As India prepares for the presentation of the Union Budget on February 1, 2025, the economic situation is causing significant concern, with projections of a sharp slowdown in the nation’s growth. The most striking change is the government’s revised GDP growth forecast for FY25, which has been slashed to 6.4%. This marks a steep drop from the 8.2% growth recorded in FY24 and signifies the slowest expansion in the past four years. This revision has startled many economists and stakeholders, who were expecting a modest deceleration but not such a drastic decline. The causes behind this slowdown are multifaceted, including global economic headwinds, domestic policy changes, and inflationary pressures.
In this context, the corporate sector has expressed its high hopes for the upcoming budget. Amit Modi, director of County Group, spoke on behalf of the real estate industry, emphasizing the sector’s significant contributions to the economy and the urgent need for support to counteract ongoing challenges. The real estate sector, which has long been a pillar of India's growth, is grappling with high input costs, liquidity constraints, and delays in project approvals, leading to slower-than-expected growth. The demand for industry status is one of the most long-standing requests from the sector, as it would allow developers to access low-cost financing, thereby benefiting consumers as well.
The real estate sector also seeks the implementation of a single-window clearance system, which would streamline approvals for construction projects and help developers avoid delays that increase costs. Reintroducing GST input credits for residential real estate projects is another important demand from the sector, as this measure would stabilize costs and improve financial predictability for developers. Modi also called for an increase in the home loan interest exemption limit, suggesting that raising it to Rs 8 lakh annually would support first-time homebuyers who have been increasingly burdened by rising property prices. Moreover, he proposed an increase in the deduction limit under Section 80C to Rs 5 lakh, which would ease the financial burden on middle-class homebuyers and stimulate demand in the sector.
Sachin Gawri, founder and CEO of RISE Infraventures, echoed these concerns and urged the government to take bold steps to support the real estate sector, which he described as a mirror to India’s economic progress. Gawri emphasized the untapped potential in the sector, which he believes could be unlocked through a combination of policy interventions. He proposed that the definition of affordable housing be revised to include properties worth up to Rs 80 lakh, thereby extending the benefits to a larger pool of consumers. He also suggested reinstating the 100% tax holiday for affordable housing projects, which could incentivize developers to increase the supply of affordable homes, addressing the ongoing housing shortage.
To further support the sector, Gawri advocated for the creation of new land banks to ensure a steady supply of land for affordable housing projects. He also recommended combining home loan principal and interest deductions with a Rs 5 lakh cap to ease the financial burden on homebuyers. Reducing the long-term capital gains holding period to two years, increasing the Section 54EC exemption limit to Rs 1 crore, and expanding the benefits of Real Estate Investment Trusts (REITs) were other measures Gawri suggested to enhance investment in the sector.
While the real estate sector is seeking relief through tax reforms and policy changes, the startup ecosystem also has its own set of demands. Startups, which are considered a key driver of innovation and job creation in India, have been facing several obstacles that hinder their growth. Sumit Singh, CEO and co-founder of DashLoc, emphasized the need to reduce regulatory complexity, which often impedes the ability of startups to scale and expand their operations. Singh called for the establishment of dedicated IT software parks, which would provide essential infrastructure and foster innovation in the technology and software development space.
In addition to infrastructure, Singh proposed that the government simplify access to loans through banks and government-backed schemes, which would make it easier for startups to secure funding. By improving access to capital, Singh believes that startups could accelerate their growth and contribute more significantly to India’s economic recovery. Given that startups are increasingly seen as a source of new jobs and innovation, the budget measures for this sector could play a pivotal role in the country’s post-pandemic recovery.
While the focus of the budget is likely to be on the real estate and startup sectors, another critical area of concern is healthcare. Despite significant improvements in healthcare infrastructure over the past few decades, the pandemic has exposed major gaps in India’s public health system, particularly in rural areas. Dr. Pravin Gupta, Principal Director and Chief of Neurology at Fortis Hospital stressed the importance of a roadmap for increasing public healthcare spending, especially in underserved regions. He argued that strategic investments in healthcare infrastructure, along with supportive policies, would help bridge the rural-urban divide and ensure equitable access to quality care for all citizens.
Dr. Ashish Chaudhari, Managing Director at Aakash Healthcare, voiced similar concerns, calling for financial incentives to support the healthcare sector. Chaudhari proposed reinstating the 150% tax deduction under Section 35AD of the Income Tax Act for new healthcare projects, which would incentivize private players to invest in healthcare infrastructure. He also recommended providing tax holidays for new healthcare facilities and offering tax relief to existing ones for a minimum of 10 years. These measures, he argued, would reduce the financial burden on healthcare providers and enable them to pass on the savings to patients, making healthcare more affordable.
As India braces for the Union Budget 2025, the stakes are high for a wide range of sectors, from real estate to startups and healthcare. With the economy grappling with slower growth and rising inflation, the government’s fiscal policies will be closely scrutinized. The budget provides an opportunity for the government to address long-standing concerns, stimulate economic activity, and support industries that are crucial for India’s recovery. If the right measures are introduced, the Union Budget 2025 could pave the way for sustainable growth, job creation, and an improved quality of life for millions of Indians.
