Monday, August 31, 2009
Centre Wants To Put In Place Well-Defined Property Rights
Centre Wants To Put In Place Well-Defined Property Rights
The Times of India (Chennai edition)
Mahendra Kumar Singh, New Delhi, August 31, 2009
India’s litigation-ridden property rights system might finally get a much-needed makeover, with the urban development ministry writing to state and local authorities to put in place a property title certification system to ensure conclusive title guarantees. The ministry also plans to organize a workshop for local officials to help chalk out an action plan.
This could revolutionise the land market and also have major implications for India’s economy. Celebrated economist Hernando de Soto has pointed out that capitalism truly succeeds only in countries with well-defined property rights. In developed countries, assets can be leveraged as collateral to take loans, which form the basis of entrepreneurship. But the lack of property rights in developing countries turns assets into ‘dead capital’.
It’s an argument that resonates in India, with property disputes being a bane for millions. The cult hit ‘Khosla ka Ghosla’ made the point humourously, but many people have suffered the same problem first-hand, and found nothing even remotely funny about it.
The Times of India (Chennai edition)
Mahendra Kumar Singh, New Delhi, August 31, 2009
India’s litigation-ridden property rights system might finally get a much-needed makeover, with the urban development ministry writing to state and local authorities to put in place a property title certification system to ensure conclusive title guarantees. The ministry also plans to organize a workshop for local officials to help chalk out an action plan.
This could revolutionise the land market and also have major implications for India’s economy. Celebrated economist Hernando de Soto has pointed out that capitalism truly succeeds only in countries with well-defined property rights. In developed countries, assets can be leveraged as collateral to take loans, which form the basis of entrepreneurship. But the lack of property rights in developing countries turns assets into ‘dead capital’.
It’s an argument that resonates in India, with property disputes being a bane for millions. The cult hit ‘Khosla ka Ghosla’ made the point humourously, but many people have suffered the same problem first-hand, and found nothing even remotely funny about it.
Is recovery here? GDP data today
Is recovery here? GDP data today
Hindustan Times, HT Business, August 31, 2009, Page 23
All eyes are on India’s gross domestic product (GDP) data for the April-June quarter, set to be released on Monday amid hopes of a strong economic rebound after factory output rose 7.8 per cent in June — the strongest growth in 16 months.
Manufacturing, which accounts for 80 per cent of overall industrial output, grew by 7.3 per cent. Consumer durables grew by a healthy 15.5 per cent, reflecting a rise in spending on goods like televisions and refrigerators.
Government officials said industrial output is estimated to have clocked a 7 per cent growth in July — the data for which would be released in less than a fortnight.
Recent data, including automobile production, indicate that industrial output data for July would reflect expansion, even though exports have faltered.
But there are two big question marks —plunging exports and deficient rainfall.
Exports fell an annual 27.7 per cent in June to $12.8 billion, the ninth straight monthly fall. It is estimated to have fallen 28 per cent in July.
“Despite positive growth and signs of recovery in the first quarter of 2009-10, the growth outlook for the industrial sector remains mixed,” the Reserve Bank of India has said in its latest annual report.
If rains continue to be elusive, these scattered greenshoots of recovery could dry up in no time. Agriculture accounts for around 17 per cent of the GDP.
“The agricultural growth prospects in 2009-10 have to be assessed taking into account the output impact of deficient monsoon,” the RBI said.
“Given our risk scenario of a 5-8 per cent decline in agricultural GDP, we can expect this year’s shortfall to shave 1 percentage point from overall GDP growth,” Standard Chartered economist Samiran Chakraborty commented.
Hindustan Times, HT Business, August 31, 2009, Page 23
All eyes are on India’s gross domestic product (GDP) data for the April-June quarter, set to be released on Monday amid hopes of a strong economic rebound after factory output rose 7.8 per cent in June — the strongest growth in 16 months.
Manufacturing, which accounts for 80 per cent of overall industrial output, grew by 7.3 per cent. Consumer durables grew by a healthy 15.5 per cent, reflecting a rise in spending on goods like televisions and refrigerators.
Government officials said industrial output is estimated to have clocked a 7 per cent growth in July — the data for which would be released in less than a fortnight.
Recent data, including automobile production, indicate that industrial output data for July would reflect expansion, even though exports have faltered.
But there are two big question marks —plunging exports and deficient rainfall.
Exports fell an annual 27.7 per cent in June to $12.8 billion, the ninth straight monthly fall. It is estimated to have fallen 28 per cent in July.
“Despite positive growth and signs of recovery in the first quarter of 2009-10, the growth outlook for the industrial sector remains mixed,” the Reserve Bank of India has said in its latest annual report.
If rains continue to be elusive, these scattered greenshoots of recovery could dry up in no time. Agriculture accounts for around 17 per cent of the GDP.
“The agricultural growth prospects in 2009-10 have to be assessed taking into account the output impact of deficient monsoon,” the RBI said.
“Given our risk scenario of a 5-8 per cent decline in agricultural GDP, we can expect this year’s shortfall to shave 1 percentage point from overall GDP growth,” Standard Chartered economist Samiran Chakraborty commented.
Residential prices creep up
Residential prices creep up
The Hindu Business Line, August 31, 2009, Page 15
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With demand, especially in the affordable segment, picking up, developers are getting back to the customary practice of hiking the rates.
--------------------------------------------------------------------------------
S. Shanker
Call it better home loan rates or just improved consumer confidence and market sentiment, demand in the residential category, particularly in the affordable segment, has picked up.
And, as bookings and enquiries pour in, developers, particularly in Mumbai, have gone back to the customary practice of hiking rates, which have risen 20-30 per cent since May and continue to go up by the day as bookings grow.
Sales improve
Of late, there has been a marked improvement in sales across metros. DLF reported bookings for 1,356 apartments, measuring 2 million sq.ft, for its project Capital Greens, on a single day.
Indiabulls Group, which launched an affordable home project in Gurgaon, has closed over 100 bookings of its launch of 200 in the first phase. The project is a cluster of 800 apartments.
In Mumbai, Kalpataru Group’s project in Thane saw 110 flats sold in 10 days at Rs 3,100 per sq.ft. Another of its project at LBS Marg logged a sale of 50 flats after the rate for a two-and-a-half BHK was reduced from Rs 98 lakh to Rs 82 lakh. At the distant western Mumbai suburb of Virar, a residential township project promoted by Rustomjee and Evershine on 217 acres registered sale of 174 apartments at Rs 1,700 a sq.ft.
“DB Realty project at Dahisar registered 1,400 bookings, even before construction began,” says Mr Suman Memani, Associate Vice-President, Religare Securities, who also points out that prices have since gone up, particularly in the Mumbai suburbs.
Prices go up
According to Mr Memani, HDIL’s Versova project launched at Rs 7,500 a sq.ft had since gone up to Rs 9,500. Similarly, DB Realty had raised prices at Dahisar to Rs 3,300, from Rs 2,700. The most recent instance is of the Harasiddhi Group, which launched its offering in Goregaon, near here, at Rs 10,000 a sq.ft (carpet area), raised the price to 10,300 a sq.ft.
In general, the price hike creeps in after 50-60 per cent of the project gets sold out. In some ways developers are testing the waters and gauging how much the market can absorb. In any case, after the major chunk is sold any developer can afford to wait for a better tiding, he says.
The price increase is only 5-8 per cent since May, says Mr Anand J. Gupta, General Secretary, Builders Association of India.
Justifying the increase, Mr Gupta says it is purely based on demand-supply dynamics. Builders, who were languishing for want of enquiries, now see a silver lining on the horizon, after they had lowered prices to the maximum to stimulate demand.
Mr Gupta points out that historically real estate had either gone up or come down. It had never been stagnant and in places where it had been constant, development was rather stunted such as in Baroda and Ahmedabad. For ages, the only reason for real estate remaining a choice asset class is because it appreciates, he says.
NO JUSTIFICATION
Mr Pawan Swamy, Managing Director - West India, Jones Lang LaSalle Meghraj, sees little justification for escalation in rates at this point in time. The corrections that have taken place in overheated locations of cities such as Mumbai were required, since developers had priced themselves out of the market.
The fact that the slowdown forced them to rationalise their rates has been working to the developers’ advantage, and one would have assumed that the recent market dynamics had delivered a clear and unequivocal message.
However, Mr Swamy feels that there has been a resurgence of demand for residential property in many markets that are not seeing much supply. In such locations, a number of developers who have successfully sold a sizable component of their existing projects are now attempting to see what kind of price escalations the market will be able to accommodate.
This is, to a significant extent, a gamble that can backfire if the developer in question misjudges market dynamics.
However, this is not happening across the board, but rather in high demand-low supply locations and only among developers who have sufficient capital clout. Nevertheless, much depends on the buyer community — if such price escalations are pandered to, we may be looking at price bubbles building up in such locations.
Last month, Mr Deepak Parekh, Chairman, HDFC, cautioned developers against raising prices, stating that such a move would stall recovery of the segment. He was also sceptical about the builder fraternity’s commitment to the affordable housing segment.
The Hindu Business Line, August 31, 2009, Page 15
--------------------------------------------------------------------------------
With demand, especially in the affordable segment, picking up, developers are getting back to the customary practice of hiking the rates.
--------------------------------------------------------------------------------
S. Shanker
Call it better home loan rates or just improved consumer confidence and market sentiment, demand in the residential category, particularly in the affordable segment, has picked up.
And, as bookings and enquiries pour in, developers, particularly in Mumbai, have gone back to the customary practice of hiking rates, which have risen 20-30 per cent since May and continue to go up by the day as bookings grow.
Sales improve
Of late, there has been a marked improvement in sales across metros. DLF reported bookings for 1,356 apartments, measuring 2 million sq.ft, for its project Capital Greens, on a single day.
Indiabulls Group, which launched an affordable home project in Gurgaon, has closed over 100 bookings of its launch of 200 in the first phase. The project is a cluster of 800 apartments.
In Mumbai, Kalpataru Group’s project in Thane saw 110 flats sold in 10 days at Rs 3,100 per sq.ft. Another of its project at LBS Marg logged a sale of 50 flats after the rate for a two-and-a-half BHK was reduced from Rs 98 lakh to Rs 82 lakh. At the distant western Mumbai suburb of Virar, a residential township project promoted by Rustomjee and Evershine on 217 acres registered sale of 174 apartments at Rs 1,700 a sq.ft.
“DB Realty project at Dahisar registered 1,400 bookings, even before construction began,” says Mr Suman Memani, Associate Vice-President, Religare Securities, who also points out that prices have since gone up, particularly in the Mumbai suburbs.
Prices go up
According to Mr Memani, HDIL’s Versova project launched at Rs 7,500 a sq.ft had since gone up to Rs 9,500. Similarly, DB Realty had raised prices at Dahisar to Rs 3,300, from Rs 2,700. The most recent instance is of the Harasiddhi Group, which launched its offering in Goregaon, near here, at Rs 10,000 a sq.ft (carpet area), raised the price to 10,300 a sq.ft.
In general, the price hike creeps in after 50-60 per cent of the project gets sold out. In some ways developers are testing the waters and gauging how much the market can absorb. In any case, after the major chunk is sold any developer can afford to wait for a better tiding, he says.
The price increase is only 5-8 per cent since May, says Mr Anand J. Gupta, General Secretary, Builders Association of India.
Justifying the increase, Mr Gupta says it is purely based on demand-supply dynamics. Builders, who were languishing for want of enquiries, now see a silver lining on the horizon, after they had lowered prices to the maximum to stimulate demand.
Mr Gupta points out that historically real estate had either gone up or come down. It had never been stagnant and in places where it had been constant, development was rather stunted such as in Baroda and Ahmedabad. For ages, the only reason for real estate remaining a choice asset class is because it appreciates, he says.
NO JUSTIFICATION
Mr Pawan Swamy, Managing Director - West India, Jones Lang LaSalle Meghraj, sees little justification for escalation in rates at this point in time. The corrections that have taken place in overheated locations of cities such as Mumbai were required, since developers had priced themselves out of the market.
The fact that the slowdown forced them to rationalise their rates has been working to the developers’ advantage, and one would have assumed that the recent market dynamics had delivered a clear and unequivocal message.
However, Mr Swamy feels that there has been a resurgence of demand for residential property in many markets that are not seeing much supply. In such locations, a number of developers who have successfully sold a sizable component of their existing projects are now attempting to see what kind of price escalations the market will be able to accommodate.
This is, to a significant extent, a gamble that can backfire if the developer in question misjudges market dynamics.
However, this is not happening across the board, but rather in high demand-low supply locations and only among developers who have sufficient capital clout. Nevertheless, much depends on the buyer community — if such price escalations are pandered to, we may be looking at price bubbles building up in such locations.
Last month, Mr Deepak Parekh, Chairman, HDFC, cautioned developers against raising prices, stating that such a move would stall recovery of the segment. He was also sceptical about the builder fraternity’s commitment to the affordable housing segment.
After a lull, land deals make a comeback
After a lull, land deals make a comeback
The Hindu Business Line, August 31, 2009, Page 15
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Coinciding with the return of buyer interest in select pockets of the residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.
--------------------------------------------------------------------------------
Moumita Bakshi Chatterjee
The slowdown in the property market, induced by the global meltdown and negative sentiments, had dealt a body blow to the mega land deals, in the country. But the gloom seems to be finally lifting. Coinciding with the return of buyer interest in select pockets of residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.
Consider this. DLF Ltd recently made headlines when it walked away with 350.7 acres in Gurgaon, for an estimated Rs 1,750 crore, marking one of the largest land deals in the country. The prime land, on the Gurgaon-Faridabad road, had been put on the block for re-bid after the only bidder in the first round (DLF) had drawn attention to certain difficulties in project implementation.
HSIIDC (Haryana State Industrial & Infrastructure Development Corporation) re-invited bids in July this year with easier terms and conditions, including staggered payment plan spread over seven years. This time, DLF clinched the deal with its winning bid of Rs 12,000 per square metre — two other bidders did not qualify on technical grounds.
The land in the Delhi suburb would be used for development of commercial, residential, sports complexes, and an 18-hole golf course. DLF, however, remains tight-lipped about the project, but sources say that the land deal is “positive” for the company, given its proximity to South Delhi on one side and the existing golf course on the other.
DLF is not the only one going after such transactions. Earlier this year, Anant Raj Industries decided to set aside nearly Rs 400 crore from its cash reserves, to acquire land for upcoming residential projects.
So are the land deals back in reckoning, after a long dry spell? Industry experts believe that land acquisition will gather pace, but will remain largely need-based.
“The market definitely is improving, new projects are being launched and the cash flow, for builders, is getting back in shape on the back of QIP issues and some proposed public offers that are being lined-up,” says Mr Manish Aggarwal, Executive Director, Investment Services, Cushman & Wakefield (C&W) India.
Time to buy
While the conditions are turning positive, the biggest clincher clearly is land valuation. In many cases the land prices have corrected nearly 60-70 per cent, says an industry observer.
Agrees Mr Amit Sarin, Director and CEO, Anant Raj Industries. “It is the best time to buy land — the valuation is a fraction of the 2007-level. Everyone is announcing low cost and affordable housing projects and the main ingredient of low cost in real estate is the land cost, not construction cost,” Mr Sarin points out.
But Anant Raj Industries, itself a zero-debt company, expects land buying to remain selective for a while.
“It is not a trend in the industry. It will happen only in those cases where the land costs are extremely attractive and the builder has a comfortable liquidity position,” he adds.
The company has stayed away from aggressive land buying over the last 2-3 years.
No frenzy likely
Real estate consulting firm CBRE too does not foresee the return of land frenzy seen in 2007-2008. “Companies are not rushing into transactions. They are more cautious and evaluating deals carefully on parameters such as potential for development, location, margins and valuation,” says Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis South Asia Pvt. Ltd.
The Hindu Business Line, August 31, 2009, Page 15
--------------------------------------------------------------------------------
Coinciding with the return of buyer interest in select pockets of the residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.
--------------------------------------------------------------------------------
Moumita Bakshi Chatterjee
The slowdown in the property market, induced by the global meltdown and negative sentiments, had dealt a body blow to the mega land deals, in the country. But the gloom seems to be finally lifting. Coinciding with the return of buyer interest in select pockets of residential market and the improved liquidity position of builders, land auctions are inching back into the spotlight.
Consider this. DLF Ltd recently made headlines when it walked away with 350.7 acres in Gurgaon, for an estimated Rs 1,750 crore, marking one of the largest land deals in the country. The prime land, on the Gurgaon-Faridabad road, had been put on the block for re-bid after the only bidder in the first round (DLF) had drawn attention to certain difficulties in project implementation.
HSIIDC (Haryana State Industrial & Infrastructure Development Corporation) re-invited bids in July this year with easier terms and conditions, including staggered payment plan spread over seven years. This time, DLF clinched the deal with its winning bid of Rs 12,000 per square metre — two other bidders did not qualify on technical grounds.
The land in the Delhi suburb would be used for development of commercial, residential, sports complexes, and an 18-hole golf course. DLF, however, remains tight-lipped about the project, but sources say that the land deal is “positive” for the company, given its proximity to South Delhi on one side and the existing golf course on the other.
DLF is not the only one going after such transactions. Earlier this year, Anant Raj Industries decided to set aside nearly Rs 400 crore from its cash reserves, to acquire land for upcoming residential projects.
So are the land deals back in reckoning, after a long dry spell? Industry experts believe that land acquisition will gather pace, but will remain largely need-based.
“The market definitely is improving, new projects are being launched and the cash flow, for builders, is getting back in shape on the back of QIP issues and some proposed public offers that are being lined-up,” says Mr Manish Aggarwal, Executive Director, Investment Services, Cushman & Wakefield (C&W) India.
Time to buy
While the conditions are turning positive, the biggest clincher clearly is land valuation. In many cases the land prices have corrected nearly 60-70 per cent, says an industry observer.
Agrees Mr Amit Sarin, Director and CEO, Anant Raj Industries. “It is the best time to buy land — the valuation is a fraction of the 2007-level. Everyone is announcing low cost and affordable housing projects and the main ingredient of low cost in real estate is the land cost, not construction cost,” Mr Sarin points out.
But Anant Raj Industries, itself a zero-debt company, expects land buying to remain selective for a while.
“It is not a trend in the industry. It will happen only in those cases where the land costs are extremely attractive and the builder has a comfortable liquidity position,” he adds.
The company has stayed away from aggressive land buying over the last 2-3 years.
No frenzy likely
Real estate consulting firm CBRE too does not foresee the return of land frenzy seen in 2007-2008. “Companies are not rushing into transactions. They are more cautious and evaluating deals carefully on parameters such as potential for development, location, margins and valuation,” says Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis South Asia Pvt. Ltd.
SEZs all set to regain position of prominence
SEZs all set to regain position of prominence
The Economic Times, August 31, 2009, Page 19
While SEZ marketing activities have been low key and nondescript for a while, things are slowly changing, says Kamlesh Pandya
Global trends suggest that barely 10 per cent of special economic zones (SEZs) that are planned actually fructify, says Mayur Shah, MD of Marathon Group. At Nexzone, his upcoming IT and ITeS SEZ site in the periphery of Navi Mumbai, Shah says that the global trend is reflected in India too. "Ninety per cent of the Indian SEZs that were to be announced have been dropped and the remaining 10 per cent will succeed," he says. "Times will be positive, from now on," he predicts.
"All indications are that the markets in Europe and North America will be back to business, between April and September of next year," he says. That will bring back smiles on the faces of Indian IT and ITeS companies and also BPO and KPO companies, but it will also create new challenges for them. IT and ITeS SEZs can prove to be among the best solutions for these challenges, feels Shah. World class infrastructure will be the key to the success of not just IT and ITeS SEZs, but also of manufacturing and industrial SEZs, says Shah. The tenants for these will be a mix of mid-sized Indian companies that will be looking to go global, as well as some of the large players in the respective domains, explains Shah.
Any marketing strategy in terms of SEZs should be directed at new domestic and international companies, gearing up to enter the Indian market and hoping to expand operations after deployment, points out Abhishek Kiran Gupta, head (research), Jones Lang LaSalle Meghraj.
Commercial real estate specialist, Mohanjeet Sehgal, sees valueadditions when it comes to SEZs, over the next couple of years. "Policy flip-flops and land acquisition issues have created a negative impression, especially when STPI was granted a year's extension in the last budget," he says. "However, when the STPI concessions cease, ultimately those who have space in IT and ITeS SEZs will be clear winners," he insists. In Navi Mumbai and its periphery, he sees great potential for BPO and KPO companies at SEZs. "Marketing activities for SEZs were rather slow, till recently. Now, companies are comparing different aspects of leasing space in SEZs in Navi Mumbai vis-à-vis Mumbai's central suburbs. It is decision making time, now," he says.
Rajesh Gadgil has just made a presentation to a large company that is looking out for SEZ space in Thane. "SEZs totally change the outlook of potential lease tenants," he says. It is not just the large players that are considering its positives, says Gadgil, who adds that smaller sized IT spaces will also get good demand from start-ups and small entrepreneurs.
According to Ashok Kumar, principal and managing director, CresaPartners India, the target audience for SEZs and the issue of striking the right balance between portfolio and tenant mix, needs to kept in mind. While SEZs are needed to accelerate GDP growth and attract foreign investment, the 'indecision' on land acquisition and other policies has resulted in numerous SEZs not being able to take off, he points out.
SEZs are not a suitable or tempting platform for existing STPI-based companies seeking to consolidate, cautions JLLM's Abhishek Kiran Gupta. "In addressing the target audience of large, new companies, the marketing strategy should highlight the fact that new companies can avail of the full tax benefits that SEZs provide and that these benefits will continue to be applicable as they expand operations," he suggests.
India is known for its entrepreneurial spirit and the IT, ITeS and BPO/ KPO sector are no different, shares Dilawar Nensey, joint MD, Royal Palms. "Lease rental is an important factor that impacts the small-sized start-up entrepreneur," points out Nensey and innovative schemes may just help the IT/ ITeS/ BPO/ KPO entrepreneur get the right sized start-up for his project.
Nensey echoes Shah's thoughts that the sector is bound to flourish and that a unit in a SEZ makes long term business sense. "India will always remain an IT/ ITeS superpower and SEZs will be the key to ensuring that we remain competitive in global markets," he concludes.
Rlys creates land bank of 1.12 L acre
Rlys creates land bank of 1.12 L acre
The Financial Express, August 31, 2009, Page 3
Press Trust of India, New Delhi
With a view to utilise surplus land for commercial purposes, Railways have now created a land bank of 1.12 lakh acre across the country.
“Our land bank is ready now as we have surplus land of 1.12 lakh acre at 103 sites across the country. This will be utilised for commercial purposes,” railway minister Mamata Banerjee said on Sunday while flagging off three trains here.
She reminded about the benefits of the Kisan Vision scheme, which aims at running special trains from production clusters of perishable goods to consumer centres transporting fruits and vegetables.
The scheme aims to benefit farmers by creating cold storage facility for vegetables and other perishable items, she said, adding “Experts are examining the scheme.”
She also announced starting of the much talked about Duranto train services for Kolkata, Pune and Mumbai from Delhi by mid-September.
More than 40 of the total 79 trains announced in the Budget are ready to be flagged off within next 15 to 20 days, she said.
Banerjee flagged off the Delhi Sarai Rohilla-Sadulpur Express named Pragati Express and. She promised more trains from Delhi like a ladies specials from Delhi to Panipat & Ghaziabad and Shatabdi Express between Delhi and Kanpur would be started soon .
Besides, she also flagged off the extended service of the Bandra terminus-Jaipur Express up to Delhi Sarai Rohilla from Delhi Cantonment station, the new building of which was also commissioned by her.
On the crucial Kashmir rail link project, she said track laying work from Qazigund to Ananatnag is complete now and the services will be operational soon.
The Financial Express, August 31, 2009, Page 3
Press Trust of India, New Delhi
With a view to utilise surplus land for commercial purposes, Railways have now created a land bank of 1.12 lakh acre across the country.
“Our land bank is ready now as we have surplus land of 1.12 lakh acre at 103 sites across the country. This will be utilised for commercial purposes,” railway minister Mamata Banerjee said on Sunday while flagging off three trains here.
She reminded about the benefits of the Kisan Vision scheme, which aims at running special trains from production clusters of perishable goods to consumer centres transporting fruits and vegetables.
The scheme aims to benefit farmers by creating cold storage facility for vegetables and other perishable items, she said, adding “Experts are examining the scheme.”
She also announced starting of the much talked about Duranto train services for Kolkata, Pune and Mumbai from Delhi by mid-September.
More than 40 of the total 79 trains announced in the Budget are ready to be flagged off within next 15 to 20 days, she said.
Banerjee flagged off the Delhi Sarai Rohilla-Sadulpur Express named Pragati Express and. She promised more trains from Delhi like a ladies specials from Delhi to Panipat & Ghaziabad and Shatabdi Express between Delhi and Kanpur would be started soon .
Besides, she also flagged off the extended service of the Bandra terminus-Jaipur Express up to Delhi Sarai Rohilla from Delhi Cantonment station, the new building of which was also commissioned by her.
On the crucial Kashmir rail link project, she said track laying work from Qazigund to Ananatnag is complete now and the services will be operational soon.
Drop in housing loans slows retail credit growth
Drop in housing loans slows retail credit growth
The Hindu Business Line, August 31, 2009, Page 1
Education loans’ share rises.
M.V.S. Santosh Kumar
Retail credit, which was until a couple of years ago, viewed as a big growth driver for banks, has seen steep moderation in the recent past, data from the RBI Annual Report released this week show.
Data show that the proportion of retail loans to total non-food credit actually fell from 24.5 per cent to 21.6 per cent between 2004-05 and 2008-09. Except for education loans, all other retail loan segments witnessed a moderation in growth over the past year.
Retail credit after expanding by 32 per cent in the 2004-07 period, moderated to an 11 per cent growth for the next two years. The reason for the slowdown may be attributed to banks’ asset quality concerns rising due to the economic downturn. Retail credit offtake too slowed.
Housing proportion falls
Housing loans, the dominant category of retail loans, grew at just 9 per cent annually during 2007-09, after a 31 per cent annual growth in the previous 3 years. Housing loans constitute almost half of the retail credit outstandings, with almost 73 per cent of this falling under priority lending – below Rs 20 lakh loans.
The subdued growth can be traced to the disproportionate increase in property prices and rising interest rates until recently.
Housing loans saw their share in the retail loan pie fall from 52.2 per cent in 2004-05 to 49.4 per cent as of May 22, 2009. However, housing credit may pick up on the rollout of new housing loan schemes and moderating property prices.
Credit card loans and education loans, the two fastest growing categories, have both increased their share in retail credit in recent years.
Of these, education loans alone continued to grow at a strong pace of 39.2 per cent in 2008-09.
Credit card loans, which managed to expand at a swift pace until 2007-08 saw growth drop to 6.1 per cent in 2008-09.
Credit cards have seen their share go up from 2.5 per cent of the retail credit to as much as 4.9 per cent, a pointer to rising income levels and increased consumption, especially in urban areas and metros. Education loans have seen significant demand in the last few years. Despite its unsecured nature, this portfolio doubled its share in loans to 5.2 per cent in the latest financial year. Loan against fixed deposit is another segment which has seen a steady 13 per cent growth in the last five years.
These loans are given at small spread over the deposit rate, as the loan is already secured by the deposit. The consumer durable loans segment is the only segment which has witnessed decline in outstandings over years.
But it is clear that this trend had little to do with actual sales, as industrial production data show consumer durable sales expanding over this period.
The Hindu Business Line, August 31, 2009, Page 1
Education loans’ share rises.
M.V.S. Santosh Kumar
Retail credit, which was until a couple of years ago, viewed as a big growth driver for banks, has seen steep moderation in the recent past, data from the RBI Annual Report released this week show.
Data show that the proportion of retail loans to total non-food credit actually fell from 24.5 per cent to 21.6 per cent between 2004-05 and 2008-09. Except for education loans, all other retail loan segments witnessed a moderation in growth over the past year.
Retail credit after expanding by 32 per cent in the 2004-07 period, moderated to an 11 per cent growth for the next two years. The reason for the slowdown may be attributed to banks’ asset quality concerns rising due to the economic downturn. Retail credit offtake too slowed.
Housing proportion falls
Housing loans, the dominant category of retail loans, grew at just 9 per cent annually during 2007-09, after a 31 per cent annual growth in the previous 3 years. Housing loans constitute almost half of the retail credit outstandings, with almost 73 per cent of this falling under priority lending – below Rs 20 lakh loans.
The subdued growth can be traced to the disproportionate increase in property prices and rising interest rates until recently.
Housing loans saw their share in the retail loan pie fall from 52.2 per cent in 2004-05 to 49.4 per cent as of May 22, 2009. However, housing credit may pick up on the rollout of new housing loan schemes and moderating property prices.
Credit card loans and education loans, the two fastest growing categories, have both increased their share in retail credit in recent years.
Of these, education loans alone continued to grow at a strong pace of 39.2 per cent in 2008-09.
Credit card loans, which managed to expand at a swift pace until 2007-08 saw growth drop to 6.1 per cent in 2008-09.
Credit cards have seen their share go up from 2.5 per cent of the retail credit to as much as 4.9 per cent, a pointer to rising income levels and increased consumption, especially in urban areas and metros. Education loans have seen significant demand in the last few years. Despite its unsecured nature, this portfolio doubled its share in loans to 5.2 per cent in the latest financial year. Loan against fixed deposit is another segment which has seen a steady 13 per cent growth in the last five years.
These loans are given at small spread over the deposit rate, as the loan is already secured by the deposit. The consumer durable loans segment is the only segment which has witnessed decline in outstandings over years.
But it is clear that this trend had little to do with actual sales, as industrial production data show consumer durable sales expanding over this period.
The REIT way
The REIT way
The Economic Times, August 31, 2009, Page 18
Are Indian REITs ready to make a mark or are they losing business to those from overseas markets? Kamlesh Pandya analyses
In a scenario where real estate is becoming out of reach for small investors, to invest and reap profits, real estate investment trusts (REITs) are a good way for the investor class to invest in the sector. It also benefits developers, as more funds are pumped into real estate. REITs/REMFs offer an innovative option for investors to buy and trade shares in the real estate sector and collect dividends from capital appreciation and rental incomes, explains Atul Modak, head, Kohinoor City Project.
REITs are generally classified into three broad categories - equity REITs, mortgage REITs and hybrid REITs. "The best benefit of REITs is fast and easy liquidation of investments in the real estate market, unlike the traditional way of disposing real estate," he explains. However, it is important to have proper regulation and utilisation of these funds and total transparency in the whole process. For REITs to be a success and contribute to the growth of the economy, initial tax sops to the investors and REITs will be helpful, he feels.
REITs in the Indian scenario, are yet to take off, says Ashok Kumar, principal and managing director, CresaPartners India. "Certainly, we are losing out on such opportunities to overseas REITs, as it does not seem to be a priority for the government," he regrets. The real estate sector in India is still complex and the regulators have to fix a lot of policies and valuation issues, in advance, for REITs to become functional, he adds. "If one considers the union budget 2009-10, there was no mention about FDI in real estate or REITs and REMFs. However, we hope that the FM will announce some relief for the sector, post the budget," adds Kumar.
Realtor Bharat Mailk points to a paper, 'Indian REITs: Are We Prepared', by the ASSOCHAM and CRISIL and says that REITs in India would have the potential to hold at least five per cent share of the total global real estate market, by 2010. The size of this global market would touch US $ 1,400 billion, according to the paper. "According to the paper, by 2010, REITs alone would hold a market size of US $ 70 billion of the total real estate market, as the concept is gaining ground in countries like India and other developing nations," he says, laying out the statistics. In the Indian context, REITs can help provide an exit route for developers, to revolve funds more efficiently. It will also provide opportunities to retail investors to participate in the real estate sector and provide asset diversification to corporate investors, besides building a vibrant secondary real estate market, adds Malik.
REMFs are the Indian version of the international REITs, adapted to the Indian mutual funds platform, explains Shobhit Agarwal, joint MD (capital markets), Jones Lang LaSalle Meghraj. "In the current context, while everybody is now working on entry and creating assets, the important question of who will buy these assets to provide an exit to the developers / investors needs to be addressed,'' he points out. The leveraging allowed in the case of Indian REITs is the lowest (at 20 per cent of the value), compared to 35 per cent in the case of Malaysia, Hong Kong, Singapore, and Taiwan and 200 per cent in the case of Korea. This could result in a lower yield and because it is not really leveraged, the risk taken is also more," he cautions.
Mihir Dhruva, CEO of Siddharth Group is of the opinion that REITs should be more preferred by the 'low-risk, low-return' investor segment. "Sentiments, which contributed significantly to the depressed market in FY 08-09 are now reversing," says Dhruva. "This has been reflected in reports coming from different cities, showing revival of real estate transactions and REITs should have a positive response as a result," he concludes.
The Economic Times, August 31, 2009, Page 18
Are Indian REITs ready to make a mark or are they losing business to those from overseas markets? Kamlesh Pandya analyses
In a scenario where real estate is becoming out of reach for small investors, to invest and reap profits, real estate investment trusts (REITs) are a good way for the investor class to invest in the sector. It also benefits developers, as more funds are pumped into real estate. REITs/REMFs offer an innovative option for investors to buy and trade shares in the real estate sector and collect dividends from capital appreciation and rental incomes, explains Atul Modak, head, Kohinoor City Project.
REITs are generally classified into three broad categories - equity REITs, mortgage REITs and hybrid REITs. "The best benefit of REITs is fast and easy liquidation of investments in the real estate market, unlike the traditional way of disposing real estate," he explains. However, it is important to have proper regulation and utilisation of these funds and total transparency in the whole process. For REITs to be a success and contribute to the growth of the economy, initial tax sops to the investors and REITs will be helpful, he feels.
REITs in the Indian scenario, are yet to take off, says Ashok Kumar, principal and managing director, CresaPartners India. "Certainly, we are losing out on such opportunities to overseas REITs, as it does not seem to be a priority for the government," he regrets. The real estate sector in India is still complex and the regulators have to fix a lot of policies and valuation issues, in advance, for REITs to become functional, he adds. "If one considers the union budget 2009-10, there was no mention about FDI in real estate or REITs and REMFs. However, we hope that the FM will announce some relief for the sector, post the budget," adds Kumar.
Realtor Bharat Mailk points to a paper, 'Indian REITs: Are We Prepared', by the ASSOCHAM and CRISIL and says that REITs in India would have the potential to hold at least five per cent share of the total global real estate market, by 2010. The size of this global market would touch US $ 1,400 billion, according to the paper. "According to the paper, by 2010, REITs alone would hold a market size of US $ 70 billion of the total real estate market, as the concept is gaining ground in countries like India and other developing nations," he says, laying out the statistics. In the Indian context, REITs can help provide an exit route for developers, to revolve funds more efficiently. It will also provide opportunities to retail investors to participate in the real estate sector and provide asset diversification to corporate investors, besides building a vibrant secondary real estate market, adds Malik.
REMFs are the Indian version of the international REITs, adapted to the Indian mutual funds platform, explains Shobhit Agarwal, joint MD (capital markets), Jones Lang LaSalle Meghraj. "In the current context, while everybody is now working on entry and creating assets, the important question of who will buy these assets to provide an exit to the developers / investors needs to be addressed,'' he points out. The leveraging allowed in the case of Indian REITs is the lowest (at 20 per cent of the value), compared to 35 per cent in the case of Malaysia, Hong Kong, Singapore, and Taiwan and 200 per cent in the case of Korea. This could result in a lower yield and because it is not really leveraged, the risk taken is also more," he cautions.
Mihir Dhruva, CEO of Siddharth Group is of the opinion that REITs should be more preferred by the 'low-risk, low-return' investor segment. "Sentiments, which contributed significantly to the depressed market in FY 08-09 are now reversing," says Dhruva. "This has been reflected in reports coming from different cities, showing revival of real estate transactions and REITs should have a positive response as a result," he concludes.
Promoters Get Cold Feet About Ipos
Promoters Get Cold Feet About Ipos
The Telegraph, Mumbai, August 30, 2009
Equity investors hoping to subscribe to IPOs may have to wait for some time. Promoters are reluctant to test the market’s appetite for new stocks, though shares have rallied upwards on the back of good liquidity, while there has been a strong buzz around IPOs (initial public offerings).
According to Prime Database, 13 companies — mainly mid-cap firms — have received Sebi’s approval as early as September last year for public floats aggregating over Rs 2,000 crore.
Another 21 companies have filed offer documents and are awaiting for their proposals — worth over Rs 8,000 crore — to be cleared. These include the offerings of power companies such as JSW Energy and Indiabulls Power.
“We are seeing IPOs at the rate of one a month. Companies are still nervous, thanks to the volatile markets, and fear that they will not be able to get the right price. They are waiting for a reasonable period of stability in the markets,” said Prithvi Haldea, chairman and managing director of Prime Database, a private agency that tracks IPOs.
“While the 30-share BSE sensex has shot up from 9903 points on January 1 to 15922 points on August 28, 2009, this has been accompanied by increased intra- and inter-day volatility. The market is making swings of 5-10 percent on the upside and downside,” said a trader with a leading Mumbai-based brokerage.
Godrej Properties, which received approval in June for a Rs 600-crore issue, may launch its IPO in the next couple of months.
“We are looking at the IPO seriously now. The markets show signs of stability, but I can’t really commit myself on whether we will launch the issue in the next three months,” Milind Korde, executive director and president of Godrej Properties, said.
Analysts said an IPO rush was unlikely for some time, though private firms are very keen. A recent offering by Adani Power was oversubscribed 20 times — the retail subscription was much lower — and is trading 4 percent above its listing price.
Uniform Code For Realty Valuations Likely Soon
Uniform Code For Realty Valuations Likely Soon
Mail Today, New Delhi, August 31, 2009
Devesh Chandra Srivastava, New Delhi
Unexpected rise or fall in property prices will soon be a thing of the past.
Industry players and experts in the realty segment are coming together to develop a regulatory framework for property valuations in the country on the lines of international norms. But there are challenges on the path of entering a phase of maturity, according to realty experts.
Kirit Budhbhatti, secretary, Centre for Valuation Studies, Research and Training (CVSRT), said, “ There is no Act to regulate the profession till date in India. So, formation of uniform guidelines on the lines of International Financial Reporting Standards (IFRS) will help setting standards in the country.” Adopting IFRS norms will enable companies to benchmark with global peers and improve brand value.
Importantly, there is hardly any training facility in India that can guide young professionals aspiring to become an independent valuer. Lack of training during the job is also a problem in India. On- job training along with the required degree is a must.
Renowned real estate experts assembled in a national conference on ‘ Valuations: The Emerging Roadmap for India’ jointly organised by the Royal Institute of Chartered Surveyors and Confederation of Indian Industries (CII) in New Delhi on August 27- 18.
Rajiv Shah, managing director of the Mumbai- based firm, R. B. Shah and Associates, said, “ Very few firms try to use fresh talents in the industry. Valuers in India are fragmented. The institutions controlling the learning/ training part are in decaying state. The brick and mortar system of valuation has to be more investor and market savvy.” Association with some professional organisation makes them to understand the flow of money and return on investments.
“ Valuers also need to know the history of pricing of a said property. Consumption of property has a cycle of seven- eight years. So does its pricing. Valuers need to work on projections based on the history,” said Sachin Gulaty, head of valuations, Jones Lange LaSalle- Meghraj.
Importantly, according to current market standards, valuers earn a small amount for their work. On the other hand, outsourcing the job of evaluating becomes a costly affair for corporates.
Though, the National Housing Bank (NHB) and the Indian Banks’ Association ( IBA) are working on draft guidelines for property valuers associated with them, a vast majority of private valuers and independent professionals will still not come under the purview of NHB or IBA. So setting a uniform code will benefit all.
Creating a framework for the fee structure, depending on the location and the area of the property is a must.
Moreover, when two parties — seller and purchaser — join hands for a deal on a property, both parties might not use the same valuer or institution for the evaluation.
Anshuman Magazine, CMD, CB Richards Ellis- South Asia Private Ltd, said, “ Therefore, there would be difference in values assigned to the property in question. This might impact the transaction or might even lead to the breaking of the deal on the issue of disagreement over the price. It is therefore a must that price variation should not be much. Else, there would be a conflict.” In this regard, Robert Peto, vice- chairman (capital markets), DTZ, suggested, “ While evaluating, it is the duty of the valuer to keep the purchaser in mind. Valuation should be done through the eyes of purchaser rather than the vendor.”
Centre Wants To Put In Place Well-Defined Property Rights
Centre Wants To Put In Place Well-Defined Property Rights
The Times of India (Chennai edition)
Mahendra Kumar Singh, New Delhi, August 31, 2009
India’s litigation-ridden property rights system might finally get a much-needed makeover, with the urban development ministry writing to state and local authorities to put in place a property title certification system to ensure conclusive title guarantees. The ministry also plans to organize a workshop for local officials to help chalk out an action plan.
This could revolutionise the land market and also have major implications for India’s economy. Celebrated economist Hernando de Soto has pointed out that capitalism truly succeeds only in countries with well-defined property rights. In developed countries, assets can be leveraged as collateral to take loans, which form the basis of entrepreneurship. But the lack of property rights in developing countries turns assets into ‘dead capital’.
It’s an argument that resonates in India, with property disputes being a bane for millions. The cult hit ‘Khosla ka Ghosla’ made the point humourously, but many people have suffered the same problem first-hand, and found nothing even remotely funny about it.
The Times of India (Chennai edition)
Mahendra Kumar Singh, New Delhi, August 31, 2009
India’s litigation-ridden property rights system might finally get a much-needed makeover, with the urban development ministry writing to state and local authorities to put in place a property title certification system to ensure conclusive title guarantees. The ministry also plans to organize a workshop for local officials to help chalk out an action plan.
This could revolutionise the land market and also have major implications for India’s economy. Celebrated economist Hernando de Soto has pointed out that capitalism truly succeeds only in countries with well-defined property rights. In developed countries, assets can be leveraged as collateral to take loans, which form the basis of entrepreneurship. But the lack of property rights in developing countries turns assets into ‘dead capital’.
It’s an argument that resonates in India, with property disputes being a bane for millions. The cult hit ‘Khosla ka Ghosla’ made the point humourously, but many people have suffered the same problem first-hand, and found nothing even remotely funny about it.
Friday, August 28, 2009
Industrial output exceeds expectations, up 7% in July
Industrial output exceeds expectations, up 7% in July
Business Standard, August 28, 2009, Page 1
BS Reporter / New Delhi
The government today announced that industry output, as measured by the index of industrial production (IIP), grew 7 per cent in July, the same as the corresponding period in 2008, taking analysts by surprise as much for the magnitude of the growth as the early data release.
The announcement was made by Commerce and Industry Minister Anand Sharma while announcing the new foreign trade policy and was unexpected because the July IIP numbers were scheduled only in the second week of September.
Analysts were also expecting a sharp fall in IIP for July, given the meagre 1.8 per cent growth in the core sector, which accounts for 27 per cent of IIP, data for which was released yesterday. Although the IIP grew a steep 7.8 per cent in June, the figure was considered an aberration.
July's 7 per cent growth indicates that the decline in factory production has been arrested and adds to hopes of economic recovery.
Sharma attributed the 7 per cent growth to fiscal and monetary measures by the government and the Reserve Bank of India. “These measures have had a salutary effect on our economy,” he said.
The growth in IIP is estimated to have come from the double-digit growth in two-wheeler and car segments and consumer goods production. "While industry data for July is buoyant, with two-wheelers up 18.2 per cent, cars up 29.1 per cent, commercial vehicle up 5.1 per cent, we expect the July IIP to come lower at 5 per cent levels versus the surprisingly high 7.8 per cent reading in June," said Rohini Malkani, economist, Citi India, in a report yesterday.
The growth in output of consumer non-durables comprising items like cars and appliances was flat in June, even as the quarter production decline d 4.6 per cent. Overall consumer goods production rose 3.8 per cent in June, aided by a 15.5 per cent expansion in consumer durables output. Segregated figures for July were not available.
Business Standard, August 28, 2009, Page 1
BS Reporter / New Delhi
The government today announced that industry output, as measured by the index of industrial production (IIP), grew 7 per cent in July, the same as the corresponding period in 2008, taking analysts by surprise as much for the magnitude of the growth as the early data release.
The announcement was made by Commerce and Industry Minister Anand Sharma while announcing the new foreign trade policy and was unexpected because the July IIP numbers were scheduled only in the second week of September.
Analysts were also expecting a sharp fall in IIP for July, given the meagre 1.8 per cent growth in the core sector, which accounts for 27 per cent of IIP, data for which was released yesterday. Although the IIP grew a steep 7.8 per cent in June, the figure was considered an aberration.
July's 7 per cent growth indicates that the decline in factory production has been arrested and adds to hopes of economic recovery.
Sharma attributed the 7 per cent growth to fiscal and monetary measures by the government and the Reserve Bank of India. “These measures have had a salutary effect on our economy,” he said.
The growth in IIP is estimated to have come from the double-digit growth in two-wheeler and car segments and consumer goods production. "While industry data for July is buoyant, with two-wheelers up 18.2 per cent, cars up 29.1 per cent, commercial vehicle up 5.1 per cent, we expect the July IIP to come lower at 5 per cent levels versus the surprisingly high 7.8 per cent reading in June," said Rohini Malkani, economist, Citi India, in a report yesterday.
The growth in output of consumer non-durables comprising items like cars and appliances was flat in June, even as the quarter production decline d 4.6 per cent. Overall consumer goods production rose 3.8 per cent in June, aided by a 15.5 per cent expansion in consumer durables output. Segregated figures for July were not available.
Reforms to continue, 8%-plus growth likely by 2010-11: FM
Reforms to continue, 8%-plus growth likely by 2010-11: FM
The Financial Express, August 28, 2009, Page 2
fe Bureaus, New Delhi
A day after the finance minister Pranab Mukherjee said the government had no more room for fiscal stimulus, he told industry that the Centre was working on economic reforms that will lead to greater mobilisation of resources. The minister also expressed hope that the economy could return to over 8% growth in 2010-11.
“There is a possibility (of over 8% growth) if there is no further adverse situation over which we have no control,” he said at a Ficci meeting on Wednesday.
Commenting on a road map for economic reforms, he said, “Economic reforms are a continuing process and have been going on since 1991. The Direct Taxes Code and the Goods and Services Tax (GST) are a part of tax reforms. Disinvestment and investment in critical sectors are part of economic reforms,” Mukherjee said.
The Centre would pursue reforms that would lead to greater mobilisation of resources in the financial sector, the minister said. These will include reforms in the corporate bond market, setting up an autonomous Debt Management Office (DMO) and a new Bankruptcy law.
The UPA with a larger mandate in its second term is expected to carry forward its agenda of economic reforms, which were stalled because of its Left allies. Apart from reforms in the banking sector, it is expected to table the Pension Fund Regulatory Development Bill and increase FDI in insurance to 49%. In the corporate debt market, it is expected to introduce repos or repurchase agreement, a transaction that allows a holder to sell a bond for a short period to another investor with an agreement to buy it back at a higher price at a later date. Presently, repos are allowed only in the government bond market.
Emphasising that the deviation from the fiscal deficit targets is ‘only temporary’, the minister also said the Centre would reduce both its fiscal and revenue deficit.
Trade policy’s first target is 15% export growth
Trade policy’s first target is 15% export growth
The Hindu Business Line, August 28, 2009, Page 1
Sharma not sure of ‘recovery’, sets $200-b figure by March 2011.
Our Bureau, New Delhi
Against persistent export contraction, the Government on Thursday announced a slew of relief measures for exporters.
These include incentives to capture 26 new markets in Africa and Latin America, duty-free import of capital goods for technological upgradation, dollar-denominated credit and doing away with application fees for grant of incentives under various export schem
es.
Announcing the Foreign Trade Policy (FTP) for 2009-2014, the Commerce and Industry Minister, Mr Anand Sharma, however, refused to hazard a specific export target for this fiscal.
“Even though economists are talking of emergence of ‘green shoots’, I remain hesitant to hazard a guess on the nature and extent of this recovery,” he said, adding that “we would like to achieve an annual export growth of 15 per cent over 2010-11 with an annual export target of $200 billion by March 2011.”
The Minister said the Government would take stock of the situation in March 2011, halfway through the series, and may even reset the targets. He said the Government could give suitable support to certain specific sectors in the mid-term review as the situation warrants.
In one of the many innovative steps, the Government decided to set up a Directorate of Trade Remedy Measures to support industry and exporters, especially from the small and medium enterprises sector, in availing themselves of their rights through trade remedy instruments such as anti-dumping, safeguard and countervailing (anti-subsidy) duties.
Mr Sharma said due to the global slowdown, some countries have resorted to protectionist measures posing barrier to free trade, which has aggravated the problem for Indian exporters.
The Government’s short-term goal through the policy was to reverse the declining trend of exports and to provide additional support, especially to the employment-intensive sectors such as textiles, handloom, leather, handicrafts, gems and jewellery as well as the plantation that have been hit badly by recession in the developed world.
The Minister said the duty refund scheme (Duty Entitlement Passbook Scheme) will stay till December 2010, while income-tax holiday for export-oriented units will continue till March 2011.
The Government has also decided to constitute a committee comprising the Finance Secretary, the Commerce Secretary and the Chairman of the Indian Banks’ Association that would meet periodically to ensure that dollar credit needs of exporters are met in a timely manner. In a bid to bring down transaction cost and institutional bottlenecks, over the next few years, additional ports/locations would be enabled on the Electronic Data Interchange. Besides, an Inter-Ministerial Committee has been established to serve as a single window mechanism for resolution of trade-related grievances.
Weak monsoon could stoke inflation, dampen growth: RBI
Weak monsoon could stoke inflation, dampen growth: RBI
The Hindu Business Line, August 28, 2009, Page 1
Our Bureau, Mumbai
The Reserve Bank of India on Thursday set the alarm bells ringing that a deficient monsoon could affect the inflation outlook for the country more than growth prospects for the economy.
It also underscored the fact that large borrowing programmes (the Centre’s budgeted gross market borrowing in FY-2010 is Rs 4,91,044 crore) and a high fiscal deficit (the estimate for FY-10 is 6.8 per cent of GDP) could worsen the actual inflation situation over time, while also putting upward pressure on interest rates.
Trends in global commodity prices in the first quarter of 2009-10, according to the RBI’s annual report for 2008-09, indicate that an upside risk to inflation could persist from a rebound in global commodity prices ahead of the global recovery.
“Increase in minimum support price that may be seen as a measure to support farmers in a below monsoon year, could stoke inflation,” the report warned.
The first quarter review of the Monetary Policy revised the inflation projection for the end of the year to 5 per cent from 4 per cent projected in April and placed the GDP growth at ‘6 per cent with an upward bias’.
Rainfall deficiency during the kharif season could affect the growth and inflation outlook, besides rural disposable income. Despite positive growth and signs of recovery in the first quarter of 2009-10, the growth outlook for the industrial sector remains mixed, the report said.
The RBI is faced with the dilemma with regard to its Monetary Policy stance — while monetary tightening will result in weakening of recovery impulses, an easy Monetary Policy stance could stoke inflation in the future.
“A major challenge for the RBI is to deal with the unpleasant combination of subdued growth with emerging risk of high inflation, which poses a complex dilemma on the appropriate stance of the Monetary Policy,” the report said.
RBI’s 6% growth vision crystal clear
RBI’s 6% growth vision crystal clear
The Economic Times, August 28, 2009, Page 11
Our Bureau MUMBAI
THE Reserve Bank of India (RBI) has held on to its 6% growth target despite a weak monsoon on the grounds that the economic impact of the drought would not be as bad as expected. However, the poor rains would push up food prices in the short term and add to inflationary pressures.
RBI has stuck to its GDP target even after at least a dozen research reports by banks and broking houses scaled down forecasts for the fiscal based on the rain failure in large parts of India.
“One needs to recognise the progress on effective diversification of Indian agriculture towards horticulture, livestock and fisheries and their rising share in total output of the agricultural sector,” RBI said in its annual report, which was released on Thursday. The central bank added that cereals, pulses and oilseeds grown during the kharif season account for only 20% of total farm output.
“Since the presentation of the policy statement, while the extent of rainfall deficiency associated with southwest monsoon has increased, the IIP figures for June show 2009 show a significant recovery in industrial output,” the central bank said in its annual report. The RBI has also said that the index of industrial production has also showed an improvement.
In another positive, RBI also expects capital flows to India to increase due to better medium-term growth and faster recovery prospects even as capital flows to overall emerging markets declined during the year. “Early indications for the first quarter of 2009-10 suggest that NRI deposits, FII portfolio inflows and inward FDI flows have generally been strong, as against the net capital outflows witnessed in the last two quarters of 2008-09,” the central bank said.
Though optimistic on growth, RBI has warned that price pressures are already being felt with the wholesale price index moving up by 4 percentage points over the March’09 levels. Although inflation as measured by the year-on-year movement of the wholesale price index is still negative, RBI said that is a statistical phenomenon with the base effect running out in October’09. The central bank also appears to be concerned over the high level of consumer price inflation for agriculture workers, which is around 13%.
GROWTH REMEDY
RBI's prescription for the economy
Reduce non-plan expenditure More liberal FDI policies to bring in technology and productivity Introduce govt-funded scheme for potential entrepreneurs Link petroleum product prices to international prices Augment grain procurement for food security CPI (Urban) to be used for measuring inflation Link no. of schemes an MF can float to the net owned funds Bank-led mobile banking more appropriate for India
Core sector disappoints
Core sector disappoints
The Economic Times, August 28, 2009, Page 14
It Could Impact Broader Economy
THE July numbers for infrastructure sector performance have delivered a small blow to rising expectation of a quick turnaround in economic growth. The core sectors, key drivers of economic activity, grew a disappointing 1.8% year-on-year (y-o-y) in July 2009, after a robust 6.8% y-oy expansion in June. Prima facie the slower growth was due to the lower output of the petroleum refinery sector, with production declining 14.4% during the month owing to maintenance shutdown at the Reliance Industries plant. But performance of sectors such as electricity did not particularly inspire confidence. Electricity generation, critical to keep industries running and pumpsets operating in farmlands, grew only 3.3%, y-o-y, in July. But the output declined for two consecutive months, as rains played truant. Coal output looked good during the month under review, rising 9.7%, but the sector reported decline in three of the four months this fiscal. Similarly, the growth of cement industries, rising 10.6%, gives the impression that construction activity has recovered. Here too, output declined monthon-month after a robust performance in March 2009 and the argument that it is in line with the trend seen during this period of the year offers little consolation.
The sub-optimal output of some infrastructure sectors such as electricity is telling on industrial performance. In many states huge power cuts are hurting production. Industrial units have stopped working as the power situation worsens. Elsewhere, the agriculture sector bears the brunt of low availability of power. If such lackadaisical performance persists in the critical core sectors of the economy, there could be more damage to the incipient recovery in growth experienced over the past few months. That should not be allowed to happen. Immediate short-term steps are required to reduce the gaps in infrastructure and prevent a fresh crisis. Growth is, anyway, already threatened by the deficient monsoon this year. Contraction in agriculture will hurt other sectors, as rural demand for various goods and services will decline. In this scenario, it is necessary that critical infrastructure sectors put up a strong performance.
RBI tightens housing project funding norm
RBI tightens housing project funding norm
Business Standard, August 28, 2009, Section II, Page 3
BS Reporter, Mumbai
The Reserve Bank of India (RBI) has extended the terms and conditions for banks to provide funds to housing /development projects following a recent judgment of the Bombay High Court.
As per the revised norm, the terms and conditions on which a loan for a housing project may be sanctioned should include the name of the bank to which the property is mortgaged. The developer should also indicate in their brochures that a no objection certificate/ permission of the mortgagee bank for sale of flats/ property could be furnished to the bank if required. The RBI has also directed that money should not be released by banks unless these terms and conditions were met by the developer.
Home sales, durable orders fuel US economy recovery hopes
Home sales, durable orders fuel US economy recovery hopes
The Financial Express, August 28, 2009, Page 18
Reuters, Washington
Sales of new US homes hit their highest level in 10 months in July and orders for long-lasting manufactured goods surged, offering fresh evidence a modest economic recovery was taking shape.
The commerce department on Wednesday said sales of new single-family homes rose 9.6% from June to an annual pace of 433,000 units, the highest rate since September.
It was the biggest gain since February 2005 and it reduced the supply of unsold homes on the market to its lowest level in more than 16 years, another sign that housing activity had stabilised after a three-year slump.
A report showing mortgage applications rising for a second straight week, with demand for refinancing loans reading their highest level since early June, suggested home sales are still rising. “The recovery in the housing market is very much under way,” said Michelle Meyer, an economist at Barclays Capital in New York.
In a third report, the commerce department said a surge in demand for aircraft pushed orders for U.S.-made durable goods up 4.9% last month, the largest advance in two years.
“Big-ticket items are displaying very normal recovery patterns, signaling that the early phase of this recovery may be stronger than people are anticipating. It doesn’t mean it will be sustained,” said Stephen Gallagher, chief US economist at Societe Generale in New York.
The data was the latest hinting that the US economy’s worst slump in 70 years was over or close to it, though analysts cautioned that recovery will be hobbled by sluggish consumer demand, owing to high unemployment.
Highlighting the tight squeeze on households, a survey showed Americans will cut their travel plans for the summer-ending Labour Day holiday dramatically this year to save money.
Despite the encouraging economic data, US stocks ended flat, pausing after strong gains earlier this week. US government bond prices rose modestly.
Atlanta Federal Reserve Bank Dennis Lockhart said the economy was in the early stages of recovery, but cautioned that it would be a while before unemployment started to fall.
While the housing sector appears to be recovering from a three-year slump, there are fears it could falter if a government tax credit of up to $8,000 for first-time home buyers is not extended. The credit is due to expire at the end of November. “After the credit expires, sales, starts, and prices will take a hit. The big unknown is how big this hit will be,” said Patrick Newport, a US economist at IHS Global Insight in Lexington, Massachusetts. The inventory of new homes available for sale fell 3.2% to 271,000 units in July, the lowest since March 1993. At July’s sales pace, that would be a 7.5-month supply, the lowest since April 2007.
ICICI cuts home loan rates to remain competitive
ICICI cuts home loan rates to remain competitive
Business Standard, August 28, 2009, Section II, Page 3
BS Reporter / Mumbai
Joining the battle being fought in the market for mortgages, India’s second-largest lender, ICICI Bank, has cut rates for home loans from August 20.
Accordingly, the rate for home loans up to Rs 20 lakh will now be 8.75 per cent, while loans between Rs 20-50 lakh will be charged 9.25 per cent. For loans above Rs 50 lakh, the rate has been fixed at 9.75 per cent. Earlier, loans below Rs 30 lakh were charged 9.25 per cent while the rate for loans above Rs 30 lakh was 9.75 per cent.
The battle in the home-loan market was sparked by the country’s largest lender, State Bank of India (SBI), which announced a competitive package early this month. Now, loans from SBI are available for 8 per cent for the first year and 8-9 per cent for the next two years depending on the size of the scheme.
RATE CHART- (%)
Proposed rate
Up to Rs 20 lakh - 8.75
Rs 20-50 lakh - 9.25
Above Rs 50 lakh - 9.75
Earlier
Below Rs 30 lakh 9.25
Above Rs 30 lakh 9.75
Two weeks ago, India’s largest mortgage lender, Housing Development and Finance Corporation (HDFC), reworked its interest rate slabs, resulting in a 50 basis points (bps) cut to 9 per cent for loans of Rs 30-50 lakh. In mid-July, HDFC had cut interest rates on loans of up to Rs 15 lakh by 50 basis points to 8.75 per cent.
The last mortgage player to cut home-loan rates was LIC Housing Finance. The country’s second-largest mortgage player cut floating rates by 50 bps from 9.25 per cent to 8.75 per cent for loans of Rs 30-75 lakh.
ICICI Bank, which has seen high losses on its unsecured loans portfolio, has indicated that it wants to continue growing its mortgage and auto loans portfolios.
As of June 30, 2009, the lender’s outstanding housing loans portfolio was Rs 53,472 crore.
Business Standard, August 28, 2009, Section II, Page 3
BS Reporter / Mumbai
Joining the battle being fought in the market for mortgages, India’s second-largest lender, ICICI Bank, has cut rates for home loans from August 20.
Accordingly, the rate for home loans up to Rs 20 lakh will now be 8.75 per cent, while loans between Rs 20-50 lakh will be charged 9.25 per cent. For loans above Rs 50 lakh, the rate has been fixed at 9.75 per cent. Earlier, loans below Rs 30 lakh were charged 9.25 per cent while the rate for loans above Rs 30 lakh was 9.75 per cent.
The battle in the home-loan market was sparked by the country’s largest lender, State Bank of India (SBI), which announced a competitive package early this month. Now, loans from SBI are available for 8 per cent for the first year and 8-9 per cent for the next two years depending on the size of the scheme.
RATE CHART- (%)
Proposed rate
Up to Rs 20 lakh - 8.75
Rs 20-50 lakh - 9.25
Above Rs 50 lakh - 9.75
Earlier
Below Rs 30 lakh 9.25
Above Rs 30 lakh 9.75
Two weeks ago, India’s largest mortgage lender, Housing Development and Finance Corporation (HDFC), reworked its interest rate slabs, resulting in a 50 basis points (bps) cut to 9 per cent for loans of Rs 30-50 lakh. In mid-July, HDFC had cut interest rates on loans of up to Rs 15 lakh by 50 basis points to 8.75 per cent.
The last mortgage player to cut home-loan rates was LIC Housing Finance. The country’s second-largest mortgage player cut floating rates by 50 bps from 9.25 per cent to 8.75 per cent for loans of Rs 30-75 lakh.
ICICI Bank, which has seen high losses on its unsecured loans portfolio, has indicated that it wants to continue growing its mortgage and auto loans portfolios.
As of June 30, 2009, the lender’s outstanding housing loans portfolio was Rs 53,472 crore.
Thursday, August 27, 2009
FM sees inflationary pressures rising
FM sees inflationary pressures rising
The Financial Express, August 27, 2009, Page 1
fe Bureaus, New Delhi
Finance minister Pranab Mukherjee on Wednesday ruled out any further fiscal stimulus, but said inflation pressures would return by the end of the year. Mukherjee also admitted for the first time that the goods & services tax (GST) rollout planned for April 1 next year may be d
ifficult to achieve unless all states came on board.
“As far as fiscal stimulus is concerned, we have practically stretched ourselves to the maximum. We will know fully only at the end of the second quarter whether it has had some effect,” Mukherjee said at an Idea Exchange programme hosted by The Express Group on Wednesday.
While the government is tackling the slowdown and the drought, Mukherjee saw other dark clouds on the economic horizon “By end of the year, there should be some inflationary pressures. They are already having some effect,” he said. The finance minister is also apprehensive about oil prices shooting up after December, when demand in the US and Europe is expected to pick up.
Inflation rose to -0.95% for week ended August 15 from -1.53% the previous week, according to data released on Wednesday. Analysts expect inflation to touch 7% by March.
Mukherjee said managing the government’s borrowing programme and the fiscal deficit posed challenges, especially since buoyancy in tax collections is missing this year due to the slowdown. The government plans to borrow a total of Rs 4.51 lakh crore in 2009-10, taking the fiscal deficit to 6.8% of GDP. The Reserve Bank of India and the government have to ensure those borrowings do not crowd out the private sector, the minister stressed.
“There will be pressure on the fiscal deficit and issues of how to manage and prevent (it). I can’t take the responsibility of creating additional fiscal deficit. I will have to bring it back. I have fixed targets for 2010-11 and 2012-13, but I don’t know how it will be managed. So far this year, I have taken an extra Rs 1,000 crore on diesel subsidy,” he said.
Contraction in indirect tax collections and the slow pace of direct tax growth have aggravated the government’s fiscal management programme. “The buoyancy is not there in indirect taxes. Direct taxes are going on more or less at par. We can’t have buoyancy in indirect taxes unless there is production,” he reiterated.
Indirect tax collections fell by 28% to Rs 63,623 crore in April-July 2009 from Rs 88,395 crore in the same period last year. Direct taxes rose 3% to Rs 73,990 crore in the same period.
Deflecting a question on whether RBI could cut rates further in light of the limited fiscal space, Mukherjee said he would urge banks to keep some headroom and provide credit to the private sector, especially in sectors like housing. “(Banks) are simply not going to keep (liquidity) with themselves, and I would discourage them to put it entirely in government securities,” he said.
On the GST, Mukherjee said though there is consensus among most political parties at the Centre, opposition in the states could hit its implementation. “There has been substantial convergence of views, but there has been divergence also. I am hoping to manage the divergence of views. Most political parties on the floor of the House have agreed to GST. This will aid the legislative aspect,” he said.
The Financial Express, August 27, 2009, Page 1
fe Bureaus, New Delhi
Finance minister Pranab Mukherjee on Wednesday ruled out any further fiscal stimulus, but said inflation pressures would return by the end of the year. Mukherjee also admitted for the first time that the goods & services tax (GST) rollout planned for April 1 next year may be d
ifficult to achieve unless all states came on board.“As far as fiscal stimulus is concerned, we have practically stretched ourselves to the maximum. We will know fully only at the end of the second quarter whether it has had some effect,” Mukherjee said at an Idea Exchange programme hosted by The Express Group on Wednesday.
While the government is tackling the slowdown and the drought, Mukherjee saw other dark clouds on the economic horizon “By end of the year, there should be some inflationary pressures. They are already having some effect,” he said. The finance minister is also apprehensive about oil prices shooting up after December, when demand in the US and Europe is expected to pick up.
Inflation rose to -0.95% for week ended August 15 from -1.53% the previous week, according to data released on Wednesday. Analysts expect inflation to touch 7% by March.
Mukherjee said managing the government’s borrowing programme and the fiscal deficit posed challenges, especially since buoyancy in tax collections is missing this year due to the slowdown. The government plans to borrow a total of Rs 4.51 lakh crore in 2009-10, taking the fiscal deficit to 6.8% of GDP. The Reserve Bank of India and the government have to ensure those borrowings do not crowd out the private sector, the minister stressed.
“There will be pressure on the fiscal deficit and issues of how to manage and prevent (it). I can’t take the responsibility of creating additional fiscal deficit. I will have to bring it back. I have fixed targets for 2010-11 and 2012-13, but I don’t know how it will be managed. So far this year, I have taken an extra Rs 1,000 crore on diesel subsidy,” he said.
Contraction in indirect tax collections and the slow pace of direct tax growth have aggravated the government’s fiscal management programme. “The buoyancy is not there in indirect taxes. Direct taxes are going on more or less at par. We can’t have buoyancy in indirect taxes unless there is production,” he reiterated.
Indirect tax collections fell by 28% to Rs 63,623 crore in April-July 2009 from Rs 88,395 crore in the same period last year. Direct taxes rose 3% to Rs 73,990 crore in the same period.
Deflecting a question on whether RBI could cut rates further in light of the limited fiscal space, Mukherjee said he would urge banks to keep some headroom and provide credit to the private sector, especially in sectors like housing. “(Banks) are simply not going to keep (liquidity) with themselves, and I would discourage them to put it entirely in government securities,” he said.
On the GST, Mukherjee said though there is consensus among most political parties at the Centre, opposition in the states could hit its implementation. “There has been substantial convergence of views, but there has been divergence also. I am hoping to manage the divergence of views. Most political parties on the floor of the House have agreed to GST. This will aid the legislative aspect,” he said.
PM: corruption holding back economic growth, investors
PM: corruption holding back economic growth, investors
The Financial Express, August 27, 2009, Page 1
fe Bureaus, New Delhi
Prime Minister Manmohan Singh on Wednesday announced a war on corruption in India’s public life. Corruption, he said, hurts economic growth and wastes precious national resources, besides scaring away foreign investors who expect fair treatment and transparent dealings.
Calling for more transparency and accountability in development programmes, the PM said systems and procedures should be more decentralised and less discretionary.
Promising to launch a multi-pronged attack on corruption, the PM, in one of his most hard-hitting speeches, said the government would soon decide on the Second Administrative Reforms Commission’s recommendations on ‘Ethics in Governance.’
Admitting that corruption is hampering India’s efforts to integrate with the world economy, the PM said, “The world respects India’s democracy, our plural and secular values, our independent judiciary and free press… but pervasive corruption in our country tarnishes our image. It also discourages investors, who expect fair treatment and transparent dealings when dealing with public authorities.” He was addressing the biennial conference of the Central Bureau of Investigation and state anti-corruption bureaus here.
India has been ranked a lowly 74 among 180 countries on Transparecny International’s Corruption Perceptions Index for 2008.
“Corruption distorts the rule of law and weakens institutions of governance. It hurts our economic growth in a variety of ways, apart from hindering our efforts to build a just, fair and equitable society,” Singh said, pointing out that though the Centre has ambitious programmes to help the poor and the marginalised, the ‘constant refrain in public discourse is that much of what the government provides never reaches the intended beneficiaries.’
“The design of development programmes should provide for more transparency and accountability. Systems and procedures which are opaque, complicated, centralised and discretionary are a fertile breeding ground for the evil of corruption. They should be made more transparent, simpler, decentralised and less discretionary,” the PM asserted.
At a time when India needs to spend billions on development and infrastructure projects, Singh flagged his concerns about delays in completion of projects and the quality of execution. “Important projects, which have huge externalities for growth, do not get implemented in time, and when they do get finished, they are often of a poor quality.
Asking anti-corruption agencies to aggressively pursue high-level corruption, the PM said, “There is a pervasive feeling today in our country that while petty cases get tackled quickly, the big fish often escape punishment. This has to change. Rapid, fair and accurate investigation of allegations of corruption in high places should remain your utmost priority.”
He told agencies to acquire new skills ‘to stay one step ahead of the corrupt’, noting that the ever evolving levels of sophistication and complexity in corruption cases present new challenges for the enforcement agencies. Singh also asked state agencies to set targets for investigation of cases like the CBI has done at the Centre this year.
Quick investigations, however, are not enough to bring the guilty to book.
“Trials must be conducted expeditiously and judgements must be delivered quickly. To begin with, the aim should be to conclude the trial in two years,” the PM said, declaring the government’s decision to set up 71 new CBI courts as model courts.
The PM asked anti-corruption agencies to allay fears of harassment among public officials. “Officials have to be encouraged to take decision, to accept responsibility, to show initiative and, whenever required, to take risks if our bureaucracy is to shed its slothful and lethargic image. Very often, the fear of harassment and damage to reputation makes officials unduly timid and slow and the whole government machinery becomes ineffectual,” Singh concluded.
The Financial Express, August 27, 2009, Page 1
fe Bureaus, New Delhi
Prime Minister Manmohan Singh on Wednesday announced a war on corruption in India’s public life. Corruption, he said, hurts economic growth and wastes precious national resources, besides scaring away foreign investors who expect fair treatment and transparent dealings.
Calling for more transparency and accountability in development programmes, the PM said systems and procedures should be more decentralised and less discretionary.
Promising to launch a multi-pronged attack on corruption, the PM, in one of his most hard-hitting speeches, said the government would soon decide on the Second Administrative Reforms Commission’s recommendations on ‘Ethics in Governance.’
Admitting that corruption is hampering India’s efforts to integrate with the world economy, the PM said, “The world respects India’s democracy, our plural and secular values, our independent judiciary and free press… but pervasive corruption in our country tarnishes our image. It also discourages investors, who expect fair treatment and transparent dealings when dealing with public authorities.” He was addressing the biennial conference of the Central Bureau of Investigation and state anti-corruption bureaus here.
India has been ranked a lowly 74 among 180 countries on Transparecny International’s Corruption Perceptions Index for 2008.
“Corruption distorts the rule of law and weakens institutions of governance. It hurts our economic growth in a variety of ways, apart from hindering our efforts to build a just, fair and equitable society,” Singh said, pointing out that though the Centre has ambitious programmes to help the poor and the marginalised, the ‘constant refrain in public discourse is that much of what the government provides never reaches the intended beneficiaries.’
“The design of development programmes should provide for more transparency and accountability. Systems and procedures which are opaque, complicated, centralised and discretionary are a fertile breeding ground for the evil of corruption. They should be made more transparent, simpler, decentralised and less discretionary,” the PM asserted.
At a time when India needs to spend billions on development and infrastructure projects, Singh flagged his concerns about delays in completion of projects and the quality of execution. “Important projects, which have huge externalities for growth, do not get implemented in time, and when they do get finished, they are often of a poor quality.
Asking anti-corruption agencies to aggressively pursue high-level corruption, the PM said, “There is a pervasive feeling today in our country that while petty cases get tackled quickly, the big fish often escape punishment. This has to change. Rapid, fair and accurate investigation of allegations of corruption in high places should remain your utmost priority.”
He told agencies to acquire new skills ‘to stay one step ahead of the corrupt’, noting that the ever evolving levels of sophistication and complexity in corruption cases present new challenges for the enforcement agencies. Singh also asked state agencies to set targets for investigation of cases like the CBI has done at the Centre this year.
Quick investigations, however, are not enough to bring the guilty to book.
“Trials must be conducted expeditiously and judgements must be delivered quickly. To begin with, the aim should be to conclude the trial in two years,” the PM said, declaring the government’s decision to set up 71 new CBI courts as model courts.
The PM asked anti-corruption agencies to allay fears of harassment among public officials. “Officials have to be encouraged to take decision, to accept responsibility, to show initiative and, whenever required, to take risks if our bureaucracy is to shed its slothful and lethargic image. Very often, the fear of harassment and damage to reputation makes officials unduly timid and slow and the whole government machinery becomes ineffectual,” Singh concluded.
India Inc takes to ECB, FCCB routes amid credit slump
India Inc takes to ECB, FCCB routes amid credit slump
The Financial Express, August 27, 2009, Page 13
fe Bureaus, Mumbai
The domestic credit offtake may be slipping but the Indian companies are raising funds heavily through external commercial borrowings (ECBs) and foreign currency convertible bonds (FCCBs) routes.
According to data on ECBs and FCCBs released by the Reserve Bank of India (RBI) on Wednesday, during July 2009, Indian corporates have raised a total of $ 2.01 billion as against $1.9 billion in June 2009, and $494 million in May 2009, through the ECB and FCCB route.
Suzlon Energy has been the only FCCB issuer for $ 90 million for the purpose of overseas acquisition for a maturity of five years. Vedanta Aluminium has been the largest ECB issuer for $500 million for rupee expenditure with a maturity period of five years and six months.
There are 46 deals done in July 2009 as against 50 in June 2009.
The budget estimates (BE) for 2009-10 on the resources raised by public enterprises by bonds, ECBs is also shown up by 12% at Rs 2,07,241 crore as against the revised estimates (RE) of Rs 1,83,949 crore for 2008-09.
The expenditure budget for 2009-10 depicts that BE for 2009-10 on the ECB side is nearly up 35% to Rs 16,440 crore as against Rs 12,191 crore in the RE for 2008-09.
In June 2009, Indian corporates raised a total of $1.9 billion through the ECB route as against $494 million in May 2009, thereby depicting more than a three-fold increase in the funds raised.
National Aviation Company of India Ltd has been the largest issuer of ECB bonds in June, through the approval route, to the tune of $830 million for the import of capital goods with a maturity period of five months.
In June 2008, $1.58 billion was raised through the ECB window. During July 2008, Indian companies raised $2.47 billion, through ECBs.
Experts say that since there has been an improvement in the liquidity conditions globally, the ECB market will now open up. More and more Indian banks and corporates will now rush in to raise funds through the ECB window, they say.
No room for lending rate cut now, says Kamath
No room for lending rate cut now, says Kamath
Business Standard, August 27, 2009, Section II, Page 2
Newswire18 / New Delhi
Banks didn’t have room to further cut lending rates as of now and, in fact, they might look at raising them once credit offtake picked up, ICICI Bank’s Chairman KV Kamath said today.
“There is no scope (for more rate cuts) left any more,” Kamath told reporters on the sidelines of an event here.
“Credit offtake is expected to pick up (in October-March), and then there will be a case for rates to harden,” he said in reply to a question.
According to him, the home loan segment has shown a recovery. “I will say home loans are better, and are back to where they were last year,” he said.
On Tuesday, OP Bhatt, head of the country’s largest lender State Bank of India, had said the bank’s new 8 per cent home loan scheme had evoked an “excellent” response.
Typically, banks witness lacklustre credit offtake at the beginning of a financial year, which picks up around the festive season post-September.
However, there is concern that a weak monsoon this year may dent rural income and banks’ credit offtake may fall short of the Reserve Bank of India’s (RBI’s) estimate of about 20 per cent growth for 2009-10.
Kamath said it was difficult to say whether RBI would reverse its easy monetary policy stance this financial year.
“There are lot of indicators that need to be seen such as inflation. It’s difficult, therefore, to say whether RBI will change its stance,” he said.
Since October, RBI has cut its benchmark repo rate by 425 basis points (bps), reverse repo by 275 bps and cash reserve ratio by 400 bps in a bid to infuse liquidity and fuel demand.
Bank credit growth slips below 15 per cent
Bank credit growth slips below 15 per cent
Business Standard, August 27, 2009, Section II, Page 2
BS Reporter / Mumbai
A high-base effect due to strong credit growth in the year-ago period is the main reason.
Bank credit growth slipped below 15 per cent as total credit outstanding fell by Rs 5,062 crore to Rs 28,01,970 crore during the fortnight ended August 14, data by the Reserve Bank of India (RBI) showed. While bankers said the credit demand remained weak, a part of the decline was attributed to repayment by oil companies and low disbursals of sanctioned loans to the infrastructure sector. On a year-on-year basis, bank credit growth fell to 14.89 per cent in the 15 days to August 14, compared with 15.74 per cent in the previous fortnight.
Bankers said a high-base effect due to strong credit growth in the year-ago period was behind the low figure. In the fortnight ended August 15, 2008, total credit outstanding had grown 25.9 per cent over the corresponding period in the previous year.
A senior executive with a public sector bank said there was a decline in demand for working capital loans, though economic activity was picking up.
“The figures do not surprise me because overall credit growth is sluggish. It will take some more time for credit growth to pick up. Sanctions have begun to roll but disbursals should take time,” said Partha Mukherjee, president, corporate banking at Axis Bank.
Bankers expect credit growth to pick up significantly from September. “There are huge sanctions in the pipeline and when these loans get disbursed post-September, credit growth will pick up strongly,” said a senior executive of a public sector bank.
RBI has projected a 20 per cent growth in non-food credit during FY10.
During the 14-day period, bank deposits shrank by Rs 9,338 crore to Rs 40,60,052 crore. On a year-on-year basis, bank deposits grew 21.8 per cent. Time deposits fell Rs 13,957 crore, while demand deposits, or deposits with tenures of less than a year, grew by Rs 4,619 crore. The fall in deposits is due to banks shedding high-cost deposits acquired earlier. Since credit off-take is still subdued, banks feel it unnecessary to acquire fresh deposits.
In its first quarter review, RBI had revised the deposit projection to 19 per cent, from 20 per cent estimated earlier.
Core sector growth slumps to 1.8%
Core sector growth slumps to 1.8%
Business Standard, August 27, 2009, Page 1
BS Reporter / New Delhi
Hopes of a recovery waned today, with data for output growth of six core industries dropping to 1.8 per cent in July, the lowest in the current financial year, and significantly behind a 6.8 per cent growth in June and 5.1 per cent in July last year.
July's disappointing performance was mainly on account of a steep fall in the output of petroleum products. On a cumulative basis, however, the core sector grew 4 per cent against 3.5 per cent in the same period last year.
The core sector accounts for 26.68 per cent of the index of industrial production (IIP) and analysts widely expect July's IIP numbers to be lower after a 7.8 per cent expansion in June.
Although industry data for July is buoyant, with two-wheelers up 18.2 per cent, cars up 29.1 per cent, commercial vehicle up 5.1 per cent, we expect the July IIP to be at 5 per cent levels versus the surprisingly high 7.8 per cent reading in June,” said Rohini Malkani, economist, Citi India.
Jyotinder Kaur, economist with HDFC Bank, sees IIP stabilising at 3 to 4 per cent in the next two months. The July numbers are expected to be out on September 11.
Experts, however, say the June growth figures were unsustainable. “The slower growth is not very alarming though it is a steep dip, because a growth of 6.8 per cent in June was guided by various factors like fiscal support and an accommodative monetary policy. The factors might have been mitigated by drought. However, they are still in place, so the recovery will continue,” said Kaur.
She added that the sharp decline in the production of petroleum products was part of the commodity cycle, since inventory stocking was coming to an end and this would pull back industrial growth and stabilise it from the high levels of 6-7 per cent growth.
Also, private refiner Reliance Industries Ltd took a 20-day maintenance shut-down of its refinery during the month, resulting in 40 per cent fall in production.
Overall, petroleum refinery production fell 14.4 per cent in July, compared to 11.8 per cent growth during the corresponding period in 2008. Crude oil production, after registering positive growth of 4 per cent for the first time this fiscal in June, shrank 0.4 per cent in July. Crude oil production had contracted by 3 per cent in July 2008.
Despite a high base, both cement and coal posted strong growth, up 10.6 per cent and 9.7 per cent, respectively. “This could be attributed to the weak monsoon, which resulted in a delay in maintenance shutdowns,” said Malkani.
1.8 per cent infra growth taunts rebound story
1.8 per cent infra growth taunts rebound story
HT Business, Hindustan Times, August 27, 2009, Page 23
Hopes of a strong industrial rebound received a major jolt on Wednesday with the country’s infrastructure sector output clocking a mere 1.8 per cent year-on-year growth in July, as refinery products and steel output recorded a dismal performance.
The six infrastructure industries — crude oil, petroleum refining, coal, cement, finished steel and coal — account for 26.68 per cent of the total industrial production.
Petroleum and refinery products showed a 14.4 per cent dip as opposed to an 11.8 per cent growth a year ago.
Poor infrastructure output growth could have a bearing on the overall industrial output that has shown signs of strong recovery in recent months.
Factory output had risen 7.8 percent in June, the strongest growth in 16 months triggering hopes of a strong economic rebound in the coming months.
Data published earlier, including that of automobile production, had already indicated industrial output would expand in June, even though exports faltered.
The key question is whether this trend can be sustained.
“There are both tailwinds and headwinds to industrial output growth. On the positive side, the global economy is gradually recovering. On the downside, the risk of a deficient monsoon hurting industrial output growth through lower rural demand for consumer goods is real,” said Sonal Varma, analyst with Nomura Financial Adivosry Securities.
The government has identified infrastructure as the major growth engine and will soon launch a public private partnership programme in the world to build more than 15,000 km of highways involving an investment of over $70 billion.
HT Business, Hindustan Times, August 27, 2009, Page 23
Hopes of a strong industrial rebound received a major jolt on Wednesday with the country’s infrastructure sector output clocking a mere 1.8 per cent year-on-year growth in July, as refinery products and steel output recorded a dismal performance.
The six infrastructure industries — crude oil, petroleum refining, coal, cement, finished steel and coal — account for 26.68 per cent of the total industrial production.
Petroleum and refinery products showed a 14.4 per cent dip as opposed to an 11.8 per cent growth a year ago.
Poor infrastructure output growth could have a bearing on the overall industrial output that has shown signs of strong recovery in recent months.
Factory output had risen 7.8 percent in June, the strongest growth in 16 months triggering hopes of a strong economic rebound in the coming months.
Data published earlier, including that of automobile production, had already indicated industrial output would expand in June, even though exports faltered.
The key question is whether this trend can be sustained.
“There are both tailwinds and headwinds to industrial output growth. On the positive side, the global economy is gradually recovering. On the downside, the risk of a deficient monsoon hurting industrial output growth through lower rural demand for consumer goods is real,” said Sonal Varma, analyst with Nomura Financial Adivosry Securities.
The government has identified infrastructure as the major growth engine and will soon launch a public private partnership programme in the world to build more than 15,000 km of highways involving an investment of over $70 billion.
Investor interest in land deals set to touch new highs
Investor interest in land deals set to touch new highs
The Financial Express, August 27, 2009, Page 4
Mona Mehta, Mumbai
The Indian realty sector may witness better investor interest in land acquisitions during Q3 FY10 comprising up to 20% of the foreign direct investment (FDI), according to industry experts. In comparison, Q3 FY09 witnessed 12% of FDI being invested in land acquisition, thanks to the global meltdown during Q3 and Q4 of FY09. Currently, residential real estate constitutes 80% of the Rs 10,000 crore overall realty market.
According to Suman Memani, associate vice-president, Religare Securities Ltd, “During the first half of 2008, 54% of the Rs 11,345-crore FDI was invested in land acquisition. With FDI in land acquisition in metros expected to grow by 12% to 20% in the third quarter of financial year 2009-10, the remaining investments by FDI would be made towards infrastructure projects, property projects and construction costs.”
FDI’s expected growth in land acquisitions comes at a time when top builders in metros are in the process of acquiring distressed assets. Delhi-based Anant Raj Industries, with Rs 750 crore cash surplus, is in the process of acquiring distressed assets in the form of land acquisition as well as properties in National Capital Region (NCR), its president-finance, Yogesh Sharma told FE. According to Sharma, “Our talks are currently on with NCR-based developers. Post acquisition of distressed assets, we plan to develop residential and commercial buildings, for which we are also open to joint ventures.”
Mumbai-based National Textile Corporation (NTC) mills need surplus cash to revive their textile mills and are in talks with 16 top developers to sell their mills. NTC’s Kohinoor Mills, Poddar Mills, Finlay Mills and Digvijay Mills are likely to be auctioned, according to an industry source.
Residential real estate is all set to see a revival since a high point of its slump during Q4 FY09, when the realty sector saw a significant dip in overall FDI investment into residential real estate due to economic slowdown and developers were forced to reduce realty prices by 25% to 40%. This is evident in the rise in value of property registrations post-Diwali this year.
With the pick-up within investors and end users, realtors are witnessing buyers booking affordable apartments. Religare Securities has recently released a realty sector report that states that affordable housing (AH) is witnessing a steady increase nationally. DLF recently booked 1,356 apartments in a single day at its project, Capital Greens, in New Delhi.
Indiabulls Group which recently launched an AH project in Gurgaon, has already closed 100 bookings. Mumbai-based Kalpataru project on LBS Marg in Ghatkopar witnessed a sudden sale of 50 flats after the rate for a two-and-a-half bedroom apartment was reduced from Rs 98 lakh to Rs 82 lakh.
Kalpataru’s residential project in Thane saw 110 flats sold in 10 days in February after the rate was fixed at Rs 3,100 per sq ft. HDIL’s Kurla project, priced at Rs 5,300 per sq ft, has seen 400 flats being snapped up even though the actual construction is still to commence. Meanwhile, DB Realty’s Dahisar project has registered bookings for 1,400 flats. Its other project at Kandivali (West) registered a sale of 400 apartments at a reduced rate of Rs 5,700 per sq ft, as mentioned in the report.
The Financial Express, August 27, 2009, Page 4
Mona Mehta, Mumbai
The Indian realty sector may witness better investor interest in land acquisitions during Q3 FY10 comprising up to 20% of the foreign direct investment (FDI), according to industry experts. In comparison, Q3 FY09 witnessed 12% of FDI being invested in land acquisition, thanks to the global meltdown during Q3 and Q4 of FY09. Currently, residential real estate constitutes 80% of the Rs 10,000 crore overall realty market.
According to Suman Memani, associate vice-president, Religare Securities Ltd, “During the first half of 2008, 54% of the Rs 11,345-crore FDI was invested in land acquisition. With FDI in land acquisition in metros expected to grow by 12% to 20% in the third quarter of financial year 2009-10, the remaining investments by FDI would be made towards infrastructure projects, property projects and construction costs.”
FDI’s expected growth in land acquisitions comes at a time when top builders in metros are in the process of acquiring distressed assets. Delhi-based Anant Raj Industries, with Rs 750 crore cash surplus, is in the process of acquiring distressed assets in the form of land acquisition as well as properties in National Capital Region (NCR), its president-finance, Yogesh Sharma told FE. According to Sharma, “Our talks are currently on with NCR-based developers. Post acquisition of distressed assets, we plan to develop residential and commercial buildings, for which we are also open to joint ventures.”
Mumbai-based National Textile Corporation (NTC) mills need surplus cash to revive their textile mills and are in talks with 16 top developers to sell their mills. NTC’s Kohinoor Mills, Poddar Mills, Finlay Mills and Digvijay Mills are likely to be auctioned, according to an industry source.
Residential real estate is all set to see a revival since a high point of its slump during Q4 FY09, when the realty sector saw a significant dip in overall FDI investment into residential real estate due to economic slowdown and developers were forced to reduce realty prices by 25% to 40%. This is evident in the rise in value of property registrations post-Diwali this year.
With the pick-up within investors and end users, realtors are witnessing buyers booking affordable apartments. Religare Securities has recently released a realty sector report that states that affordable housing (AH) is witnessing a steady increase nationally. DLF recently booked 1,356 apartments in a single day at its project, Capital Greens, in New Delhi.
Indiabulls Group which recently launched an AH project in Gurgaon, has already closed 100 bookings. Mumbai-based Kalpataru project on LBS Marg in Ghatkopar witnessed a sudden sale of 50 flats after the rate for a two-and-a-half bedroom apartment was reduced from Rs 98 lakh to Rs 82 lakh.
Kalpataru’s residential project in Thane saw 110 flats sold in 10 days in February after the rate was fixed at Rs 3,100 per sq ft. HDIL’s Kurla project, priced at Rs 5,300 per sq ft, has seen 400 flats being snapped up even though the actual construction is still to commence. Meanwhile, DB Realty’s Dahisar project has registered bookings for 1,400 flats. Its other project at Kandivali (West) registered a sale of 400 apartments at a reduced rate of Rs 5,700 per sq ft, as mentioned in the report.
Wednesday, August 26, 2009
Growth on track, reforms to take it back to 9%: FM
Growth on track, reforms to take it back to 9%: FM
The Economic Times, August 26, 2009, Page 1
At a power gathering of 100 top CEOs and policymakers, Pranab Mukherjee confirms that green shoots have indeed sprouted across industry & Q2 will likely bear more fruit
‘Govt Borrowings Won’t Push Up Interest Rates’
Team ET
WHEN the big guns of business and economy sit down for a power breakfast, what do they munch on? A platter of issues—from India’s growth gumption to public-private partnership with some reform relish on the side.
Finance minister Pranab Mukherjee joined a distinguished panel, 100 CEOs, senior bureaucrats and policymakers on Tuesday to thrash out ‘Mission 2010: The Reform Road Map’. Driving the debate was the question—will the government indeed step on the gas? And will the growth count hold up? Both Mr Mukherjee and C Rangarajan, chief of the Prime Minister‘s Economic Advisory Council, pegged the GDP growth for this fiscal at 6-6.5%. That too after factoring in the drought damage.
Mr Mukherjee told the packed gathering that reforms would continue “in right earnest” to get the economy back to its 9% clip. The good news, he said, was the green shoots in industry with basic goods, intermediates and consumer durables doing better in the first quarter.
Mr Rangarajan, a former Reserve Bank of India governor, said growth should pick up speed to hit 7-8% next fiscal. To accelerate to 9%, though, it was vital to boost domestic consumption, he added.
Brainstorming with Mr Mukherjee and Mr Rangarajan were three CEOs representing India’s bellwether segments—SBI chairman OP Bhatt, Genpact president and CEO Pramod Bhasin, and Future Group CEO Kishore Biyani. The event, hosted by ET, was sponsored by MCX-SX.
But, for the audience, the sweetest music was the FM’s assurance on government borrowings. Mr Mukherjee made it clear that public spending won’t push interest rates higher. Nor would the government’s huge debt appetite leave private industry high and dry. But do Indian banks have a pool big enough for the party?
Mr Bhatt said banks would have to raise more capital, especially tier-1 variety, to keep up with India’s growth drive. “Indian banks are just above well-capitalised. But they should have more capital at their disposal,” he added.
9% GDP growth a long way off, says Pranab
9% GDP growth a long way off, says Pranab
The Financial Express, August 26, 2009, Page 2
fe Bureaus, New Delhi
"Reforms are needed to steer the economy back towards 9% growth, but it would take longer due to the global slowdown and drought in the country," finance minister Pranab Mukherjee said on Tuesday.
Speaking at a function organised by a TV channel on Tuesday, Mukherjee said the government is moving ahead with setting up an autonomous debt management office and efforts are being made to implement goods and services tax from next year.
"The new tax reform Bill will be presented in Parliament after public debate and the government would soon introduce repos in the corporate debt market," he said.
A repo, or "repurchase agreement", is a transaction that allows a holder to sell a bond for a short period to another investor with an agreement to buy it back at a higher price at a later date. Presently, repos are allowed only in the government bond market.
"Permitting repos in corporate bonds has been proposed. We are also moving ahead to set up an autonomous debt management office," he said. Mukherjee said the country can clock over 6% growth this fiscal. "Despite the global economic crisis, we grew by 6.7% last year. This year, we are getting mixed signals. We will have over 6% growth," he said.
Push economic goals: PM to envoys
Push economic goals: PM to envoys
The Economic Times, August 26, 2009, Page 2
Diplomats Should Supplement Domestic Efforts In Investment And Energy Security: Manmohan Singh
Our Political Bureau NEW DELHI
THE government is set to give a big push to economic diplomacy for attracting investment and identifying opportunities in the energy sector. Prime Minister Manmohan Singh on Tuesday told Indian envoys at the head of missions conference that foreign policy was closely linked to economic policy and urged top diplomats to further the country’s economic goals in the international economy.
Mr Singh said Indian diplomats should supplement domestic efforts, particularly in the area of investment and energy security. He identified three areas as “pillars of India’s global engagement”, including sustaining capital inflows to supplement India’s investment efforts, taking advantage of rapid scientific and technological developments and ensuring the country’s growth is not constrained by scarcity of natural resources.
“All these required active engagement by India in all multilateral fora, and in the shaping of the world order, whether in the field of trade, international finance or international economy,” the prime minister told the heads of missions, according to a statement.
He further said insularity was no longer an option for India which had to play an active role not just in economic diplomacy but also in coming up with a solution for climate change and trade talks. “... India should play a role in the international arena in a manner that makes a positive contribution to finding solutions to major global challenges, whether in the field of trade or climate change,” he said.
Though the government has identified economic diplomacy as a key area, it is still to come up with a coherent policy. Economic diplomacy largely depends on the individual missions. But investment and energy security have been identified as key areas of India’s engagement with the world.
To illustrate his point, PM also emphasised the link between India’s foreign policy and domestic policies. He noted that the country’s foreign policy should be aimed at addressing the challenges of mass poverty. Noting that India’s economy was still the secondfastest growing economy in the world in spite of the global economic slowdown, he said that effort was required from all quarters to put the economy back on a sustained high rate of growth.
The prime minister also touched on the issue of terrorism in his address to the envoys. Without naming Pakistan, the prime minister said India would continue to resolve differences through peaceful means. “India has a stake in the prosperity and stability of all our South Asian neighbours. We should strive to engage our neighbours constructively and resolve differences through peaceful means and negotiations,” he said. External affairs minister S M Krishna had said on Monday that meaningful dialogue could only take place if Pakistan took steps to stop infiltration and dismantled the terror infrastructure.
On demand spur, Rangarajan sees FY11 GROWTH AT 7-8%
On demand spur, Rangarajan sees FY11 GROWTH AT 7-8%
The Economic Times, August 26, 2009, Page 13
Export recovery key to logging 9% growth
Akey advisor to Prime Minister Manmohan Singh on Tuesday forecast a 6-6.5% growth for the economy this fiscal year.
Higher domestic demand could see the growth rise to 7-8% in the next fiscal year, 2010-11, said Mr C Rangarajan, who took over as the chairman of prime minister’s top economic advisory council for a second term last week.
However, only a recovery in exports will see the economy returning to 9% growth, which is possible if developed countries are able to come out of recession, he said. Exports account for about a fifth of the total economic output of the country.
Mr Rangarajan’s forecast of the country’s economic growth has factored in the poor monsoon rains. Though he did not see agriculture—which accounts for 18-20% of the economy—impacting the overall growth significantly, he felt that distress in the drought-hit districts will be severe.
Two hundred forty-six districts of the 626 districts have been declared drought-hit.
The general impression is that the recession has bottomed out but the recovery will be slow, Mr Rangarajan told a gathering of CEOs at ET’s Power Breakfast with finance minister Pranab Mukherjee.
The finance minister said that mitigating the impact of deficient monsoon was a priority for the government. Despite difficulties in agriculture and export markets, the country would grow by over 6%, he said.
The answer to unbridled financial innovation that brought the Western financial markets to their knees was not putting a lid on innovation in financial markets altogether, Mr Rangarajan said. The country needs new products, but innovation should not become too complex to fathom where risks lie.
“Regulators should achieve a balance between promoting innovation and regulation in the sector to achieve a sound financial system,” he said. Financial regulators such as Sebi and RBI are in the process of introducing new products and providing depth to the fledgling corporate bonds market that would fund infrastructure projects.
On the shortfall in power generation, Mr Rangarajan said that the authorities needed to raise power output to provide impetus to growth. “It’s extremely important that power generation should match the rate of growth in the economy,” Mr Rangarajan said.
The 50,000 mw target seems a stiff one considering that the country has added only about 20,000 mw capacity in the three years to 2008-09.
Emphasising on the need for adequate power to fire up economic growth, which dropped to 6.7% in the last fiscal year from 9% or more in the preceding three years, he said, “China is adding power generating capacity each year that we achieve in five years.”
Electricity generation growth has generally lagged the nominal GDP growth, suggesting that businesses were relying on off-grid captive power. The growth in power generation by power utilities in 2008-09 was only 2.7%.
Mr Rangarajan said that considering the slow pace in building power production capacity, the country needed to add additional 50,000 mw capacity in the last two years of the Eleventh Five Year Plan ending 2011-12. The authorities should improve the availability of coal for the thermal power plants to achieve the target, he argued.
Leading economists have stressed on the need to reform the coal sector to address the shortage of fuel. The Economic Survey of 2009-10 had highlighted this point, saying that private entry into coal mining was needed to reverse the substitution of domestic coal by imported oil and coal.
Now, low-cost housing with parking in Haryana
Now, low-cost housing with parking in Haryana
The Financial Express, August 26, 2009, Page 3
Preeti Parashar, Chandigarh
Dreaming of owning a parking space along with a low-cost flat? A recent policy initiative by the Haryana government for low cost and affordable dwelling units makes it possible.
According to the new policy for providing sustainable housing to lower and middle income category, a minimum of 10% of the total parking in the building would be provided to the low cost housing category flats. The parking space would be provided based on one equivalent car space.
The government has fixed prices of the flats between Rs 4 lakh and Rs 16 lakh in Gurgaon, Faridabad, Panchkula and will allow 50% ground coverage area extending it from 35% to the private developers.
Interestingly, as per the zoning plan there would be no restriction on height of the buildings. Haryana is the first state to introduce the policy and is yet to see whether it will attract huge investment by private developers. The scheme is open for private developers till November 20.
“Under the policy private colonisers applying for licences in the state will have to follow the guidelines of this policy. The developers will have to set aside 10% of the total dwelling units in the project for the economically weaker section (EWS), 20% for the group housing and 10% for the low cost housing segment,” a senior official of HUDA told FE.
The policy features a relaxed density norm which allows more units per acre. A 10-acre plot will be able to house over 1,200 dwelling units as against 450 units at present.
About 20,000 flats will be developed in Gurgaon-Manesar urban complex and 5,000 flats in urban estate of Faridabad.
Under the affordable housing category, Rs 16 lakh per flat has been fixed for Gurgaon-Manesar Urban Complex and Rs 14 lakh in periphery controlled area of Panchkula and Faridabad-Ballabgarh Complex. Flats will be available at a selling price of Rs.12.50 lakh for the rest. This price will be inclusive of land cost, construction cost and all other levies and charges like external development charges and infrastructure development charges.
Despite of the sector-wise priority the allotment of flats for EWS will not be less than 15% of the total number of dwelling units. Moreover, the minimum area will not be less than 25 square metres (carpet area) for EWS flat and 48 square metres (carpet area) for affordable unit. The EWS flats will be for below poverty line (BPL) families.
However, Class-IV employees of Haryana government departments, its boards and corporations and autonomous organisations will also be eligible for allotment under this category.
However the policy puts a restriction on reselling of the allotted flats within five years of getting the possession and the breach of this will attract penalty equivalent to 100% of selling price of the flat.
U.S. housing data show seeds of recovery
U.S. housing data show seeds of recovery
Business Standard, August 26, 2009, Page 11
Reuters, Chicago
Larger-than-expected improvements in U.S. housing prices and consumer confidence on Tuesday lent new weight to signs the economy is emerging from the longest and deepest recession since the 1930s.
U.S. home prices rose for the second month in a row in June, according to a closely watched S&P index, and consumer confidence jumped in August.
In addition, President Barack Obama nominated Ben Bernanke to a second term as chairman of the Federal Reserve, removing some niggling doubt from investors' minds as the decision promised a consistent approach to monetary policy in the years ahead.
The developments helped buffer the blow of projections for the U.S. budget deficit to reach its highest level in 2009, relative to the total economy, since World War Two.
"The recession appears to be over, with consumer attitudes lagging behind broad economic developments," said Steven Wood, chief economist at Insight Economics in Danville, California.
Major U.S. equities indexes climbed to new 2009 highs on the day's events, while bond prices fell as signs of a resurgent economy reduced interest in safer investments.
The Conference Board, an industry group, said consumer confidence climbed to a reading of 54.1 in August from 47.4 in July, handily outpacing forecasts, on an improved outlook for the job market and the overall economy.
The rise sent the index to its highest level since May. Still, some analysts warned not to get carried away.
"Confidence remains well below its historical average of 95 and it has not even regained the level of 61 seen before the collapse of Lehman almost a year ago," said Paul Dales, U.S. economist at Capital Economics in Toronto.
The weak labor market remains a sticking point to recovery, and especially a revival in consumer spending. Even the Fed has conceded the likelihood of a "jobless recovery," with the unemployment rate staying high long after growth resumes.
Americans saying that jobs were "hard to get" in August dropped to 45.1 percent from 48.5 percent but those saying jobs were plentiful were just 4.2 percent.
"Most of the strength was in the 'expectations' component, so it looks like even though the near-term conditions are still a bit rocky, there is hope for the future," said Kim Rupert, managing director, global fixed income analysis, Action Economics LLC in San Francisco.
Other data supporting recovery hopes came from the Standard & Poor's/Case-Shiller index, with prices of U.S. single family homes rising by 1.4 percent in June from May, after creeping up by 0.5 percent in April.
The data gave fresh evidence that the three-year housing slump is finally easing. The housing market is considered a critical component to a broad economic recovery.
Emaar MGF in 2nd attempt to float IPO
Emaar MGF in 2nd attempt to float IPO
Financial Cronical, August 26, 2009
By Vivek Sinha & Sanjeev Sharma
After last year's aborted move to go public, Emaar MGF is now seriously considering a second attempt to to raise around Rs 3,500 crore through an initial public offering, reports Financial Chronicle.
The real estate company, which is a joint venture between the Dubai-based Emaar Properties and Delhi-based MGF Development, is in advanced discussions with investment bankers about the contours of the issue, the report added.
Citing sources close to the development, the report said the company is considering to go in for a smaller IPO, sometime in October, wherein it would dilute around 10-15 per cent of its equity.
Kotak, JP Morgan Chase, DSP Merrill Lynch, Deuts-che Bank, Enam Securities are among investment ban-kers holding discussions for the mandate, the sources said.
"Emaar MGF continues to evaluate various funding options to meet its growth plans. However, we are not in a position to comment on the specifics of any of our fund raising plans,” quoted Emmar spokesperson in the report.
According to the report, the firm plans to utilise the proceeds from the IPO to develop projects on various land parcels it owns. At December-end 2007, Emaar MGF owned around 13,000 acres across the country, it added.
Real estate firms have been aggressively raising funds following the liquidity crunch and balance sheet stress last year.
Another real estate major Ansal API announced its plans to discuss various fund raising initiatives at its board meeting on the August 28 of this month. When contacted, Anil Kumar CEO of Ansal API said, "The board will discuss all possible options to raise funds."
In February 2008, Emaar MGF had attempted to raise around Rs 7,000 crore through an IPO. It aborted its plans to sell 102.6 million shares after receiving a weak response to the issue.
It had to reduce its price band and push back the closing date by five days but finally decided to call off the offer when subscriptions fell from 83 per cent to 43 per cent of the shares offered.
The original price band was Rs 610-690, which was revised to Rs 530-560.
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