Union Budget 2026-27 has once again underlined the government’s preference for infrastructure-led growth, but affordable housing has emerged as a clear casualty. Despite repeated emphasis on “Housing for All,” allocations for key urban housing and city renewal schemes have been pared back, drawing sharp reactions from the real estate industry.
The Pradhan Mantri Awas Yojana (PMAY) Urban 2.0, the government’s flagship affordable housing programme, saw its allocation dip by 5.9 percent to Rs. 18,625.05 crore in the 2026-27 Budget Estimates. This compares with Rs. 19,794 crore allocated in Budget 2025-26, even as demand for affordable homes in urban India remains acute.
PMAY Urban: A Cut Amid Big Promises
While presenting the Budget, Finance Minister Nirmala Sitharaman said the allocation for PMAY Urban 2.0 would help fuel the scheme’s expansion and provide a further boost to affordable housing. However, the headline number masks a more uneven funding trajectory.
In the revised estimates of 2025-26, the PMAY Urban 2.0 allocation had already been sharply reduced to Rs. 7,500 crore, highlighting execution and fiscal pressures. This comes against the backdrop of much higher allocations in earlier years. In the interim Budget 2024-25, PMAY received Rs. 80,671 crore, while Budget 2023-24 had provided Rs. 79,590 crore.
Experts point out that PMAY has played a critical role in addressing housing shortages across urban and rural India. Over the past decade, the scheme has enabled the completion of more than 4.21 crore homes, largely through credit-linked subsidies that helped low- and middle-income families access formal housing and basic amenities.
Urban Missions Also Take a Hit
Affordable housing has not been the only urban priority to see reduced funding. Budget 2026-27 has cut allocations for the Urban Rejuvenation Mission: AMRUT and the Smart Cities Mission by around 20 percent. The combined allocation now stands at Rs. 8,000 crore, down from Rs. 10,000 crore in the 2025-26 Budget Estimates.
Urban planners note that AMRUT and Smart Cities play a supporting role for affordable housing by improving water supply, sanitation, transport, and liveability. Lower spending on these missions could slow the pace of integrated urban development, particularly in smaller cities.
No Fresh Push, Growing Disappointment
Perhaps the most striking aspect of Budget 2026-27 is the absence of any new measures for affordable housing. There were no announcements on interest subsidies, tax incentives, or a revision in the definition of affordable housing, an issue the industry has been flagging for years.
According to ANAROCK data, the affordable housing segment has been steadily losing ground. Its share in overall housing sales has fallen from over 38 percent in 2019 to 26 percent in 2022, and further to around 18 percent in 2025.
CREDAI National President Shekhar Patel expressed strong disappointment, saying that the lack of concrete measures could worsen the situation. He warned that with the current outdated definition of affordable housing, the segment’s share could fall further to nearly 12 percent of total housing supply. Patel described this as a serious warning sign for India’s lower middle class and middle class, even as developers continue to welcome the government’s broader infrastructure push.
Diverging Industry Views
Not all industry voices read the Budget the same way. Niranjan Hiranandani, Chairman of NAREDCO, struck a more optimistic note, pointing to the government’s continued commitment to PMAY. He said sustained support for affordable and sustainable housing would improve accessibility, stimulate allied industries, and reinforce housing as a driver of inclusive urban development.
Others argue that indirect measures may still support housing demand, even if affordable housing lacks direct incentives. Monty Joshi, Co-Founder of Sarvam Properties, said the Budget lays the groundwork for long-term growth by expanding housing demand beyond metro cores into Tier-2 and Tier-3 markets. He cited infrastructure investment, city economic regions, REITs, and municipal bonds as factors that could lower execution risks and improve capital access for developers.
Bhavesh Kothari, Founder and CEO of Property First Realty, also highlighted the rise in public capital expenditure to Rs. 12.2 lakh crore and improved connectivity through high-speed rail corridors and national waterways. According to him, these measures could unlock new housing corridors and ease pressure on metros, indirectly supporting housing demand.
A Gap Between Intent and Impact
While infrastructure, manufacturing, and urban connectivity remain central to Budget 2026-27, affordable housing appears to have slipped down the priority list. The reduced allocation for PMAY Urban 2.0, cuts to urban missions, and lack of fresh policy measures raise questions about how India plans to address its growing urban housing deficit.
For a segment that directly affects livelihoods, social mobility, and urban stability, the Budget’s silence is telling. As housing demand becomes more end-user driven and geographically dispersed, experts argue that affordable housing needs more than indirect support. It needs clear fiscal backing, updated definitions, and policy urgency if “Housing for All” is to remain more than a slogan.
