The Union Budget for FY27 was presented in a context of steady domestic growth, easing inflationary pressures, and a continued emphasis on fiscal consolidation. The Government has chosen policy continuity over big bang sector-specific interventions, reinforcing confidence in India’s medium-term growth trajectory while keeping public finances on a disciplined path. The fiscal deficit is targeted to remain on a gradual consolidation trajectory, while growth is supported through sustained public investment.
A key anchor of the Budget is the maintenance of elevated capital expenditure at approximately INR 12 trillion, reaffirming infrastructure-led growth as the primary policy lever. Continued allocations toward transport, logistics, and regional connectivity, alongside the focus on Urban Economic Regions (CERs), are expected to shape urbanisation patterns and economic activity beyond the largest metropolitan centres. These measures provide an indirect but supportive backdrop for real estate demand across residential, commercial, and logistics segments over the medium term. From a real estate standpoint, however, the Budget remains largely non-interventionist. There are no new fiscal incentives, tax benefits, or regulatory reforms targeted specifically at real estate. Notably, the absence of fresh measures for affordable housing stands out, particularly when housing affordability continues to face pressure from elevated input costs and financing conditions. With no changes to income tax slabs, household affordability sees limited incremental support. Overall, the Budget is constructive at a macro level, but near-term real estate performance will remain driven by execution of infrastructure projects, interest rate trends, and market fundamentals rather than direct policy stimulus.
Commenting on the recently announced Union Budget 2026, Shishir Baijal, International Partner, Chairman and Managing Director, Knight Frank India said, “We welcome the Honourable Finance Minister’s announcement today, so far as the thrust on infrastructure development is concerned. The FY27 Union Budget signals continuity in India’s macro-growth trajectory, with a consistent infrastructure push and fiscal discipline. The Budget maintains a stable macro environment for investors, keeping buyer sentiment measured and pragmatic. The focus on selective opportunities in tier-2 and tier-3 growth corridors, and connectivity in urban economic regions, provides a supportive backdrop for demand in residential and logistics markets over the medium term. However, disappointingly, the Budget does not introduce any real estate-specific fiscal incentives, especially to boost affordable housing in India, which has already been a cause of concern for the sector.”