The Union Budget 2024-25 presented by Minister Smt. Nirmala Sitharaman lays a strong foundation for infrastructure and urban development in India. The budget prioritises significant investments aimed at rebuilding cities, enhancing connectivity, and promoting equitable growth. One of the standout provisions in the budget is the allocation of long-term interest-free loans, amounting to INR 1.5 lakh crore for the fiscal year 2024-25. This financial support is designed to assist states in enhancing their infrastructure projects, ensuring that development is more uniform across various regions.

The budget emphasises growth in several critical corridors, including the Amritsar-Kolkata Industrial Corridor, the Polavaram Irrigation Project, and key nodes in the Vishakhapatnam-Chennai and Hyderabad-Bengaluru Industrial Corridors. Additionally, a plan for Transit Oriented Development is set to be formulated for 14 large cities with populations exceeding 30 lakh. This initiative will facilitate efficient transport connections and encourage higher-density housing near transit hubs.

Another significant allocation is the amount set aside for Andhra Pradesh, with INR 15,000 crore earmarked for comprehensive infrastructure development in the Andhra Pradesh Capital Region. Overall, these announcements in the budget are expected to rejuvenate cities and create increased opportunities for real estate developers. With a strong emphasis on infrastructure development, the government is focused on creating equitable real estate hotspots across the country. The predicted infrastructure investment is expected to have a multiplier effect, facilitating job creation and economic growth.

The real estate sector has lauded the Budget’s allocations towards infrastructure development. Mr. Samyak Jain, Director at Siddha Group believes increased budgetary allocation for infrastructure development in cities like Mumbai is essential to unlock new development regions. According to him, these measures will foster a conducive environment for real estate growth, contributing to overall economic development.

Mr. Prashant Sharma, President of NAREDCO Maharashtra, echoes similar sentiments, “with significant infrastructure investments continuing over the next five years, including a provision of INR 11.1 crore for capex, we anticipate a multiplier effect that will drive private investment in infrastructure. The introduction of a market-based financing framework and simplified rules for Foreign Direct Investments will further facilitate economic growth and stability”, he said.

According to Ms. Shraddha Kedia-Agarwal, Director at Transcon Developers, the substantial infrastructure investments will have a multiplier effect, stimulating economic activity and catalysing further growth in infrastructure, which is pivotal for real estate development.

A major focus of the budget is rural connectivity initiatives. The Phase IV of the Pradhan Mantri Gram Sadak Yojana (PMGSY) aims to provide all-weather connectivity to 25,000 rural habitations, ensuring better access to remote areas and facilitating development leading to urbanisation. Specific road connectivity projects have been funded at a cost of INR 7.3 trillion crore, targeting enhancements in road infrastructure across various states. Important projects highlighted include the Patna-Purnea Expressway, the Buxar-Bhagalpur Expressway, and developments in Bodhgaya, Rajgir, Vaishali, and Darbhanga.

Furthermore, the budget shows commitment towards support for flood management, with assistance allocated for flood management projects in regions like Assam, Himachal Pradesh, Uttarakhand, and Sikkim, addressing the significant losses caused by natural disasters.

Despite innovative financing in recent years, capital expenditure remains a key aspect of infrastructure funding. Between FY21 and FY24, capital expenditure by the Union Government increased by 2.2 times, while state government investment rose by 2.1 times during the same timeframe. The net flow of funds to infrastructure sectors through bank credit was around INR 79,000 crore from March 2023 to March 2024. Although this number is less than the budgeted allocations for railways and roads, credit growth in the infrastructure sector recovered to 6.5% in FY24 compared to 2.3% in FY23.

Moreover, external commercial borrowings have seen a noteworthy increase, with gross inflows to infrastructure sectors rising to USD 9.05 billion in FY24, up from an average of USD 5.91 billion from FY20 to FY23. This indicates a renewed confidence in infrastructure funding and investment. Between 2019 and 2024, real estate investment trusts (REITs) raised INR 18,840 crore, while infrastructure investment trusts (InvITs) raised INR 1,11,294 crore.

In conclusion Jitendra Mehta, President, CREDAI MCHI Thane, had the following to say, “The Union Budget 2024-25 seeks to unlock significant growth potential in infrastructure and urban development. With targeted financial support, strategic investment in key projects, and a focus on rural connectivity, the government aims to create a balanced approach to real estate development across the country. The emphasis on infrastructure investments is anticipated to yield numerous job opportunities and foster an environment conducive to sustainable growth. As these initiatives unfold, they signify the beginning of a new era of development aligned with the vision of a prosperous and connected India."