Budget 2025 Allocates Rs 15,000 Crore to Housing Sector, Focus on Affordable Housing: CREDAI Pune Metro President Ranjit Naiknavare

Pune, 1st February 2025: The budget’s focus on strengthening the rural economy, supporting MSMEs and providing direct tax benefits to the middle class is a welcome move that will drive economic growth and increase disposable income. The reduction in the fiscal deficit target from 4.8% to 4.4% is a positive step, while the rise in capital expenditure from ₹10 lakh crore to ₹12 lakh crore is commendable.

The expedited processing of company mergers will improve the ease of doing business and the new tax bill—aimed at reducing litigation by streamlining existing laws—is a step in the right direction. Additionally, the decision to allow 100% FDI in insurance is a significant and much-needed reform.

The government’s strong emphasis on urban development, including the creation of new funds amounting to nearly ₹1 lakh crore and a renewed push for infrastructure through PPP projects, will enhance urban livability and drive long-term growth.

The SWAMIH Fund I has already enabled the completion of nearly 90,000 housing units by the end of 2025. With the launch of SWAMIH Fund II, an additional ₹15,000 crore has been allocated to facilitate the completion of 1 lakh homes from stalled projects, further boosting the housing sector.

The increase in the income tax exemption limit to ₹12 lakh is a major relief for the middle class. Likewise, the hike in rental TDS from ₹2.2 lakh to ₹6 lakh and the removal of notional rent on a second self-occupied property are positive changes. These measures will encourage homebuyers, particularly those looking to invest in additional or second homes, while fostering positive sentiment in the real estate market.

However, the sector had anticipated further initiatives, such as increased incentives to stimulate demand for affordable housing, GST reductions or additional income tax benefits, a higher cap on home loan interest exemptions—which has remained unchanged for years—and a revised definition of affordable housing based on minimum dwelling unit size rather than a fixed ₹45 lakh value nationwide. These measures could have provided additional momentum to the market and improved housing affordability.

Overall, this remains a progressive and forward-looking budget. Its impact is expected to support the real estate ecosystem and further drive housing demand.