Budget 2023: Infrastructure Boost for East, Affordable Housing Missed

Kolkata: Real estate developers in West Bengal have welcomed the Union Budget's strong thrust on infrastructure-led growth, but they are disappointed by the absence of targeted measures for affordable housing. Industry bodies believe that the higher public capital expenditure of Rs 12.2 lakh crore on highways, Metro rail, logistics corridors, and urban infrastructure will improve connectivity and unlock new growth corridors in the eastern region, particularly in Tier-2 and Tier-3 cities.

"Investments in highways, Metros, railways, and urban infrastructure will enhance connectivity and support long-term urban development, especially in Tier-2 and Tier-3 cities," CREDAI West Bengal president Sushil Mohta said. He added that faster approvals, simplified processes, and digitization would help reduce project timelines and holding costs.

However, Mohta expressed concern over the continued neglect of affordable housing. "The long-pending demand to revise outdated price and area caps has again been ignored. With rising land and construction costs, affordable housing risks shrinking from nearly 18 percent to about 12 percent of total supply," he said. Mohta also warned that a sustained decline in supply could push up rentals, increase commuting distances, and fuel informal housing in urban areas.

He pointed out that there was no relief on GST rationalization, input tax credit, or income tax benefits on home loans, and industry status for real estate remained elusive.

Ambuja Neotia Group chairman Harshavardhan Neotia welcomed the infrastructure focus, stating that the 8.9 percent increase in capital expenditure to Rs 12.2 lakh crore will sustain momentum in large-scale development and create opportunities across the construction and real estate value chain. "Measures such as dedicated REITs for CPSE asset monetization and the Infrastructure Risk Guarantee Fund would help de-risk capital deployment and attract institutional investors," he said.

"The allocation of Rs 5,000 crore per City Economic Region and the continued focus on Tier-2 and Tier-3 cities represent the next growth frontier, which is significant for eastern India," Neotia added.

Merlin Group MD Saket Mohta said the Budget was encouraging from a macroeconomic perspective, even though it lacked sector-specific incentives. "The sustained push towards infrastructure creation and balanced regional growth is expected to support real estate demand in an indirect but meaningful manner over the medium to long term," he said.

Jain Group MD Rishi Jain noted that the focus on infrastructure, REITs, and InVITs would help unlock capital and support long-term housing growth, improving confidence among developers and homebuyers. REITs allow investors to invest in large-scale, income-generating real estate (like malls or offices) and earn a share of the rent without owning the physical property. InVITs are like mutual funds for infrastructure, allowing investors to invest in projects like highways and power grids to earn a portion of the tolls or fees collected. These instruments help small investors to participate in large real estate and infrastructure projects.

Reacting to the Budget, Bengal Shristi Infrastructure Development Ltd CEO Sahil Saharia said the Budget offered limited short-term relief. "While the capex push and City Economic Regions signal long-term planning, key demands such as infrastructure status and higher Section 24(b) deductions remain unaddressed," he said.

Purti Realty MD Mahesh Agarwal welcomed the Budget, noting that measures such as REITs and InVITs would unlock capital for new projects, while support from institutions like NIIF and NaBFID would ease funding for large housing and infrastructure developments, boosting confidence among developers and homebuyers.

Overall, developers said that while the Budget lays a strong foundation for long-term real estate growth in West Bengal and the eastern region through infrastructure and urban development, the lack of targeted support for affordable housing remains a missed opportunity.