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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 can live together peacefully. There is strength in unity despite diversity.

Cover story focuses on the real estate sector. It is the second largest employer after agriculture in India. It is both in organised and unorganised sectors. Small, medium and larger players are involved. Central government and state governments are actively pursuing development of the housing sector to provide relief mainly to the low income groups. Bharat real estate sector is expected to reach USD 180 billion by 2020 with the housing sector contributing to 11.2% of GDP. Since last three years the sector has been reeling due to multiple factors like demonetisation, GST, RERA (which is for bringing transparency between buyers and sellers).

RERA provides protection to buyers but not to developers. West Bengal had also introduced Housing Industry Regulation Act (HIRA) which was not accepted by the Central government. GST has pushed the prices of housing. So called affordable houses are not affordable by lower middle class. Cost of registration is high. Cost of housing has increased steeply due to high cost of input, interests, overheads, labour, land, GST and registration. Large built up space, both in housing and commercial, are lying unsold throughout the nation. It is estimated to be an inventory of over 25 lakh crore of square feet. Developers are under stress. Many have become defaulters. Assets of many are in the insolvency process. Many projects have been declared stressed assets. Majority of population is even not in a position to afford to own a house due to high cost which is due to external factors, while margin of developer is very thin and even at loss for clearance of the stocks.

Position in rural areas is worse. Majority do not have money to buy one to two cottah land and build partial marked house. Due to population growth more in rural areas, parental house is unable to accommodate all members of the family. They are moving to urban areas. Government need to tackle this burning issue of rural housing for poor.

Many projects are held up in the initial stage. People are reluctant to invest. Return is very poor. Even rental income is far below the cost of interest of finance from bank/financial institution.

World Trade War:  From globalisation to nationalism and protectionism, USA is leading world to a situation of Trade War. USA is imposing new tariffs on USD 200 billion of Chinese goods. USA needs to confront China over its trading practices to defend USA’s long term interest. Trump has threatened to impose duties on a further USD 267 billion of ‘Made in China’ goods. 10% tariff would increase to 25% next year. The latest round of duties comes on top of 25% tariff already imposed on about USD 50 billion of Chinese goods. Tariffs are spread over wide range of goods.

But American consumers are unlikely to feel the pinch. USA is doing well. Trump has pushed the biggest tax cuts in recent US history to build manufacturing units in the US. The dollar is on a roll. Unemployment is down to 3.9%.

Trump claimed that China is the world’s biggest culprit of intellectual property (IP) theft. He believes that free trade is the pivot around which global trade revolves. It appears that it would be difficult for both the countries to retreat from Trade War. China is the only rival to US as the dominant power of the 21st century. Companies from the EU, Mexico and Japan may benefit. Bharat should explore potential of advantages.

Bharat Economy:  Economy is facing crisis of world Trade War. Non-performing assets, unemployment, rising crude oil prices, weak banking sector, etc. Government needs to review the hedging conditions for infrastructure loan; permit manufacturing sector to avail external commercial borrowings (ECB) up to USD 50 million with a minimum maturity of one year versus the earlier period of three years, removal of exposure limits of  20% of FPI’s corporate bond portfolio to a single corporate group, company and related entities and 50% of any issue of corporate bonds, exemption from withholding tax for issuance of Masala Bond and removal of restrictions on import of non-essential items and encouragement of exports.

Bharat, the Guru of the past, has to learn from USA’s historical tax cuts. Bharat personal tax and corporate taxes are too high and too complex. In the name of simplification, it is becoming more complex and complicated. This is breeding corruption, exposing to multiple interpretations and breeding high corruption. Tax returns are needed to be filed in with help and cost of professional. The goods and service tax (GST) is still work-in-progress with so many revisions in rates and changes in rules. Widening the tax base is necessary. Its compliances depend on simple structure and lower tax rates, so nobody induced to evade or seek help for adjustment.

Bharat’s current account deficit has widened to 2.4% of GDP. It may be narrowed in 2019. Trade deficit too widened to USD 46 billion as exports remained flattish. These, coupled with the outflow of Foreign Institutional Investor (FII) funds, have created pressure on the Indian Rupee. Government, in its efforts to arrest the Rupee fall, has imposed higher tariffs on import of 19 items, however this may trigger retaliation from the affected countries. Government has taken measures for additional capital flows of around USD 10 billion. Foreign industries may not be willing to invest in view of the falling rupee. It is not good to depend on a foreign capital. Foreign fund is flowing in to take over stressed but valuable and productive assets at steep discounts upto 70%. Many companies have valuable assets. As they have defaulted on some payments they are undergoing the bankruptcy process. If time has been given, these struggling companies could take recourse to assets sale and recover money from their debtors to come out of such so called default.

For instance IL&FS has over Rs. 1,15,814 crore of assets. But it has defaulted on some payments. It is on the door of insolvency process. Uncertainty looms large on industries and businessmen. Lakhs of retailers are out of business due to the presence of Walmart, IKEA and others and also e-commerce giants like Amazon, Flipkart, etc. SMEs need reforms and financial support. Power sector problems have not been resolved. Government’s timely positive actions are needed in all sectors to ‘Make in India’ a success story.

Stock Market: Stock market has been in grip of bears specially in respect of financial stocks. Due to default in payment by IL&FS, financial stocks have crashed by 15 to 45%. Foreign Portfolio Investors (FPIs) have pulled out a combined Rs.  196 billion (Rs. 107.46 billion from equity and Rs. 88.78 billion from debt) from the Indian markets so far in September. Market is concerned about widening current account deficit, rising oil prices, a sliding rupee, global trade wars, financial market crisis and ensuing general election. Regular profit booking has also impacted the markets sentiment. Domestic investors are perplexed while staying in market. Risk-reward is unattractive despite recent correction.

May Mother of Universe bless Bharatwasis to bring glory of the Bharatmata and become economically powerful and independent.