In budget 2022, infrastructure benefits the most. Construction and affordable real estate stands to benefit from heightened focus in this area. The rise in CAPEX is positive for long steel and pipe manufacturers, and it benefits the construction processes immensely. Finance minister Nirmala Sitharaman announced that 2022-23 80 lakh houses would be completed for identified eligible beneficiaries of PM Awas Yojana, both rural and urban and Rs 48,000 crore is allocated for the purpose. On February 1, 60,000 houses were identified as beneficiaries for PM Awas Yojana in rural and urban areas.

Infrastructure investment

Plans for investments in remote roads, mass transit in cities and 400 new “Vande Bharat” trains in three years will benefit key infrastructure players, including Larson & Toubro Ltd., GMR Infrastructure Ltd., KNR Constructions Ltd., IRB Infra Ltd., Container Corporation of India Ltd., Allcargo Logistics Ltd. and Indian Railway Catering and Tourism Corp.

The budget 2022 benefits infrastructure, housing and urban planning industries most. For the real estate sector, the budget placed an outlay of Rs 48,000 crores under the Pradhan Mantri Awas Yojana, and the construction of 80 lakh homes will facilitate affordable housing. This, yet again, showcases the government’s commitment to building affordable housing stock. The PM awas yojana would help first-time buyers with optimum schemes from builders.

Better water supply

The demand for plastic pipes witnessed a 20% rise in the allocation for the Jal Jeevan mission. The allocation improves the water supply for construction processes. Additionally, the government allocated Rs 6000 crore for tap water connection to 3.8 lakh poor households.

Metals investment

The government’s 600 billion rupee allocation for piped water to 38 million homes and spending on logistics will benefit India’s metals producers, including Vedanta Ltd., Tata Steel Ltd. and JSW Steel Ltd. Jindal Stainless Ltd. Pipe makers Jain Irrigation Systems Ltd., KSB Ltd., Kirloskar Brothers Ltd. could also benefit.

Steel witnessed a rise in its share, with JSW steel rising by 4% and steel authority of India rising by 5%. The focus on aatmanirbharta impacts positively for domestic steel demand. On the raw material side, the extension of customs duty waiver on ferrous scrap in FY2023 is a welcome development for secondary steel manufacturers.

Sustainable development

Investment granted for solar power usage. Production-linked incentives worth 195 billion rupees for solar modules to boost local manufacturing will focus on growth at leading panel manufacturers, including Tata Power Ltd., Suzlon Energy Ltd., Adani Enterprises Ltd. and Reliance Industries Ltd.

Improved transportation

The boosting of a 2000 km frail network under indigenous world-class technology KAWACH, new Vande Bharat trains would revolutionize Indian infrastructure. The budget has proposed an increase in CAPEX outlay by 35.4%, expansion of national highways network by 15% and addition of 25,000 km of roads.

Construction material

The government’s plan to build more homes for low-income earners across cities will mean more contracts for cement and construction majors UltraTech Cement Ltd., Ambuja Cements Ltd, Birla Corp. and ACC Ltd. Increased capital outlay for FY23 augurs well for industrials, engineering and capital goods, construction, and cement sectors. In addition, cement and home building materials will also boost from continued focus on affordable housing.

Boosting of technology with 5g support

The launch of 5G auctions in 2022 will help boost the telco sector and the classification of data storage as infrastructure spending will benefit companies including Bharti Airtel Ltd., Reliance Industries Ltd., Vodafone Idea Ltd., Mahanagar Telephone Nigam Ltd., HFCL Ltd., Tejas Networks Ltd., Sterlite Technologies Ltd. The CAPEX capital of budget 2022 influences the infrastructure status of the data centers, and it spurs a continued cycle of tech CAPEX in India. It also focuses on laying the building blocks of new-age sectors like drones, space, AI genomic and semiconductors.

Digital finances for better business promotion

Digital financial services providers in India are set to gain after Tuesday’s budget focused on expanding such services. These include PB Fintech Ltd., the parent of PolicyBazaar, newly listed Paytm’s owner, One 97 Communications Ltd., eClerx Services Ltd. and Paisalo Digital Ltd., which provides smaller loans through its app.

Better housing and job creation

The strong Capex allocation +35% in FY23 would create its multiplier effects for corporate India. It would boost the economy and make it the fastest in FY23. Besides, there would be continuing focus on mass housing and various Agri schemes that would help job creation and boost incomes at the lower end of the income pyramid. The stocks for housing finance companies have risen by 6%.

Improved industry development

Anuj Puri, Chairman of ANAROCK Group, emphasized that the ECLGS scheme has been extended till March 2023 for the MSMEs. “Besides providing an impetus to the industrial development, this move is likely to have a rub-off effect on the real estate sector as well given that the catastrophic impact of the pandemic on this sector (MSMEs) slowed down the demand for affordable housing in 2021. We saw the home loan eligibility for many affordable housing buyers impacted by the pandemic due to loss of jobs and many MSMEs being shut down – resulting in significantly lower sales in this category.

Lower logistics cost

Budget 2022-23 is being looked at as a booster for the infrastructure industry, focusing on PM Gati Shakti National Master Plan for Multi-Modal Connectivity aimed at coordinated planning and execution of infrastructure projects mainly by bringing down the logistics costs. This will surely help the PPP model emerge and provide employment and real estate development in smaller areas.The government’s impetus on PM Gatishakti’s plan to build world-class infrastructure and logistics will likely boost the consumer sector supply chain over a longer-term.

Smooth banking process

The digital inclusion in fund transfer and acquiring of 100% of post offices under the banking system would enable smooth and transparent real estate transactions in rural areas, and it would also encourage loan disbursal to the semi-urban population.

Faster project approvals

The central government would work with the state government for a reduction n time required for land and construction-related approvals for promoting affordable housing for the middle class and economically weaker sections in urban areas. The center would also work with financial sector regulators to expand access to capital and reduce the cost of intermediation. A higher growth rate center marked a Rs 7.50 lakh crore budget for FY23.

Rationalized taxation

The budget has also proposed the rationalization of tax withholding provisions relating to the purchase or rental of properties and including units of Real Estate Investment Trusts (REITs) within the bonus stripping/ dividend provisions. In addition, a slew of measures has also been announced from an indirect tax perspective, such as the extension of customs duty exemption on import of steel scrap by another year (up to March 31, 2023) and revocation of anti-dumping countervailing duty on specified steel products. (EY).