to home-buying.

"It (increased rebate) has given more money into the hands of individuals and households, which would to a large extent, ease out the increasing pressure on account of home loan EMIs and rising home prices," said Samantak Das, Chief Economist and Head of Research, JLL India.

'Housing may not benefit from new tax slabs'

Some believe the announcements were merely lukewarm since they have no direct bearing on the health of Indian real estate. "From a real estate point of view, there were no major direct announcements that could be seen as immediate booster shots," said Anarock chairman, Anuj Puri.

"Changes in the income tax slabs under the new tax regime and the new tax slabs will doubtlessly benefit the middle class," Puri added, "However, whether the housing sector will get a collateral boost remains to be seen."

Another noteworthy disappointment among experts remains the noticeable lack of benefits to taxpayers in the old tax regime. "The new tax regime also offers no benefits that taxpayers can avail of under any Sections, including Section 80C, which has tax benefits for home loans in the old regime," said Puri.

However, the positives include a potential capital flow under the credit-linked subsidy scheme thanks to the PMAY enhancement. The government’s increased budgetary allocation towards its Smart City Mission — Rs 16,000 crore in FY24 versus Rs 14,100 crore in FY23 — also comes as good news for developers.

The FM also announced the Centre’s intent to oversee urban planning and property tax reforms at the state-level in order to ensure urban sustainability, and the establishment of an urban infrastructure development fund for tier-2 and tier-3 towns, all of which are positives for housing development.

For LIVE updates on the Budget 2023 and Finance Nirmala Sitharaman's speech, click here.

(Edited by : Anushka Sharma)