Union Budget: Rural vs urban development considerations must for balanced growth

Real estate is undoubtedly one of the most crucial sectors in India, whose growth is indispensable for the health of the economy. Single-handedly, the sector contributes nearly 8 per cent to the country’s GDP and is the second-largest employment generator in the nation. The sector’s impact on the economy makes it a highly anticipated area of focus for the upcoming Union budget.

The fact that hundreds of ancillary industries, including construction and financial services, depend on real estate has also prompted major sectors to hold out for favourable policy announcements and amendments. While the government must boost the sector’s growth by increasing demand and rationalizing costs, more efforts should be made to ensure the benefits cascade down to both urban areas and rural regions. This is because equal opportunities for both rural and urban areas will be essential for fostering balanced and progressive growth across the nation.

On that note, the key explores some anticipated reforms in the upcoming budget that can benefit real estate and ensure balanced growth in the country.

A renewed focus on housing

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The government has been pushing for affordable housing to drive inclusive growth and development for all. Announcing reformative policies and increasing allocations towards initiatives supporting affordable housing projects in both urban and rural areas will ensure wholesome growth.

Reports suggest that by the year 2030, the nation will need over 25 million houses to address the acute housing shortage in the urban centers. In this regard, it is anticipated the government will consider integrating affordability and long-term sustainability policies in the upcoming budget to solve issues related to housing shortages. For instance, slashing lending rates in the affordable housing segment and encouraging developers through incentives to build more adorable properties can help bridge the gap.

Incentives for the commercial real estate sector

The Indian commercial real estate market is projected to touch the $5.47 trillion valuation by 2024. This underscores the segment’s growth prospects and role in uplifting the economy. Hence, the sector anticipates substantial assistance or subsidies for infrastructure development in non-metropolitan and rural areas. By tapping into the potential of the non-urban areas, the government can help attract investment into the sector and stimulate growth in the suburban and rural areas.

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Besides creating a conducive avenue for investments and infrastructural development, the budget should also focus on incentivizing commercial real estate and business enterprises, so they can lead the growth and create ample job opportunities for the rural youth. Similarly, announcing incentives and benefits for commercial properties and IT parks in suburban and rural areas focusing on energy efficiency and long-term sustainability can help promote green real estate in urban areas, safeguarding its environment.

Slash tax rebates

Another means to ensure that both rural and urban areas can experience growth would be by announcing favorable tax reforms to salaried individuals, especially home buyers. Similarly, providing tax holidays to property developers, lowering GST rates, and offering them special rebates to develop projects in rural areas would encourage them to support growth in remote areas. In addition, simplifying the tax structure for REITS would boost investment inflow towards rural areas, ensuring they develop as rapidly as urban spaces.

Support for property developers

A huge part of the projected growth for the real estate segment rests on the opportunities available to developers. Since they form such an integral part of the real estate sector, incentivizing them by easing their access to better funding opportunities, offering tax rebates, and extending R&D support can stimulate rapid growth. By making provisions like input credit available to developers and the opportunity to collaborate with public entities for developmental projects, the government can incentivize them to build properties in rural and urban areas and support long-term public infrastructure growth.

Creating SEZs and industrial corridors

The sector anticipates favourable announcements concerning special economic zones (SEZ) and industrial corridor creations across rural and urban areas. By supporting SEZ developments, the government can attract domestic and foreign investments, prompting development in these areas. Additionally, industry leaders are hopeful for financial support that encourages the integration of commercial spaces with residential facilities. Such moves can prompt equitable growth and contribute significantly towards the economy.

Indeed, achieving balanced growth between rural and urban regions is vital for economic development. By prioritizing initiatives to uplift real estate and infrastructure across the nation in the upcoming budget, the government can ensure balanced growth and development across the nation.

The author is chairman, IndiaLand Group. Views expressed in the above piece are personal and solely that of the author. They do not necessarily reflect Firstpost’s views.

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