Budget 2022 could have done more on the demand-side for real estate: Knight Frank

By Shishir Baijal

The Minister of Finance has presented a growth-oriented budget with focus on infrastructure and development. Creation of a unified logistics platform, highway expansion by 25,000 kms in FY23 and development of 100 new cargo terminals in the next three years are significant steps in improving the supply chain ecosystem in the country and will aid in further improving the warehousing sector development.

Many measures around digital adoption and ease of doing business will improve business efficiency and go a long way in driving economic growth. The Government has reiterated its commitment towards “Housing for All” by allocating Rs 48,000 crores towards this scheme, around the same that was spent last year. This is in line with the Rs 47,390 crore spending undertaken in FY 2022 and signifies the continued support for affordable housing. “Housing for All” has been the government’s focus since 2014. Housing security is a basic need and intrinsic to the development of a nation.

Budget 2022: Robust policy changes with muted tax proposal

Interventions to improve credit to the pandemic afflicted MSME sector including the hospitality industry is also a step in the right direction. All MSMEs including those in the retail and hospitality sector will have extended access to credit support up to 40 per cent of their credit outstanding till March 2023.

‘Infrastructure’ status given to Data Centres will provide a huge boost to the fast-evolving digital environment of the country, which will make available preferential and cheaper credit for this already fast-growing industry. We expect that 2,500 MW of new data centre capacity will be required by 2026 in India. This announcement will greatly help in achieving this capacity and support India’s ambitions of being a strong Data Centre player in the region.

The Minister of Finance has said that the SEZ Act will be replaced with a new law by September 2022, and we will be waiting for further details given the significant impact of this on the commercial real estate sector.

Adoption of Unique Land Parcel Identification Number (ULPN) to facilitate IT-based management of records will reduce time required for all land and construction related approvals. States will be encouraged to adopt ULPN to facilitate IT-based management of records. Adoption or linkage with National Generic Document Registration System (NGDRS) with the ‘One-Nation One-Registration Software’ will foster a uniform process for registration and ‘anywhere registration’ of deeds and documents.

While the government has announced quite a few supply-side reforms, more could have been done to boost the demand-side. The housing sector could have been granted further boost, given the strong multiplier effect the sector has on the economy. The sector would have benefited immensely by demand boosting tax benefit measures, after having made a substantial recovery from the pandemic lows. Due attention here would have gone a long way in sustaining the growth momentum.

The author is Chairman and Managing Director, Knight Frank India.

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