Budget 2019: How The Government's Infra Push Will Benefit The Real Estate Sector

Since India’s infrastructure is going to play a pivotal role in it becoming a $5-trillion economy, finance minister Nirmala Sithraman went ahead and extended her largesse to it while presenting Union Budget-2019-20 on July 5, which had fiscal prudence written all over it. The government plans to spend a total of Rs 100 crores in the next five years for that purpose. While pegging the infrastructure financing needs at around Rs 20 lakh crores a year, the FM also proposed to enhance the sources of capital for the sector as India chases its dream to become a developed nation. 

Connectivity, said the FM her in 127-minute speech, was the lifeline of the economy and set aside large sums in her budget to provide a more robust connectivity through road, air and water in the times to come. She also stated that her government gave a massive push to all forms of physical connectivity through the Pradhan Mantri Gram Sadak Yojana, industrial corridors, dedicated freight corridors, Bhartamala and Sagarmala projects, Jal Marg Vikas and UDAN (Uden Deskh Ke Aam Nagrik) Schemes. 

The Bharatmala project would help develop national road corridors and highways while the Sagarmala project aims to enhance port connectivity. The Jal Marg Vikas project for capacity augmentation of navigation on national waterways is aimed at smoothening internal trade carried through inland water transport. The UDAN scheme is meant to improve air connectivity in smaller cities. 

For improving railway infrastructure for instance, an estimated Rs 50 lakh crore would be invested. Similarly, Rs 80,250 crore would be spent to provide better road connectivity in rural parts of the country. 

How does the infra push help the realty sector? 

Connectivity is one of the key parameters based on which a property's attractiveness is evaluated. For instance, several locations in major Indian cities have huge inventory stock because connectivity in these areas is still poor. Since major cities are brimming with an increasing population, the government has been trying to create new urban centres to accommodate the rising population. The same is true of industries, too. Past examples show that brilliant business models and most thoroughly planned residential alternatives failed when the locations where they are set up, were caught in connectivity hurdles. If the suburbs were planned to lessen the population burden of big cities, they have not been able to achieve that target precisely for reasons to do with connectivity. 

You may like to read: Why India’s Affordable Suburbs Are Not Popular Just Yet? 

Developers, who were expecting several other announcements in this year’s budget and were left disappointed on several counts, have also applauded this move, and say better infrastructure would turn out to be a boon for the sector. “A key highlight of this budget has been the allocation for the upgrade of infrastructure and the thrust on such projects’ faster completion. Any infrastructural development boosts the movement of real estate and encourages investments,” says Pankaj Jain, managing director, Realistic Realtors. 

MRG World joint MD Rajat Goel and Saya Group CMD Vikas Bhasin are of the view that the plan to invest Rs 100 lakh crores in infrastructure building over the next five years, means the real estate sector will continue to get the boost.