18

Dear Reader,

India-Bharat will celebrate series of festivals till December. In September, the divine Mother of the Universe will be worshipped. Divine Cosmic Mother is magnificent, omniscient, omnipresent, omnipotent and benevolent. Mother bestows on her children love, divine wisdom, strength, prosperity, infinite happiness, humility, sweet speech, the zeal for creative endeavour and peace. Mother Infinity destroys all evil and demonic forces. May Mother grant us spiritual strength so that with purity, humility and harmony, we live together peacefully. There is strength in unity despite diversity.

Our cover story focuses on the real estate sector. The real estate sector is the second largest employer after agriculture. It employs unskilled, semi-skilled, highly skilled and white collar workers. It comprises of housing, retail, commercial, hospitality and entertainment. The Indian real estate market size is expected to touch USD 180 billion by 2020. The housing sector alone contributes 5.6% to the country’s Gross Domestic Product (GDP). The sector has high potential. As a source of employment, it can be at par with agriculture. This sector can bring about smart cities and also modern villages as envisioned by Mahatma Gandhiji. Since some years, this sector has been passing through great challenges. Apart from high rates of interest, this sector has witnessed a mismatch between supply and demand. While inventory has been steadily building up, most units are priced too high thus making those unaffordable for majority of the population. With economy showing signs of uncertainty, this sector stands to suffer more as people are reluctant to invest in housing in uncertain times. There is a large inventory of unsold semi built up and full built up units - both residential and commercial. Many projects are held up in the initial stage. Many projects have been declared stressed assets. Many are facing bankruptcy proceedings. The GST and the Benami Property Act will also have a major impact.

The introduction of the Real Estate (Regulation and Development) Act, 2016 is a welcome development. With this Act finally coming into force on May 1, 2017, India now has its first realty regulator. The Act brings in much-needed transparency and a range of benefits for both, buyers and developers. RERA will bring almost 83,000 registered builders in India under its purview, and with better regulation and accountability more investments from foreign and domestic financial institutions are expected to flow into this sector. The buyers, now aware of their rights and aware about whom to approach in case some problem arises, will also feel more comfortable in investing in real estate. RERA will achieve bigger success if the state governments endorse this Act and do not do anything to dilute the Act.

In addition, the Securities and Exchange Board of India (SEBI) has given its approval for the Real Estate Investment Trust (REIT) platform, which will promote investments into this sector.

Population is increasing. However, the developers have been focusing mostly in meeting the housing needs of the affluent and middle classes so far. The government has rightly started emphasizing on affordable housing for the masses. Affordable housing is finally set to get the much coveted infrastructure status. One crore houses are to be built in rural India by 2019. This sector will have cheaper cost of finance including funding sourced from external commercial borrowings (ECB), refinancing of housing loans by the National Housing Bank. This can give a further boost to the sector. A new credit linked subsidy scheme (CLSS) for the mid-income group with tenure of loans to 20 years is welcome. The allocation of
` 23,000 crore under the Pradhan Mantri Awas Yojana (PMAY) will boost housing in rural areas. But the qualifying area is not enough. In both cities and rural areas, land prices are very high. The carpet area of 30 sq.m. (that is approximately 323 sq.ft.) cannot accommodate a nuclear family with two children. It should be a minimum 40 sq.m. (10 sq.m. each for two bedrooms, 8 sq.m. for kitchen, 5+5 sq.m. for bathrooms, 2 sq.m. for passage).

Housing condition in rural areas is pathetic. People live in cottages which are mostly fragile structures made of mud and rice husks. The scheme should be to provide 2 kottah land plus ` 5 lakh for building even brick cottage. Loan should be at 6% with repayment in 20 years. Having a kitchen/ roof garden should be a condition of loan.

India’s economic growth projection of 7.5% and RBI’s projection of 7.3% would be difficult to achieve. Rupee appreciation has its impact on export also. Rajiv Kumar, Vice Chairman, NITI Aayog, is confident that economy will grow 7.7-7.5% despite economy growth sliding to a three year low of 5.7% in the first quarter of the current fiscal year owing to slump in manufacturing & roll out of GST which is now completed. There is no sign of creation of 10 million jobs. New investment is almost negligible. Despite cuts in policy rates by RBI, the reduction is not fully getting transmitted to the end-customers thus keeping interest rate high. This is having an adverse impact on the economy, especially on infrastructure and manufacturing. The ‘Make in India’ campaign is also suffering in the process. Almost all corporate sectors are reeling under high debts and unsold stocks.  India needs real investments, higher productivity, friendly reforms, free from official tyranny. Government’s measure for detection of shadow money has also affected domestic demand. Immunity scheme at 20% of declaration of shadow money would do wonders for large investments. HSBC doubts the accuracy of GDP.

In 2016-17, foreign fund inflows aggregated USD 60.08 billion. Prime Minister Narendra Modi’s programmes like Digital India, Start-up India and Make in India will boost the economy in times to come. Reforms like these, coupled with introduction of GST, are poised to move India up on the World Bank Index of the ‘ease of doing business’ as well as on the Global Competitiveness Index.

In China, manufacturing activities have accelerated. It may sustain its economic growth of 6.9%. China will run a current account surplus of 1.5-2% of GDP. The US will most likely run a deficit of around 2% but possibly as high as 3% of GDP while it has a surplus of around 10% of GDP. Germany’s external surplus now exceeds 8% of GDP. The UK will have current account deficit of above 3% of GDP. The global economy has grown at an average rate of 3.3%.

May God bless India-Bharat to fight demonic forces and help its citizens to live in peace and harmony.