India’s real estate industry has raised concerns over the Union Budget 2026’s limited engagement with affordable housing, warning that the segment risks further contraction despite strong infrastructure-led spending. While developers have welcomed the government’s sustained capital outlay on transport and urban infrastructure, they argue that the absence of housing-specific incentives could deepen structural stress in the country’s residential market.
Public capital expenditure has been increased to Rs 12.2 lakh crore, reinforcing the government’s strategy of using infrastructure as a growth engine. Industry stakeholders acknowledge that investments in highways, metro rail systems, logistics corridors and urban services will improve connectivity and unlock new development zones. However, national developer bodies caution that infrastructure momentum alone cannot sustain inclusive urban growth if housing affordability continues to weaken. According to industry estimates, affordable housing currently accounts for less than one-fifth of new residential supply, a share that could decline sharply without policy recalibration. Developers point to outdated pricing thresholds and unit size definitions that no longer reflect current land values, construction costs or household incomes in growing urban regions. As a result, many builders are shifting away from entry-level housing towards higher-margin segments. Urban economists warn that this trend carries significant social and economic consequences. A sustained drop in affordable housing supply typically leads to rising rental costs, longer daily commutes and the expansion of informal settlements on city fringes. These outcomes, experts note, undermine productivity gains from infrastructure investment and increase environmental pressure through higher transport emissions.
The Budget’s silence on fiscal relief measures such as tax incentives for affordable housing construction, indirect tax rationalisation on inputs, or enhanced benefits for homebuyers has added to industry unease. Developers argue that such interventions could have improved project viability while keeping housing within reach of lower- and middle-income households who form the backbone of urban labour markets. At the same time, the industry has welcomed reforms aimed at improving ease of doing business. Measures supporting faster approvals, simplified compliance processes and greater digitisation are expected to reduce execution timelines and financing costs across the sector. Analysts believe these changes could partially offset rising costs, though they may not be sufficient to revive affordable housing on their own. From a city-planning perspective, the debate highlights a broader challenge facing India’s urban transition. Infrastructure expansion without parallel housing affordability risks producing cities that are better connected but socially fragmented. Planners argue that affordable housing should be treated as economic infrastructure essential for workforce stability, job access and urban resilience.
Looking ahead, industry bodies have urged policymakers to revisit housing definitions and fiscal frameworks to align them with present-day market realities. As India’s cities continue to expand, the ability to integrate infrastructure investment with accessible housing will determine whether growth remains inclusive, climate-resilient and people-centric, or increasingly unequal.
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