Tuesday, May 12, 2009
Economy to bounce back, 9% growth within 6 mths: Mohan
Economy to bounce back, 9% growth within 6 mths: Mohan
The Financial Express, May 12, 2009, Page 2
fe Bureau, Mumbai
Unwinding of monetary as well as the fiscal policy would happen only after the global economy gets rekindled, says RBI deputy governor Rakesh Mohan.
“It is obviously the case that given the kind of expansion that has taken place in the balance sheets in some of the most significant Central banks of the world, unwinding would be done when needed,” he said on the sidelines of 101st annual general meeting of the Indian Merchants Chamber in Mumbai on Monday.
Mohan who predicted that India is likely to bounce back to 9% growth within six months time, said the speed of the downturn of the global economy has been arrested although the global economy is not yet witnessing an upturn.
One of the on-going consequences of the current crises will be that a great deal of re-thinking would happen within governments and Central banks as to how monetary policies ought be conducted, how financial sector regulations should be done, how these two are related etc.
Responding to the media criticism on his `alleged conservative attitude’ while framing the policies in the RBI , he said, “It’s to be noted that doing reform in the country’s real sector is far different than pursuing reforms in the sensitive financial services sector. It’s good to sacrifice some of the ardent reformative approaches many a times in the interest of the nation.” Mohan said
Listing the lessons, the world needs to learn from the recent downturn, he said, “We should now avoid high volatility in monetary policies and take appropriate response of monetary policy to asset prices. One has to manage capital flow volatility, look for signs of over leveraging and go for active dynamic financial regulations. Also, one has to actively look for regulatory arbitrage incentives or possibilities.’’
Commenting on his resignation from the Central bank, he said, “I receive an offer from the American University that I could not refuse. Every one has to have a time to retire and so I did.”
Shankar Acharya, honorary professor, Indian Council for Research on International Economic Relations said that the current fiscal would be a bad year for India. the slow and painful recovery would happen after 2010 probably. In this fiscal, the country would grow at 5-6% and 7-8% growth is likely in medium to longer run.
The Financial Express, May 12, 2009, Page 2
fe Bureau, Mumbai
Unwinding of monetary as well as the fiscal policy would happen only after the global economy gets rekindled, says RBI deputy governor Rakesh Mohan.
“It is obviously the case that given the kind of expansion that has taken place in the balance sheets in some of the most significant Central banks of the world, unwinding would be done when needed,” he said on the sidelines of 101st annual general meeting of the Indian Merchants Chamber in Mumbai on Monday.
Mohan who predicted that India is likely to bounce back to 9% growth within six months time, said the speed of the downturn of the global economy has been arrested although the global economy is not yet witnessing an upturn.
One of the on-going consequences of the current crises will be that a great deal of re-thinking would happen within governments and Central banks as to how monetary policies ought be conducted, how financial sector regulations should be done, how these two are related etc.
Responding to the media criticism on his `alleged conservative attitude’ while framing the policies in the RBI , he said, “It’s to be noted that doing reform in the country’s real sector is far different than pursuing reforms in the sensitive financial services sector. It’s good to sacrifice some of the ardent reformative approaches many a times in the interest of the nation.” Mohan said
Listing the lessons, the world needs to learn from the recent downturn, he said, “We should now avoid high volatility in monetary policies and take appropriate response of monetary policy to asset prices. One has to manage capital flow volatility, look for signs of over leveraging and go for active dynamic financial regulations. Also, one has to actively look for regulatory arbitrage incentives or possibilities.’’
Commenting on his resignation from the Central bank, he said, “I receive an offer from the American University that I could not refuse. Every one has to have a time to retire and so I did.”
Shankar Acharya, honorary professor, Indian Council for Research on International Economic Relations said that the current fiscal would be a bad year for India. the slow and painful recovery would happen after 2010 probably. In this fiscal, the country would grow at 5-6% and 7-8% growth is likely in medium to longer run.
CPI, WPI-based inflation seen converging
CPI, WPI-based inflation seen converging
The Hindu Business Line, May 12, 2009, Page 15
The Hindu Business Line, May 12, 2009, Page 15
Expected to be at around 5% by end of 2009-10.
K.R. Srivats, New Delhi
Former Reserve Bank of India (RBI) Governor, Dr Y.V. Reddy, sees the wholesale price index (WPI) and the consumer price index (CPI) converging around five per cent by end of fiscal 2009-10.
“I am sticking my neck out. My own hunch is they (WPI and CPI) will converge. CPI will start coming down,” Dr Reddy told Business Line in an interview. He is here to launch his book India and the Global Financial Crisis: Managing Money and Finance.
Asked the basis for such a prediction, Dr Reddy said that it was the lagged effect of the various price changes that had happened. He also said that his comment on convergence was without reference to the spillover consequences of monetary and fiscal measures.
“WPI and CPI should be looked together and you should look at it for the next 12-18 months. One should recognise that it (convergence) is possible,” he said.
On inflation expectations, Dr Reddy said that given our history, it is very difficult to convince people that in India there is deflation threat or inflation is coming down. “I agree that there is an exit problem for fiscal and monetary… but we have multiple instruments and it should be possible to handle excess liquidity”.
Asked to comment about the central bank’s decision to raise interest rates in June 2008, Dr Reddy replied “please read my book”.
On RBI
In his introduction to the book, Dr Reddy writes that RBI taking responsibility, even if decisions had been taken in deference to the government’s wishes, is relevant both for the conduct of monetary policy and select actions on the regulatory front.
“The RBI articulated a need for careful consideration of the monetary policy in response to high inflation, as explained in detail in the governor’s remarks on inflation in Pune on June 23, 2008. However, the RBI announced monetary measures on June 24, 2008. Both statements explained in detail the dilemmas and time-dimensions involved, and indicated the complexities in the conduct of monetary policy and communications with the financial markets.
“These statements illustrate that once expectations had been built in financial markets around the government’s preferences, which is what happened vis-À-vis that led to the statements made above, the RBI had to fulfill those expectations as far as possible to avoid giving an impression of serious differences”
To a question on ‘financial protectionism’ in developed countries, Dr Reddy said that his book had “very clearly” addressed this topic. He highlighted that the global wisdom on the financial sector was changing and global rules of the game were likely to change.
“Financial institutions in advanced economies are now being heavily subsidised (capital). The earlier rules of the game were based on the assumption that there was a level playing field and government should not interfere.
“Now you have a situation, where it is quite possible that reasonably healthy banks in developed economies will also be taken over. Because… the level-playing field has been removed. This also applies to free trade agreements where there are financial services agreements. All of them were based on the ground that markets were operating normally with a level-playing ground”.
K.R. Srivats, New Delhi
Former Reserve Bank of India (RBI) Governor, Dr Y.V. Reddy, sees the wholesale price index (WPI) and the consumer price index (CPI) converging around five per cent by end of fiscal 2009-10.
“I am sticking my neck out. My own hunch is they (WPI and CPI) will converge. CPI will start coming down,” Dr Reddy told Business Line in an interview. He is here to launch his book India and the Global Financial Crisis: Managing Money and Finance.
Asked the basis for such a prediction, Dr Reddy said that it was the lagged effect of the various price changes that had happened. He also said that his comment on convergence was without reference to the spillover consequences of monetary and fiscal measures.
“WPI and CPI should be looked together and you should look at it for the next 12-18 months. One should recognise that it (convergence) is possible,” he said.
On inflation expectations, Dr Reddy said that given our history, it is very difficult to convince people that in India there is deflation threat or inflation is coming down. “I agree that there is an exit problem for fiscal and monetary… but we have multiple instruments and it should be possible to handle excess liquidity”.
Asked to comment about the central bank’s decision to raise interest rates in June 2008, Dr Reddy replied “please read my book”.
On RBI
In his introduction to the book, Dr Reddy writes that RBI taking responsibility, even if decisions had been taken in deference to the government’s wishes, is relevant both for the conduct of monetary policy and select actions on the regulatory front.
“The RBI articulated a need for careful consideration of the monetary policy in response to high inflation, as explained in detail in the governor’s remarks on inflation in Pune on June 23, 2008. However, the RBI announced monetary measures on June 24, 2008. Both statements explained in detail the dilemmas and time-dimensions involved, and indicated the complexities in the conduct of monetary policy and communications with the financial markets.
“These statements illustrate that once expectations had been built in financial markets around the government’s preferences, which is what happened vis-À-vis that led to the statements made above, the RBI had to fulfill those expectations as far as possible to avoid giving an impression of serious differences”
To a question on ‘financial protectionism’ in developed countries, Dr Reddy said that his book had “very clearly” addressed this topic. He highlighted that the global wisdom on the financial sector was changing and global rules of the game were likely to change.
“Financial institutions in advanced economies are now being heavily subsidised (capital). The earlier rules of the game were based on the assumption that there was a level playing field and government should not interfere.
“Now you have a situation, where it is quite possible that reasonably healthy banks in developed economies will also be taken over. Because… the level-playing field has been removed. This also applies to free trade agreements where there are financial services agreements. All of them were based on the ground that markets were operating normally with a level-playing ground”.
Cautious and tightfisted
Cautious and tightfisted
Business Standard, the strategist, May 12, 2009, Page 1
Byravee Iyer / Mumbai
As the downturn tightens its grip, consumers shy away from spending. Consumer confidence takes a beating in India and the world over.
In the October 2008 round of the Nielsen Global Consumer Confidence Survey, things still looked upbeat. The financial markets were facing their worst crunch ever. Still, India was way ahead of the pack as the nation of most confident consumers on earth. Its score of 114 on the Nielsen Consumer Confidence Index was several laps ahead of the global average of 84.
The latest edition of the Nielsen survey shows that the confidence of the Indian consumer has been seriously dented, notwithstanding the government’s fiscal stimulus and stray signs of economic recovery. India has ceded the top spot to Indonesia. It is now, in fact, ranked third — Denmark has come second.
Worse still, it has now become a part of the double-digit consumer confidence crowd. At 99, 15 points lesser than last time, it is the lowest India has scored in the last six rounds of the survey. (The fall this time round has been steeper; in the previous round, it had fallen eight points from 122.) The elite club of triple-digit consumer confidence countries now has only two members — Indonesia (104) and Denmark (102).
Gloom and hope
Meanwhile, global consumer confidence has fallen seven points to 77. (As a result, the gap between India’s score and the global average is now down to 22 from 30 in the last round.) No fewer than 49 of the 50 countries surveyed have registered a fall in consumer confidence. Taiwan is the only country to go against the grain — its consumer confidence is up three notches to 63.
To add to the gloom, about 77 per cent of consumers surveyed by Nielsen globally think their economy is in recession, up from 63 per cent in October last year.
In India, only 28 per cent of the respondents think their economy is not in recession. (Technically, India is facing a slowdown in growth and not a recession where there is a decline in the gross domestic product.) In other words, as many as 72 per cent could feel India is in recession. (In contrast, 65 per cent of Chinese polled in the survey feel their economy is not in recession.) Of those who believe the country is in recession, more than half (56 per cent) think it will come out of recession in the next 12 months.
On their part, several leading producers of consumer goods say sales are robust and at least the next three months look good. (Few companies now venture to predict the future beyond a quarter, thanks to the market volatilities of the past six months.) “At Samsung, we have not seen drop in sales for any product category. In fact, at the end of the first four months of the year, we are still maintaining growth of over 25 per cent in terms of our sale of consumer electronics,” says Samsung India Deputy Managing Director Ravinder Zutshi.
Maruti Suzuki Chairman R C Bhargava had recently said that his company, which is the country’s largest producer of cars, had seen record production in March and things looked good for the next three months. Pawan Munjal, the managing director and CEO of Hero Honda, India’s largest two-wheeler company, says sales are looking good till the next festival season which will end with Diwali in North India some time in November. “We should grow at a healthy pace till then,” says he.
Much of this growth of course is going to come from small towns and villages — markets that haven’t borne the brunt of the economic slowdown. Good rains, the farm loan waiver and the rural welfare schemes have all added to the purchasing power there. Still, it has failed to lift the mood of the Indian consumer, the Nielsen survey shows.
On the jobs front, India is the second most optimistic country in the world after Indonesia. Six per cent Indians believe this is an excellent time for jobs, while as many as 41 per cent feel it is a good time for jobs. This is not surprising since India has not seen the kind of large-scale layoffs that have happened in the West. “If you are an employee, Asia is the place to be. And in Asia, India is the place to be,” says Mercer Asia Pacific Head Peter Promnitz. Conservative Indian companies are still handing out conservative annual increments. Consequently, 62 per cent of the Indians surveyed are optimistic about their personal finances over the next 12 months. Little surprise then, 40 per cent Indians say this is a good time to buy the things they want or need.
“I would say that the consumer has certainly become cautious in his spending. Impulse purchase may have come down. However, need-based purchase still continues, which has contributed to growth in the sector,” explains Samsung’s Zutshi.
Savings spree
But that hardly makes Indian consumers big spenders of money, according to the Nielsen survey, for a majority of them now prefer to put their spare cash into savings. As many as 66 per cent of those polled say they will save, up from 58 per cent in the last Nielsen survey. Thirty-three per cent say they will also invest in shares and mutual funds, down from 42 per cent last time. Twenty-two per cent will also put their money into retirement funds, up from 20 per cent in the previous survey. The import is significant — people are nervous about the stock markets and feel retirement planning is a better way to secure the future.
Indians, therefore, are tightfisted when it comes to buying new clothes, going on holidays, as well as spending on out-of-home entertainment and home improvement. It’s safe to assume that Indian consumers are cautiously optimistic.
Beating India in the savings department are Singapore and Hong Kong at 75 per cent and 74 per cent, respectively. In fact, nearly half the global respondents (48 per cent) say they will now put spare money into their savings kitty. This is two percentage points more than the last round of the survey. Paying off debts too has risen two percentage points to 32 per cent. The downturn, it appears, has had a serious impact on lifestyle in many parts of the world. No doubt, extravagance has stalled and the population of individuals with no spare cash has risen. Only retirement fund investments remain flat at 10 per cent.
Things are different in China, Thailand and Singapore as citizens of these countries still burn their spare cash on holidays and vacations. Retail therapy continues to pay off in Russia, Brazil and China as more than 35 per cent of respondents there say they will spend their money on new clothes.
What worries?
When it comes to concerns, India has quite a few, including job security and the economy. Job security is the biggest concern for big savers in Singapore, Hong Kong, UAE, Vietnam, Spain and Hungary. The global concern over job security is up from 9 per cent to 22 per cent.
India is the second-most worried nation when it comes to terrorism. Sixteen per cent Indians say it is their top-most concern. The November terror attacks on Mumbai and the rise of the Taliban in neighbouring Pakistan have shaken them.
Overall, the biggest global concern is the economy, which is up from 20 points to 23 points. Another leading concern is increasing fuel prices, particularly for the US — the world’s largest fuel consumer. France, Russia and New Zealand are most concerned about increasing food prices. Footloose and fancy-free are The Netherlands, Norway and Denmark with no concerns at all.
Business Standard, the strategist, May 12, 2009, Page 1
Byravee Iyer / Mumbai
As the downturn tightens its grip, consumers shy away from spending. Consumer confidence takes a beating in India and the world over.
In the October 2008 round of the Nielsen Global Consumer Confidence Survey, things still looked upbeat. The financial markets were facing their worst crunch ever. Still, India was way ahead of the pack as the nation of most confident consumers on earth. Its score of 114 on the Nielsen Consumer Confidence Index was several laps ahead of the global average of 84.
The latest edition of the Nielsen survey shows that the confidence of the Indian consumer has been seriously dented, notwithstanding the government’s fiscal stimulus and stray signs of economic recovery. India has ceded the top spot to Indonesia. It is now, in fact, ranked third — Denmark has come second.
Worse still, it has now become a part of the double-digit consumer confidence crowd. At 99, 15 points lesser than last time, it is the lowest India has scored in the last six rounds of the survey. (The fall this time round has been steeper; in the previous round, it had fallen eight points from 122.) The elite club of triple-digit consumer confidence countries now has only two members — Indonesia (104) and Denmark (102).
Gloom and hope
Meanwhile, global consumer confidence has fallen seven points to 77. (As a result, the gap between India’s score and the global average is now down to 22 from 30 in the last round.) No fewer than 49 of the 50 countries surveyed have registered a fall in consumer confidence. Taiwan is the only country to go against the grain — its consumer confidence is up three notches to 63.
To add to the gloom, about 77 per cent of consumers surveyed by Nielsen globally think their economy is in recession, up from 63 per cent in October last year.
In India, only 28 per cent of the respondents think their economy is not in recession. (Technically, India is facing a slowdown in growth and not a recession where there is a decline in the gross domestic product.) In other words, as many as 72 per cent could feel India is in recession. (In contrast, 65 per cent of Chinese polled in the survey feel their economy is not in recession.) Of those who believe the country is in recession, more than half (56 per cent) think it will come out of recession in the next 12 months.
On their part, several leading producers of consumer goods say sales are robust and at least the next three months look good. (Few companies now venture to predict the future beyond a quarter, thanks to the market volatilities of the past six months.) “At Samsung, we have not seen drop in sales for any product category. In fact, at the end of the first four months of the year, we are still maintaining growth of over 25 per cent in terms of our sale of consumer electronics,” says Samsung India Deputy Managing Director Ravinder Zutshi.
Maruti Suzuki Chairman R C Bhargava had recently said that his company, which is the country’s largest producer of cars, had seen record production in March and things looked good for the next three months. Pawan Munjal, the managing director and CEO of Hero Honda, India’s largest two-wheeler company, says sales are looking good till the next festival season which will end with Diwali in North India some time in November. “We should grow at a healthy pace till then,” says he.
Much of this growth of course is going to come from small towns and villages — markets that haven’t borne the brunt of the economic slowdown. Good rains, the farm loan waiver and the rural welfare schemes have all added to the purchasing power there. Still, it has failed to lift the mood of the Indian consumer, the Nielsen survey shows.
On the jobs front, India is the second most optimistic country in the world after Indonesia. Six per cent Indians believe this is an excellent time for jobs, while as many as 41 per cent feel it is a good time for jobs. This is not surprising since India has not seen the kind of large-scale layoffs that have happened in the West. “If you are an employee, Asia is the place to be. And in Asia, India is the place to be,” says Mercer Asia Pacific Head Peter Promnitz. Conservative Indian companies are still handing out conservative annual increments. Consequently, 62 per cent of the Indians surveyed are optimistic about their personal finances over the next 12 months. Little surprise then, 40 per cent Indians say this is a good time to buy the things they want or need.
“I would say that the consumer has certainly become cautious in his spending. Impulse purchase may have come down. However, need-based purchase still continues, which has contributed to growth in the sector,” explains Samsung’s Zutshi.
Savings spree
But that hardly makes Indian consumers big spenders of money, according to the Nielsen survey, for a majority of them now prefer to put their spare cash into savings. As many as 66 per cent of those polled say they will save, up from 58 per cent in the last Nielsen survey. Thirty-three per cent say they will also invest in shares and mutual funds, down from 42 per cent last time. Twenty-two per cent will also put their money into retirement funds, up from 20 per cent in the previous survey. The import is significant — people are nervous about the stock markets and feel retirement planning is a better way to secure the future.
Indians, therefore, are tightfisted when it comes to buying new clothes, going on holidays, as well as spending on out-of-home entertainment and home improvement. It’s safe to assume that Indian consumers are cautiously optimistic.
Beating India in the savings department are Singapore and Hong Kong at 75 per cent and 74 per cent, respectively. In fact, nearly half the global respondents (48 per cent) say they will now put spare money into their savings kitty. This is two percentage points more than the last round of the survey. Paying off debts too has risen two percentage points to 32 per cent. The downturn, it appears, has had a serious impact on lifestyle in many parts of the world. No doubt, extravagance has stalled and the population of individuals with no spare cash has risen. Only retirement fund investments remain flat at 10 per cent.
Things are different in China, Thailand and Singapore as citizens of these countries still burn their spare cash on holidays and vacations. Retail therapy continues to pay off in Russia, Brazil and China as more than 35 per cent of respondents there say they will spend their money on new clothes.
What worries?
When it comes to concerns, India has quite a few, including job security and the economy. Job security is the biggest concern for big savers in Singapore, Hong Kong, UAE, Vietnam, Spain and Hungary. The global concern over job security is up from 9 per cent to 22 per cent.
India is the second-most worried nation when it comes to terrorism. Sixteen per cent Indians say it is their top-most concern. The November terror attacks on Mumbai and the rise of the Taliban in neighbouring Pakistan have shaken them.
Overall, the biggest global concern is the economy, which is up from 20 points to 23 points. Another leading concern is increasing fuel prices, particularly for the US — the world’s largest fuel consumer. France, Russia and New Zealand are most concerned about increasing food prices. Footloose and fancy-free are The Netherlands, Norway and Denmark with no concerns at all.
Another nano from Tatas
Another nano from Tatas
The Economic Times, May 12, 2009, Page 12
A Big Boost For Affordable Housing
TATA’S Nano experiment could become a movement in reaching affordable products to the bottom of the consumer pyramid. It is indeed heartening that the Tatas are extending the concept of Nano to housing. Tata Housing, a subsidiary of Tata Sons, has announced a project near Mumbai that would build homes costing Rs 3.9 lakh and Rs 6.7 lakh. Tata’s foray into housing at the lower end underlines the increasing realisation that demand is a lot more stable in the lower income groups. These groups have their own income-expenditure dynamics that is not fully exposed to the vagaries of the increasingly globalised Indian economy. Telecom, though not in the same category as housing, is a good example of the robust demand at the lower end. As telecom operators have moved away from the saturated urban markets to small towns and rural areas, growth has accelerated — subscriber additions crossed 15 million in March. True, every additional subscriber lowers their average realisation per subscriber, but there is addition to the bottom line too. Similarly, houses in sub-Rs 10 lakh category may not carry big margins, but the demand is bound to be massive. Even the government estimates the bulk of the 25 million housing unit shortage to be in the lower income category.
The entry of a large and credible corporate such as the Tatas at the lower end of the market can crystallise this potential demand. More importantly, it could galvanise other serious developers to come into this segment and drop prices to gain market share. Though companies like DLF and Unitech are going into more affordable housing, they are nowhere near testing the market for under Rs 10-lakh housing unit. For this to happen policy must also create an enabling framework. Clear property titles and relationships with financiers would enable a big developer to arrange funds for their buyers. The government will have to free up land for creating more towns. Availability of more land would bring down prices. Tatas’ housing project, for instance, is about 100 km away from Mumbai. An efficient mass rapid transport system can make such projects more attractive to those who cannot afford housing within the city limits.
No loans, DDA to buy Games Village flats
No loans, DDA to buy Games Village flats
The Times of India, May 12, 2009, Page 5
New Deal To Translate Into Rs 700-Crore Bailout Package For Recession-Hit Developer
TIMES NEWS NETWORK
New Delhi: After weeks of uncertainty, DDA has finalized a bailout formula for the Commonwealth Games Village project, mired in financial difficulties caused by the recession.
The project had got stuck mid-way as the builders — Emaar MGF — failed to raise the required funds. It will now be given a boost of about Rs 700 crore. This fund, says DDA, will not be a loan but the purchase price of 333 flats that it will buy from Emaar MGF. A part of the fund, which will be given in installments based on various stages of completion of the project, will be handed over immediately.
DDA spokesperson Neemo Dhar maintained that the fund was not to be seen as a loan, but as a price for the flats which DDA will dispose of later along with the flats that were to be handed over to the agency as a part of the original deal. Dhar said: ‘‘Out of the 1100 flats that are to be built, two-thirds were to be handed over to us after completion. Now, the 333 flats will form an additional part of the number which will be coming to DDA.’’
Meanwhile, Emaar MGF is heaving a sigh of relief as the project gets off the ground once again. When tenders were floated for the project, the company had signed the deal at a staggering Rs 435 crore for the land alone. The deal required the project to be built by the company, with the clause that it would sell off its share of flats at market rates to raise funds. However, its attempt to sell the flats ran into a financial wall earlier this year. The flats, which were being offered at a market price of Rs 12,500 per square foot, reportedly found few buyers prompting Emaar MGF to go to DDA for a bailout.
Emaar MGF spokesperson said: ‘‘DDA’s decision to invest in the Games Village is a very positive development and signifies the national importance of the project. This move is a firm step in ensuring the completion of the prestigious Village.’’ He added that the company was ‘‘committed to the timely delivery of the Games Village’’. Incidentally, the land development body is now purchasing the flats at Rs 11,000 per sq ft, a rate that was arrived at by a panel of experts from HUDCO, CPWD, NDCC and DDA.
The Times of India, May 12, 2009, Page 5
New Deal To Translate Into Rs 700-Crore Bailout Package For Recession-Hit Developer
TIMES NEWS NETWORK
New Delhi: After weeks of uncertainty, DDA has finalized a bailout formula for the Commonwealth Games Village project, mired in financial difficulties caused by the recession.
The project had got stuck mid-way as the builders — Emaar MGF — failed to raise the required funds. It will now be given a boost of about Rs 700 crore. This fund, says DDA, will not be a loan but the purchase price of 333 flats that it will buy from Emaar MGF. A part of the fund, which will be given in installments based on various stages of completion of the project, will be handed over immediately.
DDA spokesperson Neemo Dhar maintained that the fund was not to be seen as a loan, but as a price for the flats which DDA will dispose of later along with the flats that were to be handed over to the agency as a part of the original deal. Dhar said: ‘‘Out of the 1100 flats that are to be built, two-thirds were to be handed over to us after completion. Now, the 333 flats will form an additional part of the number which will be coming to DDA.’’
Meanwhile, Emaar MGF is heaving a sigh of relief as the project gets off the ground once again. When tenders were floated for the project, the company had signed the deal at a staggering Rs 435 crore for the land alone. The deal required the project to be built by the company, with the clause that it would sell off its share of flats at market rates to raise funds. However, its attempt to sell the flats ran into a financial wall earlier this year. The flats, which were being offered at a market price of Rs 12,500 per square foot, reportedly found few buyers prompting Emaar MGF to go to DDA for a bailout.
Emaar MGF spokesperson said: ‘‘DDA’s decision to invest in the Games Village is a very positive development and signifies the national importance of the project. This move is a firm step in ensuring the completion of the prestigious Village.’’ He added that the company was ‘‘committed to the timely delivery of the Games Village’’. Incidentally, the land development body is now purchasing the flats at Rs 11,000 per sq ft, a rate that was arrived at by a panel of experts from HUDCO, CPWD, NDCC and DDA.
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