West Bengal Real Estate Sector Reacts to Union Budget 2026-27
Real estate developers across West Bengal offered a mixed response to the Union Budget 2026-27 on Sunday, welcoming the government's strong emphasis on infrastructure-led growth while expressing significant disappointment over the absence of targeted measures for the crucial affordable housing segment. Industry leaders warned that without intervention, affordable housing supply could contract substantially amid escalating construction and land costs.
Infrastructure Investments Hailed as Growth Catalyst
The budget's announcement of a higher public capital expenditure target of Rs 12.2 lakh crore for the fiscal year 2027, earmarked for highways, metro rail networks, logistics corridors, and urban infrastructure, was broadly welcomed. Industry bodies believe this substantial investment will enhance regional connectivity and unlock new growth corridors, particularly in Tier-2 and Tier-3 cities across eastern India.
"Investments in highways, Metros, railways and urban infrastructure will enhance connectivity and support long-term urban development, especially in Tier-2 and Tier-3 cities," stated Sushil Mohta, President of CREDAI West Bengal. "Faster approvals, simplified processes and digitisation would help reduce project timelines and holding costs for developers."
Harshavardhan Neotia, Chairman of the Ambuja Neotia Group, echoed this sentiment, stating the budget reinforced the Centre's commitment to urban transformation. "The 8.9% increase in capital expenditure to Rs 12.2 lakh crore will sustain momentum in large-scale development and create opportunities across the construction and real estate value chain," he said. He highlighted measures like dedicated REITs for CPSE asset monetisation and the Infrastructure Risk Guarantee Fund as positive steps to de-risk capital deployment and attract institutional investors.
Affordable Housing Segment Faces Critical Challenges
Despite the infrastructure optimism, a primary point of contention was the continued neglect of policy support for affordable housing. Sushil Mohta flagged this as a "serious concern" for the sector.
"The long-pending demand to revise outdated price and area caps has again been ignored," Mohta lamented. He issued a stark warning: "With rising land and construction costs, affordable housing risks shrinking from nearly 18% to about 12% of total supply. A sustained decline in supply could push up rentals, increase commuting distances for the urban poor, and fuel the growth of informal housing in urban areas."
Developers also noted the absence of several other anticipated relief measures, including:
- Rationalisation of Goods and Services Tax (GST) rates for construction materials.
- Restoration of input tax credit benefits.
- Enhanced income tax benefits on home loans to stimulate buyer demand.
- Granting of official industry status to the real estate sector.
Focus on Tier-2, Tier-3 Cities and Financial Instruments
The budget's allocation of Rs 5,000 crore per City Economic Region (CER) and its continued focus on developing Tier-2 and Tier-3 cities were seen as particularly significant for the eastern region's growth. Harshavardhan Neotia described this as representing "the next growth frontier" for real estate.
Rishi Jain, Managing Director of Jain Group, pointed to the focus on financial instruments like Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InVITs) as positive. "The focus on infrastructure, REITs, and InVITs would help unlock capital and support long-term housing growth, boosting confidence among both developers and homebuyers," he stated.
These instruments allow smaller investors to participate in large-scale projects. REITs enable investment in income-generating commercial real estate like malls or offices, while InVITs function like mutual funds for infrastructure projects such as highways or power grids.
The budget was presented by Finance Minister Nirmala Sitharaman in an 85-minute speech, marking her ninth consecutive budget address and cementing her position as India's longest-serving finance minister.
