Industry Experts Weigh In On FinMin's Budget: A Mix of Positives And Unmet Expectations

In response to the recently presented Interim Union Budget for the fiscal year 2024-25, industry experts from various sectors have shared their perspectives on the government's financial proposals. While some have lauded certain aspects, others have expressed concerns about unmet expectations.

Real Estate Sector

The Interim Budget for 2024 did not bring about any significant announcements for the real estate sector, as anticipated. However, the focus on infrastructure development and connectivity enhancements across the country is expected to fuel growth in not just top cities but also Tier 2 and 3 cities. Finance Minister Nirmala Sitharaman announced measures such as the continuation of the PM Awas Yojana (Gramin), a new housing scheme for the middle class, and an 11.1 per cent increase in capex outlay allocation, which is set to unlock potential for real estate development.

Anuj Puri, Chairman of ANAROCK Group, highlighted the unmet expectations, including the long-standing industry request for an industry status and anticipated tax benefits for homebuyers. Puri expressed that while the interim budget did not directly address these concerns, there is hope for concrete measures in the upcoming Union Budget.

Economic Outlook

Industry leaders and economists have commented on the fiscal aspects of the budget. ICRA Ltd's Chief Economist and Head of Research & Outreach, Aditi Nayar, noted that the higher-than-expected capex and lower-than-projected fiscal deficit suggest healthier expenditure quality.

“The higher than expected capex (FY24: INR 9.5 trillion vs. INR 9.3 trillion and FY25: INR 11.1 trillion vs. INR 10.2 trillion) and lower than projected fiscal deficit (FY24: 5.8 per cent vs. 6.0 per cent and FY25: 5.1 per cent vs. 5.3 per cent) suggest that the quality of expenditure is going to be healthier than what we had penciled in both in FY2024 and FY2025. Faster fiscal consolidation and a dip in borrowings will help to cool yields further over the coming year, as long as the estimates for revenue and capital receipts appear credible as the year progresses,” she said.

Housing And Agriculture Sectors

Ravi Subramanian, MD & CEO of Shriram Housing Finance Ltd, praised the budget's focus on middle-class housing and the higher allocation to PM Awas Gramin, foreseeing benefits for both the housing and rural segments.

“Though the FM has not raised the cap on the affordable housing segment, the government’s focus on middle-class housing by announcing a scheme to help them buy or build their own houses will boost the country’s housing sector and home loan market. The higher allocation to PM Awas Gramin will also be beneficial for the rural housing segment. The measures will also stimulate the core sector output demand and rural jobs. Overall, it is a growth-oriented Budget, which is planning to spend 3.4 per cent of the GDP for capital expenditure. It is an 11.5 per cent hike compared to the previous year. I hope that the government’s greater emphasis on rooftop solar, green energy, MSMEs, food processing industries, INR 1-lakh crore innovation fund, railway economic corridors, aviation, tourism and medical education will further stimulate growth and it will hasten the economic activities across sectors,” Ravi said.

Atul Garg, MD of GRM Overseas, emphasized the government's support for farmers through schemes like PM Kisan Samman Yojana and PM Fasal Bima Yojana, viewing them as significant steps towards inclusive growth in the agricultural sector.

“The integration of mandis into the Electronic National Agricultural Market signals a monumental step towards inclusive growth for our farmers. The government's unwavering support for 'Anna Datas' through schemes like PM Kisan Samman Yojana and PM Fasal Bima Yojana showcases a commitment that resonates with the agricultural backbone of our nation,” Garg said.

“The emphasis on value addition and income enhancement, as exemplified by schemes like Pradhan Mantri Kisan Sampada Yojana and PM Formalization of Micro Processing Enterprises Yojana, is truly uplifting. These efforts are not just about economic benefits; they represent a profound investment in the prosperity of our farming communities,” he added.

Highlighting the government’s focus on post-harvest activities and the promotion of private and public investments, Garg said, “As we look ahead, the expansion of Nano DAP application and the Aatma Nirbhar Oilseeds Abhiyan instill confidence, aligning with our aspirations for a self-reliant and thriving agricultural landscape.

Macro-economic Development and MSMEs

Vanesh Naidoo, Founder and Director of SafeCams, appreciated the government's acknowledgment of the pivotal role played by MSMEs in the economy and the commitment to financial assistance.

“From a macro perspective, the government is keeping the deficit low while still increasing the Capex expenditure for infrastructure. The government's recognition of the pivotal role played by MSMEs in the economy is great. Also, their commitment to prioritizing financial assistance is a positive step forward. Acknowledging the challenges associated with credit guarantee schemes, the emphasis on simplifying and streamlining the process would help a lot of MSMEs' working capital funding requirements. It's encouraging to note that the upcoming budget aligns with the government's vision to enhance the global competitiveness of MSMEs through training schemes. While there were no new tax benefits announced, the extension of startup tax benefits till 2025 is also welcomed,” Vanesh said.

Mini Nair, CFO of Geojit Financial Services, commended the budget's focus on maintaining a low fiscal deficit, infrastructure development, and the allocation of funds for research and innovation.

Uday Narang, Founder and Chairman, Omega Seiki Mobility, said, “We commend the government's visionary Interim Budget 2024, a monumental step towards a sustainable and technologically advanced future. The strategic allocation for a robust electric vehicle ecosystem aligns seamlessly with our commitment to entrepreneurship, innovation, and growth in the EV industry. The emphasis on supporting manufacturing and creating employment opportunities, coupled with initiatives for women's empowerment and the adoption of e-buses, reflects a comprehensive approach to inclusive progress. The dedicated support for manufacturing and charging infrastructure is a game-changer, promising exponential growth in our industry. This budget represents a significant step towards cleaner air, sustainable transportation, and a thriving domestic EV industry. We are euphoric about the prospects outlined in this budget, providing a robust framework for us to accelerate EV adoption and contribute to a cleaner, interconnected future for India."

While the budget received positive feedback for various measures, the unmet expectations, particularly in the real estate sector, suggest that the upcoming Union Budget may address some of these concerns and provide more clarity on industry-specific issues.