Infrastructure outlay bodes well for real estate growth

2 Feb 2023 , 09:26 AM

The union budget 2023 has laid its clear focus on accelerating economic growth rate, job creation, last mile connectivity, skilling , and green energy transition. The Hon’ble Finance Minister has charted out a well-balanced budget with fiscal prudence and consolidation to shore up India’s GDP growth rate pegged at 7% for FY 23-24. The Indian government on Wednesday unveiled a Rs 45 trillion ($549.14 billion) spending budget for the next fiscal year aiming to taper down fiscal deficit by FY 25.

Indian leadership has been able to stay symmetrical in navigating geo-political and economic headwinds. This has prevented fatigue economic growth in comparison to its global twins which are looming under the threat of recession, inflation, and energy crisis. The strong public finance, infrastructure capex, and robust financial sector for the benefit of all strata of society. Though India is expecting 6-6.8% economic growth in FY24, slightly lower than the 7% expected in the current fiscal year it is still a bright star in the global universe. It has clearly shunned outright populist budget anticipation by laying thrust to fiscal prudence.

Capital spending seen to rise 33% to Rs 10 trillion along with record high railways development outlays by 48% to Rs 2.4 trillion will reorient real estate development across its asset class like residential, commercial, logistics and industrial parks due to last mile connectivity. The transit and multi modal corridor will reduce logistics cost of goods and services and ensure timely delivery to enhance production efficiency. The slew of infrastructure projects will augur well for decentralization of commercial real estate to peripheral satellite towns and tier cities. This will ensure the sprouting of new growth centers and economic corridors across geographies leading to additional employment opportunities.

The substantial changes made in personal income tax under the new tax regime is simplified and proposes strong governance. Per capita income has increased to Rs 1.97 lakh. At the same time, India’s economy has grown from 10th to 5th largest in the world in the last 9 years. India Budget 2023 is positively scripted where the major advanced economies in the world are crippling down with recessionary threat and inflation crisis. In this backdrop, according to the Economic Survey India’s GDP is pegged to grow between the 6-6.8% range, maintaining its tag of being the fastest growing economy in the world. India’s resiliency and rebound economic recovery from pandemic rude shocks has also abodes well for the economic growth outlook.

Thus, India’s growth story is very bullish amongst the faltering global economies. The future of the young demographic dividend is brightest and this will fuel the optimistic growth of commercial real estate in the long run.