SWAMIH boosts affordable housing, fund of Rs 15,000 cr to be established

Under the SWAMIH Fund, 50,000 dwelling units in stressed housing projects have been completed, and keys handed over to homebuyers

A SWAMIH (Special Window for Affordable and Mid-Income Housing) Fund 2, a blended finance fund of Rs 15,000 crore aims to complete an additional one lakh affordable housing units, said Finance Minister Nirmala Sitharaman, adding the scheme has delivered about 50,000 homes in stalled projects, with 40,000 more by 2025.

 

“Under the SWAMIH fifty thousand dwelling units in stressed housing projects have been completed, and keys handed over to home-buyers. Another forty thousand units will be completed in 2025, further helping middle-class families who were paying EMIs on loans taken for apartments, while also paying rent for their current dwellings,” said Sitharaman.

 

 

Building on the July Budget, the government will also create an Urban Challenge Fund worth Rs 1 trillion to support initiatives under Cities as Growth Hubs, Creative Redevelopment of Cities, and Water and Sanitation. 

 

The Urban Challenge Fund will cover up to 25 per cent of the cost of viable projects, requiring at least 50 per cent of the funding to come from bonds, bank loans, or public-private partnerships (PPPs). For the fiscal year 2025-26, an initial allocation of Rs 10,000 crore has been proposed.

 

Furthermore, the Budget has proposed a revision in the Tax Deduction at Source (TDS) on rent, raising the annual exemption limit from Rs 2.4 lakh to Rs 6 lakh. FM Sitharaman announced the change, highlighting its aim to ease compliance for tenants and landlords.

 

Anuj Puri, chairman, Anarock Group said, “From a real estate perspective, the budget delivers both direct and indirect benefits, acting as a catalyst for growth. However, a notable shortfall was the absence of major announcements for the affordable housing sector, leaving stakeholders disappointed. Despite this, the budget overall remains strong and growth-oriented, with a clear focus on economic development and enhanced consumption.”

 

“The simplified TDS on rent decreases the compliance burden and enhances liquidity for landlords and will positively impact the rental housing market, especially in metro cities. This step minimizes tax pressures, promotes homeownership, and facilitates real estate investment, especially in second homes and Tier 2 and 3 cities.,” added Puri.

 

Niranjan Hiranandani, chairman of the National Real Estate Development Council and co-founder and managing director (MD) of Hiranandani Group, said, “The middle class, a crucial driver of demand, stands to benefit immensely from tax incentives that translate their aspirations for an improved quality of life into tangible home-buying prospects. This is expected to generate a positive demand curve in the real estate sector. Banks have reported a notable 40 per cent increase in retail home loan portfolios post-COVID, and the anticipated reduction in home loan interest rates will further fuel this sustained demand.”

 

“However, it is worth noting that the budget has not taken significant action towards uplifting affordable housing, a segment crucial for inclusive growth and economic stability,” he added.

  Venkatesh Gopalakrishnan, director group promoter’s office, MD, Shapoorji Pallonji Real Estate, believes that the reform can put more disposable income in the hands of the middle class, enabling them to direct funds toward both housing investments and consumer spending. “This increased liquidity naturally stimulates housing demand while generating broader economic activity,” he added. 

 

Pradeep Aggarwal, founder and chairperson, Signature Global (India) - an NCR-based prominent affordable housing player, stated the savings form tax exemption may lead to higher demand for housing units, particularly in the affordable segment. “However, the availability of affordable homes in major metros remains a key concern, especially in the wake of rising land and input costs. The government's intention to promote the redevelopment of cities may help ensure the availability of land for affordable housing,” he said.

 

Manju Yagnik, Vice chairperson of Nahar Group and Senior Vice President of NAREDCO Maharashtra said, “The Union Budget 2025-26 reaffirms the government’s commitment to inclusive development, economic growth, and a strategic focus on increasing consumption. The launch of SWAMIH Fund 2 is a welcome move to revive stalled housing projects, ensuring timely completion and restoring homebuyer confidence. The continued emphasis on affordable and mid-income housing will further drive demand, supporting homeownership aspirations. These measures collectively strengthen the foundation for a dynamic and resilient real estate market.”

 

“The Union Budget 2025 -26 was presented in the backdrop of slower GDP growth, higher than tolerable inflation rates, and historical lows of the Indian Rupee. For the housing sector, the allocation toward the SWAMIH Fund will support the delivery of stressed projects. The investor-friendly approach of the government is also apparent in the move to remove the erstwhile tax on deemed rent for two self-occupied properties compared to one earlier. However, some crucial aspects like sops for affordable housing and a national policy towards rental housing were not addressed,” said Shishir Baijal, Chairman and Managing Director, Knight Frank India. 

 

Akshat Khetan, Founder, AU Corporate Advisory and Legal Services noted, “The Union Budget 2025 has brought forth significant reforms aimed at revitalizing the real estate sector, particularly in the affordable housing segment. The reintroduction of the Credit-Linked Subsidy Scheme (CLSS) and tax exemptions for developers focusing on affordable housing will not only encourage homeownership among the economically weaker sections but also drive much-needed growth in the sector. These measures will play a crucial role in making housing more accessible and affordable for millions of Indians.” 

 

Anupama Reddy, vice president and co-group head - corporate ratings, ICRA, also believes that the tax exemption will enhance the disposable income in the hands of consumers and is a positive for affordable and mid-income housing segments. “The continued focus of the government on the affordable housing segment, as reflected in the higher allocation of 54 per cent towards the PMAY-Urban programme in FY2026 BE as compared to FY2025 RE, should aid the affordable urban housing segment.”

 

Reddy is expecting the introduction of a second tranche of the SWAMIH Fund of Rs. 150 billion to likely provide much-needed liquidity support to the stressed residential projects and support in the completion of an additional 40,000 housing units.

 

Each infra-related ministry will develop a three-year pipeline of projects suitable for implementation under the Public-Private Partnership (PPP) model. States will also be encouraged to follow suit and can seek financial support from the India Infrastructure Project Development Fund (IIPDF) to formulate PPP proposals.

 

Moreover, the government aims to enhance infrastructure and warehousing facilities for air cargo, with a special focus on high-value perishable horticultural produce. To ensure efficiency, cargo screening, and customs protocols will be streamlined and made more user-friendly, according to Budget.

 

“The supply of goods warehoused in a Special Economic Zone (SEZ) or in a Free Trade Warehousing Zone ((FTWZ)  to any person before clearance for exports or to the Domestic Tariff Area shall be treated neither as supply of goods nor as supply of services.”

 

The government's Revised Estimate for total receipts, excluding borrowings, stands at Rs 31.47 lakh crore, with net tax receipts accounting for Rs 25.57 lakh crore. Meanwhile, total expenditure has been revised to Rs 47.16 lakh crore, including a capital expenditure of Rs 10.18 lakh crore As per the updated projections, the fiscal deficit is now estimated at 4.8 per cent of GDP.