India’s budget expands outlook of the existing rural housing scheme

V Nagarajan

It extended support to the middle-class dream of buying or building their own homes. A new scheme has been announced while expanding the outlook of the existing rural housing scheme.

Under the Pradhan Mantri Awas Yojana-Gramin (PMAY-G) two crore houses will be taken up in the next five years. The scheme is nearing its completion target of 30 million households. As of Feb.1, 29.5 million households or 86 per cent were complete. The Rs50,650 crore allocation of funds for 2024-25 is almost double the Rs 28,174.5 crore spent in 2023-24.

According to industry sources, Rs3.28 lakh crore has been utilised under the rural housing scheme, whereas central assistance of Rs1.56 lakh crore has been released for urban housing.

It is expected to provide a thrust to urban housing programme. Under PMAY (Urban), the government had sanctioned 1.19 crore houses of which 80 lakh units are already completed. While the government had committed Rs2 lakh crore, it has already spent Rs1.48 lakh crore.

Though direct pronouncements were limited for the real estate sector, a slew of measures for infrastructure and other sectors would boost real estate development. For instance, the enhancement of multi-modal connectivity through economic railway corridor programmes would develop port connectivity and dedicated freight corridors would reduce overall logistic costs.

According to Savills, the expansion and strengthening of the electrical vehicle ecosystem will enable development of charging stations, manufacturing units, industrial and warehousing nodes.

The domestic tourism promotion via long-term interest free loans to states for comprehensive development of iconic tourist centres will create a spurt in the hospitality sector along with an improvement in overall infrastructure of tourist centres.

The interim budget proposes a proposal to extend certain tax benefits to start-ups and investments made by sovereign wealth or pension funds, as well as tax exemption on certain income of some IFSC units until March 31, 2025. This is expected to result in sustaining investments by sovereign wealth and pension funds in India and will augur well for the commercial office real estate segment.

The blue economy 2.0 scheme for restoration and adaptation measures, and coastal aquaculture and mariculture will create a multipronged impact including development of life sciences real estate and aquaparks as it promotes manufacturing of modern equipment, maritime transport and marine biotechnology.

A thrust on research and innovation in sunrise sectors via strengthening deep-tech technologies for defence purposes augurs well. The creation of a corpus of Rs 1 lakh crore for long-term, 50-year interest-free loans to boost innovation would mean establishment of more institutional incubation and research centres with a ripple effect on development of tech-related real estate.

Overall, the interim budget reinforces the government’s progressive outlook and vision towards creating a $5 trillion economy.

I am planning to develop our inherited land for residential development. As a Gulf NRI, can I invest in the firm. Please clarify. Seby Mathew, Sharjah.

The RBI regulations specify general permission for NRIs/PIOs to invest by way of capital contribution in a firm on non-repatriation basis. Regulation 4 of the said Regulations inter alia provides as under:

A permission for investment in certain cases – NRIs and PIOs resident outside India can invest by way of contribution to the capital of a firm or a proprietary concern in India on non-repatriation basis provided; (i) the amount invested is by inward remittance or out of NRE/FCNR(B)/NRO account maintained with authorised dealers/authorised banks. (ii) the firm or proprietary concern is not engaged in any agricultural/plantation or real estate business (i.e., dealing in land and immovable property with a view to earning profit or earning income therefrom) or print media sector. (iii) Amount invested shall not be eligible for repatriation outside India.

I have invested in commercial property in Bangalore and wish to mortgage the unit to raise funds. Does it require any approval from the authorities? Are there restrictions while mortgaging it to the banks or other lending institutions? Rajesh Menon, Dubai.

You can mortgage the commercial property to an authorised dealer/housing finance institution in India without the need to get any approval from the authorities. You can also mortgage to a party abroad but with prior approval of Reserve Bank of India.