FM Sitharamam urges full utilisation of Capex in housing sector

Sitharaman’s Call: A review meeting, which was headed by Finance Minister Nirmala Sitharaman on 20 September, is to measure the capital expenditure of the Ministry of Housing and Urban Affairs in the present fiscal year. Rs 28,628 crore was allocated to the ministry, and Sitharaman asked the officials to meet the capex target without compromising the amount of the budget.

Affordable Housing Focus Area

The Pradhan Mantri Awas Yojana, or Urban, was a significant agenda of discussion during the meeting. This scheme will be critical in resolving affordable housing solutions that exist in urban India. Under social media networking platform X, the Finance Ministry emphasised Sitharaman's call to pick up the pace regarding the advancement of PMAY (U) progress for the urban population's housing needs. The Minister underlined the urban transport requirement and asked the officials to meet the capex targets for Metro Rail and the RRTS.

Continuous Capex Proposals

The government has, yet again kept the capex target at Rs 11.1 lakh crore, which matches the interim budget at 3.4 per cent of GDP , in Union Budget 2024. Consistent allocation shall, possibly trigger ongoing infrastructure development in most sectors.

Market Implications

Several stocks should benefit from the push from the government for affordable housing. The government, on August 9, approved PMAY-U 2.0, which includes a central assistance plan of Rs 2.3 lakh crore to support the construction, purchase, or rental of one crore houses for the urban poor and middle-class families over five years. Nomura has emphasised the fact that affordable housing finance companies will benefit from this as these segments are most well-represented among borrowers by low-income and economically weaker sections. Above that, other players like LIC Housing Finance, Aavas Financiers, and Home First Finance will also see positive benefits.

This would then translate into a cement demand of 179 million tonnes in FY30E, as against the demand of 147 million tonnes seen over the last five years. Elara Securities expects this ramp-up to have a two-fold positive impact on five-year demand CAGR by 120 basis points. UltraTech Cement, Ambuja Cements, and Shree Cement would be major beneficiaries of rising capex in housing and infrastructure projects. With clear commitment to maximising capital expenditure in housing finance, the said initiatives of the government are sure to boost growth for both the housing finance sector as well as the cement industry, while urban infrastructure develops throughout the country.