Union Budget 2021 Highlights On Real Estate Sector

union budget 2021
source: outlook india

India’s Finance Minister, Nirmala Sitharaman, on February 1, 2021, finally unveiled the most anticipated Union Budget in the parliament.

Touted as one of the most significant budgets of recent time, expectations of the real estate sector from Union Budget 2021 were soaring high. And it would be completely fair to say that at a contribution of 8% to the economy, India’s real estate sector forms a key pillar of the economy. 

After almost a year of uncertainty and disruption, all thanks to the pandemic, we see green shoots. Keeping the positive signs growing, the realty sector needed a solid impetus from the union budget 2021 to reset the sector’s growth trajectory to pre-COVID levels. It’s time to have a look at what the Real Estate sector finally gained from the Union Budget 2021

Key Highlights of Union Budget 2021

Affordable Housing  

FM has reinforced the focus on affordable housing in the new Union Budget 2021. In July 2019 budget, the government had announced an additional deduction of interest amounting to Rs. 1.5 lakh for the home loan taken to buy an affordable house. 

Nirmala Sitharaman proposed to extend the current relief of Rs.1.5 Lakhs on home loans for affordable housing till 31st March 2022. The cap on the definition of affordable housing remains at Rs 45 Lakhs. This extension has also been provided for developers offering affordable housing projects. 

Further, to keep up the Affordable Rental Housing supply for the migrant workers, FM also proposed allowing a new tax exemption for the notified Affordable Rental Housing Projects under the ‘Housing for All’ initiative. These measures impacted the stock market as shares of realtors soared by 7% during the day.


In a move to augment funds for the real estate sector and infrastructure, Finance Minister Sitharaman in the Union Budget for 2021 – 22 proposed permitting debt financing of InvITs and REITs by making suitable amendments to relevant legislation. She also proposed to exempt taxes on dividends on InvITS and REITs to ease access to finance. 

Infrastructure & Financial Capital

Tabling the Union Budget 2021 -22 in Parliament, Sitharaman said Infrastructure needs long-term debt financing. A new institution that acts as a provider, enabler, and catalyst to take care of infrastructure financing to be created.  Furthermore, a new bill will be set up with an expectation to have a lending portfolio of at least Rs. 5 lakh crore for DFI. 

Another point that made it to the FM’s list was easier commuting. She has made a few announcements on the country’s metro network budget allocation to make it possible. She mentioned that two new technologies – MetroLite and MetroNeo will be deployed in Tier-2 cities and peripheral areas of Tier-1 cities.  

She pointed out that central will provide funding to:

  • Kochi Metro Railway Phase-II of 11.5 km at the cost of Rs 1,957.05 crore
  • Chennai Metro Railway Phase-2 of 118.9 km at a cost of Rs.63,246 crores;
  • Bengaluru Metro Project-Phase 2A and 2B of 58.19 km will be funded at the cost of Rs.14,788 crores;
  • While the Nagpur Metro Rail Project Phase 2 and Nashik Metro will receive funding of Rs.5,976 crores and Rs.2,092 crores. 

Big boost for Highway & Railway Projects: 

From an investment of 1.03 lakh crore for Tamil Nadu; an investment of Rs 65,000 crore for Kerala to 1.18 lakh crore for Ministry of Road Transport and Highways– a major investment plan in highway and railway projects were among a few key highlights of Union Budget 2021.

While tabling the budget, FM mentioned that the Railway Ministry had prepared a new map for future-ready Indian railways for 2030. As a part of the plan, an automatic train protection system will be commissioned in busy corridors. Son Nagar-Gomosh section EDFC will be taken up under PPP in 2021 – 22. 

Shortly, more freight corridor plans to be introduced– Itarsi to Vijaywada, Kharagpur to Vijayawada, and Bhusawal to Dankuni are to name a few. 

Construction Workers

 To help secure the unorganized labor force migrant workers, a portal to be launched to collect all the relevant information about the building, the workers working at the construction site, and few other details. This will be an effort to help put together Insurance, Housing, Credit, Health, Food, and a few other schemes for migrant workers. 

While some measures were announced to aid the sector, many of the major expectations were left unfulfilled, leaving the sector with a bittersweet taste. Although India’s real estate industry did not receive the anticipated focus, some extensive measures were announced on infrastructure, including expenditure on metros, roads, ports, health, etc. All of this will indirectly benefit the housing sector immensely.