Lack of major infra projects for Mumbai, MMR annoys ruling parties

Builders call the budget a let-down as it fails to announce major incentives for real estate sector The Union Budget did not have any big bang announcements for Mumbai and Maharashtra, prompting criticism from the ruling Maharashtra Vikas Aghadi (MVA), while opposition BJP said the budget would spur growth

Builders call the budget a let-down as it fails to announce major incentives for real estate sector

Labourers work at an under-construction site in Mumbai on Tuesday. Bhushan Koyande/ HT

The Union Budget did not have any big bang announcements for Mumbai and Maharashtra, prompting criticism from the ruling Maharashtra Vikas Aghadi (MVA), while opposition BJP said the budget would spur growth.

State environment minister Aaditya Thackeray called the budget an election manifesto, which had philosophical ideas but no timeline. He said the Centre mentioned transit-oriented development to upgrade the urban capacity of the state, but no timeline was given.

“It was more like a manifesto than a budget. Instead of numbers, we saw philosophical ideas such as interoperability and transit-oriented development, but no timeline or allocation. There are several announcements; it needs to be seen how they translate,” Thackeray told media persons.

Industries minister and Shiv Sena leader Subhash Desai said the Centre did not give any allocation for Mumbai which contributes a large share of taxes. The ruling party also criticised the lack of announcement of new projects in Mumbai and the Mumbai Metropolitan Region (MMR).

He said they expected the Centre to bring in a scheme for dilapidated structures in the city and provide incentives to the micro, small and medium enterprises (MSMEs). “Mumbai continues to be ignored. While the Centre every year writes off debts of big industries, it has not given any relief to the MSME sector in the budget.”

Over the outlay of ₹20,000 crore for 25,000 km of expressways across the country, Desai said the funds earmarked were inadequate.

State BJP chief Chandrakant Patil said the budget has the vision for the next 25 years, keeping the common man on the centre stage. “The budget presses upon the overall growth in sectors, including industry, agriculture, education, and infrastructure. It has the vision of using modern technology and taking the country on the path of artmanirbhar [self-reliance],” he said.

The budget also failed to cheer the real estate sector in the MMR, which is recuperating from the Covid-19 pandemic.

Builders called it a let-down. “There is nothing for the sector which is one of the biggest job generators as well as contributes substantially to the exchequer,” a realtor, who did not wish to be named, said.

He said the sector expected incentives for those constructing affordable houses, classification of all houses costing up to ₹1.50 crore as affordable within the city limits, a hike in the tax deduction limit on home loan interest, and removal of the notional rent paid on the inventory of unsold flats.

Finance minister Nirmala Sitharaman in her speech said the Central government will work with the state governments to reduce the time required for all land and construction-related approvals, in a bid to promote affordable housing for the middle class and the Economically Weaker Section in urban areas.

Realty experts said this move was unwarranted. “Approvals are given by the state government and the Centre has no power over it. We feel that if the Central government comes into the picture, we will then be forced to deal with one more agency. This happened when the Centre imposed environmental clearance and we had to approach the Union Environment Ministry for approving our projects,” an analyst said on the condition of anonymity.

The Maharashtra Chambers of Housing Industry (MCHI-CREDAI) said though it was a growth-oriented budget, builders were hoping for some incentives.

“The real estate industry analysts and the developers’ community were hoping for some more rebates given their performance and contribution to the overall economy in the last few months. A simple point that could have brought cheer to home buyers would be an increase in a tax deduction on home loan interest,” Boman Irani, president, MCHI-CREDAI, said.

Echoing a similar reaction, Shishir Baijal, CMD, Knight Frank India, a real estate consultancy firm, said the budget focussed on infrastructure and development.

“The government could have given a further boost to the housing sector given the strong multiplier effect the sector has on the economy. The sector would have benefitted immensely by demand boosting tax benefit measures. The housing sector has made a substantial recovery from the pandemic lows and due attention here would have gone a long way in sustaining the growth momentum,” Baijal said.

The only positive announcement is 80 lakh houses will be completed under the Pradhan Mantri Awas Yojana for which ₹48,000 crore has been allocated.

For the last few years, the real estate sector has been witnessing a massive slowdown which only aggravated after the Covid-19 lockdown. However, recent moves like a cut in stamp duty as well as low interest rates on home loans pushed demand.

Maharashtra could get some km of expressways and multimodal logistics parks through the PPP model as it is an industrial state. The Union finance minister also said the contracts for eight ropeway projects would be awarded in 2022-23. The Sewri-Elephanta caves ropeway could materialise subject to clearances from the Archaeological Survey of India.

“The budget mentions many conceptual level points for infrastructure development such as multimodal connectivity, change in the design of civil structure for metro, and setting up a committee of urban planners and economists to formulate urban sector policies. As there is nothing specific, we have to wait for some clarity on these ideas,” a senior state bureaucrat said.