India's 2021 Budget: Enabling Growth

On the face, it appears that the budget does not offer significant incentives for the real estate sector. However, a close analysis shows that this year’s budget would have a steady and meaningful impact on the real estate sector’s fortunes over the next two years

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The proposed Union Budget 2021-22 focusses on reviving the Indian economy, adversely impacted by the Covid-19 induced lockdowns, from a government estimated GDP decline of 7.7% in 2020. Compared to budgets prepared in the last decade, this one takes the boldest steps to boost economic growth through government led investments in building real infrastructure, leading to the government’s target of 14.4% GDP growth in the coming fiscal year of 2021-22.

The budget proposes significantly higher outlays in the areas of medical infrastructure and services, physical infrastructure (such as roads, highways, airports, ports, railways, renewable energy projects and textile parks) for ensuring the health, well-being and safety of Indians whilst boosting economic activity and growth. Contrary to expectations, the government is not increasing its substantial spending plans by raising taxes, but by largely by focusing on disinvestment, privatization and monetization of state held assets, supported by government borrowings.