Budget 2025 Expectations: Dr. Niranjan Hiranandani’s Vision for a Stronger Indian Real Estate Sector
Real Estate Trends: Growth in Luxury vs. Slowdown in Affordable Housing
In the last five years, the real estate sector witnessed robust growth across affordable, mid-range, and luxury segments, averaging a 10% compound annual growth rate. However, Dr. Niranjan Hiranandani explains that the past year has seen a slowdown in affordable housing due to two primary reasons:
Home loan interest rates spiked from 6.5% to 8.7%, significantly impacting loan affordability.
PMAY (Pradhan Mantri Awas Yojana) funding for 1.1 crore homes has been exhausted, leaving a gap in government support.
Despite these setbacks, Dr. Niranjan Hiranandani remains optimistic. He notes that the government’s announcement to add 1 crore new urban homes and 2 crore rural homes under PMAY is a promising step forward.
Why Affordable Housing is Struggling—And How Budget 2025 Can Help
As per Dr. Niranjan Hiranandani, the spike in interest rates has added a significant burden to aspiring homeowners. The 20%+ rise in EMIs has reduced demand in the affordable segment, even though aspirations post-COVID have risen.
The delay in PMAY fund allocations is another major hurdle. With the scheme announced but not operational, the sector is in limbo. Dr. Niranjan Hiranandani recommends immediate disbursement after the Budget to stimulate activity in this segment.
Stamp Duty and Tax Reform: The Real Need of the Hour
In states like Maharashtra, Dr. Niranjan Hiranandani points out that almost half of the property cost consists of taxes—stamp duty, ready reckoner rates, and development charges. He urges the government to reduce these levies, just as it did during the pandemic.
“Reducing taxes doesn’t reduce government revenue—it increases it,” he explains, referencing how lower rates during COVID-19 boosted both sales and tax collections.
Ready Reckoner Rates: Double-Edged Sword
The ready reckoner rate system, while useful for revenue generation, often pushes land prices beyond affordability. Dr. Niranjan Hiranandani suggests that these rates be stabilized to avoid unnecessarily inflating project costs.
Slums vs. Formal Housing—A Broken Urban Planning Cycle
One of the most compelling points made by Dr. Niranjan Hiranandani is the self-defeating cycle of high taxation:
Taxes make formal housing unaffordable.
People migrate to slums or jhopadpattis.
The government then subsidizes slum redevelopment.
Slums get regularized and further urban pressure builds.
Instead, Dr. Niranjan Hiranandani recommends that taxation be restructured so that homes are affordable from the beginning—thus reducing slum proliferation and easing pressure on urban infrastructure.
GST on Construction Materials Must Be Rationalized
The construction industry is being stifled by high GST rates on inputs, particularly cement. Reducing this to 18% could significantly lower the overall cost of housing. Dr. Niranjan Hiranandani advocates for rational GST rates to make development viable for private players without compromising quality.
Housing Is Not Just Shelter—It’s Economic Infrastructure
According to Dr. Niranjan Hiranandani, housing must be seen as economic infrastructure, not just a social good. A booming real estate sector creates:
Massive employment
Demand for steel, cement, transport, logistics, and more
Increased tax collections when homes are priced right
If the Budget 2025 includes real estate-friendly reforms, India could witness 8% GDP growth, especially in infrastructure-focused cities.
Private Sector Role and Urban Planning
While the government continues to play a pivotal role in infrastructure, the private sector is equally critical. However, red tape, high taxes, and inconsistent regulations discourage private participation. Dr. Niranjan Hiranandani suggests that simplifying land approvals, offering FSI incentives, and reducing compliance costs will enable faster urban expansion.
Election-Year Politics and Housing Policy
Dr. Niranjan Hiranandani openly questions why well-known solutions are not implemented, especially in an election year. The reason, he believes, lies in outdated bureaucratic advice that higher taxes bring more revenue.
But he counters with historical data: lower tax rates have often generated more revenue due to increased market activity. In his words:
“We already know what works. What we need is political will.”
Conclusion: The Path Forward for Real Estate and Economic Growth
Dr. Niranjan Hiranandani is not just highlighting problems—he’s offering tested, actionable solutions that can uplift the housing sector, create employment, and strengthen India’s economic backbone. The upcoming budget is a pivotal moment for change. It’s time for the government to act decisively by reducing taxes, facilitating funding, and rationalizing policies.
The future of Indian real estate depends on it—and so does the dream of “Housing for All.”
F&Qs
Who is Dr. Niranjan Hiranandani?
Dr. Niranjan Hiranandani is the Founder and Chairman of the Hiranandani Group, one of India’s leading real estate development companies. He is also a noted economist, educationist, and real estate thought leader who frequently shares insights on housing, infrastructure, and urban policy. Subscribe to his channel here: Dr. Niranjan Hiranandani YouTube.
What are Dr. Niranjan Hiranandani’s key recommendations for Budget 2025?
His recommendations include:
Reducing stamp duty and ready reckoner rates.
Expanding PMAY eligibility limits.
Lowering GST on cement from 28% to 18%.
Ensuring timely fund disbursement for affordable housing.
Simplifying land and development regulations.
Why is affordable housing slowing down in India?
According to Dr. Niranjan Hiranandani, high interest rates, exhausted PMAY funds, and increased construction costs due to high taxation are key reasons. Budget 2025 must address these through policy and financial reforms.
How much of a home’s cost is taxes, according to Dr. Hiranandani?
In cities like Mumbai, around 50% of a home's cost goes toward government taxes and charges—including stamp duty, FSI premiums, and development charges. This makes homes unaffordable for many buyers.
How does reducing taxes benefit the real estate sector?
Lower taxes reduce the overall cost of housing, increasing demand. Dr. Niranjan Hiranandani highlights that when the government reduced stamp duty during COVID-19, both home sales and tax revenues increased.
What is the impact of GST on construction materials like cement?
The current 28% GST on cement inflates construction costs, making housing unaffordable. Dr. Hiranandani suggests lowering it to 18% to support both private developers and homebuyers.
What role does urban planning play in housing affordability?
Poor urban planning, high taxation, and inconsistent regulation have led to slum proliferation. Dr. Niranjan Hiranandani believes better tax policies and infrastructure investment can create formal housing solutions and reduce informal settlements.
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