The government has introduced several key land reforms and a significant allocation to Pradhan Mantri Awas Yojana-Urban. But is the latter enough to meet the housing demand?
Modi 3.0 government on July 23 presented a mixed bag of opportunities for the real estate sector in the Union Budget 2024. From the announcement of 'Bhu-Aadhaar' a unique identification number for land in rural areas, to digitisation of all urban land records, and a push towards PMAY-U the government has proposed several land-related reforms in the Budget 2024.
In her speech, Finance Minister Nirmala Sitharaman announced that the government and states will collaborate to carry out these land reforms, both in rural and urban areas. While the Centre will extend fiscal support as incentives, the states will work towards the completion of these reforms in the coming three years.
A unique Land Parcel Identification Number (ULPIN) or Bhu-Aadhaar has been proposed for all lands including the digitisation of cadastral maps. The authorities would conduct a survey of map sub-divisions as per current ownership and establish a land registry.
“Bhu-Aadhar is a game-changer for the realty sector and agricultural industry. Each plot will be given a unique identifier as part of this project, which aims to improve transparency and speed up land transactions. Since land records have historically been dispersed and subject to disagreement, this approach is especially important for rural areas,” says Abhishek Raj, Founder & CEO of Jenika Ventures.
Speaking on urban land-related reforms, the finance minister said that the land records in urban areas will be digitised using GIS mapping. “The government will establish an IT-based system for property record administration, updating, and tax administration. These will also facilitate improving the financial position of urban local bodies,” FM Sitharaman stated.
“Digitalisation has the potential to unlock new efficiencies and lower regulatory barriers, as the Ministry of Agriculture and Farmers' Welfare states that over 75 per cent of India's land is used for agriculture. Better land governance and promoting sustainable development are two goals that the government shares with the Bhu-Aadhar program. Millions of rural landowners could profit from it and general economic growth could be boosted if it is successfully implemented and opens the door for more safe and effective land transactions,” Raj states.
In the Budget 2024, a total budgeted amount of Rs 10 lakh crores was announced by the finance minister with the central government allocating Rs 2.2 lakh crores over five years under Pradhan Mantri Awas Yojana-Urban. With this, the government aims to assist one crore families at the bottom of the pyramid and lower-middle-income groups in their housing requirements.
“PMAY-U's new section focuses on the city populace to upgrade their dwelling standards. It is designed to provide less luxurious housing answers, thereby addressing the disparity of most of the supply and demand for houses in urban regions efficiently,” says Anuj Puri, Chairman of ANAROCK Group. Puri adds, “From a real estate point of view, the first thing that stands out is the government’s continued focus on infrastructure with an allocation of over Rs 11.11 lakh crore which is nearly 3.4 per cent of India’s GDP.”
Industry moguls view that the government is considering a public-personal partnership version which may bring about a change of “dormitory-fashion rental housing for manufacturing unit personnel.”
“The allocation of Rs. 11.11 lakh crore for infrastructural development, along with the innovative PPP model for rental housing in urban centres and the strategic push for transit-oriented development showcases a forward-thinking approach. These initiatives will undeniably propel real estate development in the right direction,” states Mohit Goel, Managing Director of Omaxe, a New Delhi-based real estate developer.
“This strategic flow is anticipated to mitigate the urgent difficulty of worker housing shortages by way of the use of organising price-effective residing regions in proximity to business zones,” Puri states. The real estate industry hopes that this would further boost the housing demand in not just the top 7 cities but also the tier 2 and 3 cities.
Puri notes that the focus on rural and urban job creation, if effective, may push the affordable housing segment. As per ANAROCK data, the affordable homes category (< Rs 40 lakh) has witnessed a decline in overall sales since the pandemic, to approx. 19 per cent in H1 2024 from over 38 per cent in the period before the pandemic in 2019. In addition to this, the percentage share of the total housing supply in the top 7 cities also fell to 18 per cent in H1 2024 from nearly 40 per cent in 2019.
The real estate players, therefore, welcome any boost to the affordable housing segment.
“For individual taxpayers under the new tax regime, the increased standard deduction limit to Rs 75,000 from the previous Rs 50,000 along with the new income tax slabs implies savings, but hardly enough to boost housing demand,” Puri notes.