Real Estate Intelligence Report, Wednesday, June 24, 2009

Growth revival imminent

Growth revival imminent
The Economic Times, June 24, 2009, Page 14

World Bank Estimates Unduly Pessimistic

THE World Bank has cut its global growth forecast for 2009. It has said the world GDP will shrink by nearly 3% as against 1.7% it had forecast in March. For India, however, the Bank has raised the growth estimate from 4% in March to 5.1% in 2009-10. We believe the Bank is being unduly pessimistic about the prospects for growth in India. There is enough evidence to suggest India’s GDP should easily expand by 7% in 2009-10. The quick estimates of GDP released recently by the Central Statistical Organisation (CSO) show how domestic investment and consumption levels are much better than what one might have projected after the global financial meltdown last year. For one, Gross Fixed Capital Formation (GFCF) at current prices held up quite impressively in the first quarter of 2009 at 34.8% of GDP compared with 33.4% in 2008 first quarter. Indeed, this indicates the domestic investment rate is holding up in spite of a full year of recession in the developed world. Pessimists had argued the investment rate could decline dramatically after the global meltdown. However, there are signs that capital flows are easing of late. About $25 billion of equity funds have come into the emerging markets this year. For India, with an investment rate of 34%, one can safely project a GDP growth of 7-8%.

Again, after the 2008 meltdown, it was assumed the Indian consumer would withdraw into a shell largely due to the fear factor caused by the severity of the recession. For a while, this seemed very plausible. However, now there are signs of a consumption revival, as reinforced by data from consumer goods manufacturers. The CSO data also reveals that Private Final Consumption Expenditure has grown to 53.8% of GDP in January-March 2009 compared with 50.4% of GDP in the first quarter of 2008. Similarly, the Government Final Consumption Expenditure has also risen from 12% of GDP in first quarter 2008 to 14% of GDP in January-March 2009. This is partly the result of the big fiscal stimulus — up to 4% of GDP — over the past eight months. Unlike in the OECD region, there is no demand recession in India. A GDP growth of 7-8% is there for the asking, with some good policies in place.

Two exceptions | India, China stand out in global gloom

Two exceptions India, China stand out in global gloom
The Financial Express, June 24, 2009, Page 6

The World Bank’s latest projections on growth sent stock markets in India on a tailspin. They shouldn’t have, because despite the gloomy picture predicted for most economies around the world, India and China come out looking fairly solid. The Bank predicts that growth in India in 2009 will be to the tune of 5.1%, moving up to 8% in 2010 and then to 8.5% in 2011. Given that in the recent past, India’s actual growth rate has exceeded the Bank’s conservative prediction, things look quite good. Few would have predicted a return to 8% in 2010, looking at the way things had unravelled in the last quarter of 2008. Interestingly, India’s growth rate will, according to the Bank, exceed China’s for the first time in many decades in 2010. In 2011, both the economies will be growing at a neck-and-neck pace. The resilience of India and China, which together account for one-third of global population, has to be good news not just for these two countries but also for the rest of the world.

The really gloomy picture comes from the state of the developed world and the emerging economies of Latin America. The US is expected to contract by 3% in 2009 before posting low but positive rates of growth of 1.8% and 2.5% in 2010 and 2011. The Euro area will perform worse than even the US, contracting by 4.5% in 2009 before rising by 0.5% and 1.9% in 2010 and 2011. Japan is likely to record a dismal -6.8% in 2009 before recovering to 1% and 2% in 2010 and 2011. Interestingly, Latin America seems to have finally caught the crisis bug. The region as a whole is expected to contract by -2.2% in 2009. Out of the region’s biggest economies, Brazil will contract by -1.1%, Mexico by -5.8% and Argentina by -1.5%. These countries will move into the positive terrain in 2010 and 2011 but will grow between 3% and 4% only. In fact, the estimate of growth for all developing countries except China and India for 2009 is -1.6%. This underscores the importance of the economies of India and China in leading a global recovery. In India, growth could get a real boost if the government delivered some concrete action in infrastructure and unleashed a few bold reformist measures in the coming Budget. Even 10% might be gettable.

Infrastructure is key to success of govts: Montek

Infrastructure is key to success of govts: Montek
The Financial Express, June 24, 2009, Page 1

fe Bureau, Mumbai

Infrastructure development will be the key to running successful governments in India, feels Montek Singh Ahluwalia, deputy chairman of the Planning Commission.

Speaking at a conclave of Indian and global top financial experts, Ahluwalia said: “The recent poll results show that governments that are seen to have developed infrastructure have won, which in the long run will support demand.” He was speaking at the fourth Emerging Markets Forum organised by IDFC and supported by the Express group and the Bombay Chamber of Commerce.

The deputy chairman’s statement is the clearest indication so far of the importance the government is expected to place on infrastructure in the Budget, and through the rest of the year.

Ahluwalia assured the bankers that the economy is in good shape and they should not have any fear in financing infrastructure projects on the premise that the economy won’t be able to sustain that. He acknowledged that bank credit is much easier “than it was until 4-5 months ago” but more needed to be done. The line of thought was endorsed by Deepak Parekh, chairman HDFC, who said the Indian banking system was flushed with funds but commercial banks were parking these with the Reserve Bank of India. “The demand for credit is not rising in line with the liquidity, As a result, I think the lending rates are likely to go down further. I expect the rates to go down by at least 50 basis points over next six months.”

As a component of the infrastructure sector, Parekh said, demand for affordable housing (up to Rs 30 lakh per unit) is on a constant rise as property prices have corrected much in this segment. “HDFC's loan disbursement in this segment is improving on a month-over-month basis in the current year.”

Bimal Jalan, former governor of RBI, too, said he was concerned about the spread between the actual lending rates and the repo rate—the price at which they source money from RBI. “This is something the RBI will have to look at closely,” he told FE.

The current repo rate is around 5.5% and the banks are lending at 11% rates. “A huge gap of around 600 basis points,” he asserted.

Ahluwalia also said the Indian economy should show firm signs of revival during the second half of 2009. “Though the economic recovery has already kick started, I think it is reasonable to assume that the worst is over. And now it will get back to the more normal growth.”

The theme of the three-day conclave is the transformational potential of the Indian economy within the next three decades. Harinder Kohli, president & CEO of the Centennial Group, said, “The studies we have carried out have taken experiences of over 150 countries to develop the scenario. India has the potential to grow from contributing 2% of the global GDP to 16% of the GDP by 2039.”

But to do that, Rajiv B Lall MD& CEO of IDFC, said the overriding observation that emerges from the experts is that Indian policy makers need to be proactive and anticipate change better.

Zia Mody, senior partner with leading law firm AZB & Partners, said: “The debate and discussions related to political and governance problems in India will be welcome”.

Economy will kickstart in 3rd quarter

Economy will kickstart in 3rd quarter
The Financial Express, June 24, 2009, Page 2

fe Bureau, Mumbai

Key decision makers and influencers gathered at the fourth Emerging Markets Forum and expressed their views on the Indian economy, while most seemed bullish; there were also some voices of concern.

On the positive side, HDFC Bank chairman Deepak Parekh, reckoned that the Indian banking system was flush with funds and the commercial banks were parking these with the Reserve Bank of India (RBI). “The demand for credit is not rising in line with the liquidity, As a result, I think the lending rates are likely to go down further. I expect the rates to go down by at least 50 basis points over next six months,” said Parekh

Speaking about the housing sector Parekh mentioned that the demand for affordable housing (up to Rs 30 lakh per unit) is on constant rise in the country as property prices have corrected lot in this segment in recent past. “HDFC's loan disbursements in this segments is improving on month-over-month basis in current year,” said an optimistic Parekh.

Planning Commission deputy chairman Montek Singh Ahluwalia also mentioned that the economy would surely kickstart in the third quarter of the calendar year. Ahluwalia was promptly surrounded by the a host of eager participants from over the globe and India as well.

However, Rajya Sabha member and former RBI governor Bimal Jalan, who would also be one of the panel member in the four days of discussion (three in Mumbai and on in New Delhi), mentioned that he was concerned about the spread between the actual lending rates and the repo rate. “This is some the RBI will have to look at closely,” he told FE reporters.

The current repo rate is around 5.5% and the banks are lending at 11% rates. “A huge gap of around 600 basis points,” he asserted. “I am really curious about the manner in which the government intends to plug the fiscal deficit in the current circumstances and manage to wriggle out of what could be a potentially serious predicament,” said a banker.

Speaking about the event, Pratip Kar, a senior official with the World Bank and former Sebi executive director, said, “Foreigners in this forum would get to know about the seriousness and the direction of government reforms in the days to come. That would attract a lot of foreign funds in the country.”

“The debate and discussions related to political and governance problems in India along with exchange of ideas with regards to the possible institutional solutions, is a welcome move” added Zia Mody, senior partner with leading law firm AZB & Patrners.

The challenge is to escape the middle income trap

The challenge is to escape the middle income trap
The Financial Express, June 24, 2009, Page 2

There is much cause for celebration in India today: a successful democratic election, growth rates for 2009 and 2010 averaging 5 percentage points more than the world, and a stock market up 77% in the last three months. For a country that graduated from low income status only in 2007, these are heady statistics.

For the first time in many years, a single party emerged as a clear winner in national elections. The size of the Congress Party victory has raised hopes that, despite India’s complex coalition politics, serious reform is possible. If growth can be sustained or even accelerated to reach its potential, India could be transformed into an affluent country within one generation. The prize is huge: the elimination of poverty in one of the world’s largest countries, and an economy that could be one of three largest in the world at market exchange rates-a global economic leader.

But the challenges are also enormous. Few countries have grown from low income to affluent in a single generation. Most have floundered and seen growth slow considerably when they reach middle income. Only a handful of East Asian economies have sustained rapid growth once they reached middle income. The great challenge for the new Indian government is whether it can lay the policy and institutional foundations that will allow the country to become affluent. The temptation will be to move cautiously. After all, cautious reforms generated India’s current economic success, and caution in financial reform insulated India from the recent global turmoil. With a solid mandate in hand, why risk political capital on an accelerated reform agenda?

The answer lies in a hard-nosed look at what happened to Brazil, Morocco, the Philippines, South Africa, and Syria in the past. Only Brazil and Morocco from this group had higher per capita incomes in 2005 than in 1975 in constant dollars. In Brazil, this was due entirely to a commodities boom that started in 2005 (its 2004 per capita income was lower than in 1975), and in Morocco the annualized growth over 30 years was less than 0.1 percent a year.What is striking about these examples is that all the countries grew rapidly in the previous decade, 1965-75, and were considered development success stories in 1975, much as India is today. Brazil had grown by 10 percent per year per capita, more than doubling incomes during these years.

But each of these countries got caught in a middle income trap. That occurs when countries cannot compete with low-wage, low-income economies in manufacturing exports or with advanced economies in skill-intensive innovative activities. Without an identified growth strategy, middle income countries can stagnate, at best showing short spurts of growth offset by periods of decline. That is the risk for India today-if it becomes complacent about growth because of its recent success, just when sustained growth is becoming harder to achieve.

But India can avoid a middle income trap if it plans far enough in advance and start to implement institutional reforms to achieve the transformation from poor to advanced economies. History offers some lessons on the needed transformations. The first transformation is to shift from accumulating factors of production to using resources more efficiently in the modern economy. In India this shift towards efficiency can happen only if cities develop properly. Urbanisation is happening fast, with millions moving out of the countryside every year. Today, just the fact of urbanisation is enough to yield growth. But eventually growth will depend on cities becoming more efficient-delivering what is known in the jargon as “agglomeration” benefits. Poorly managed cities, with crime, congestion, and squalor, do not deliver such benefits. Instead, they choke the growth process.

The second transformation is to move beyond basic education for all to a broader concept that also includes skills for a knowledge economy-with broad-based tertiary education, research institutes, and firms with in-house technological capabilities. Despite India’s vaunted institutes of technology and management, and its space and nuclear programs, the knowledge establishment is very thin and highly skewed towards the public sector. India needs more scientists and engineers in the private sector, using their talents to commercialise products. India has two universities in the Shanghai Top 500 global ranking; China has 22. India spends only 0.25% of GDP on R&D devoted to civilian applications. Three-quarters of its total R&D spending is in the public sector. It now needs to produce and deploy skilled workers.

The third transformation is from a centralised to a decentralised administrative system. India already has problems implementing national policies-witness the difficulties in resolving infrastructure bottlenecks despite innumerable plans. As the economy grows more complex, decisions will need to be speeded up. Local administrative cadres need professionalisation. As a recent Administrative Reform commission noted: “It is ironic that there has been no sincere attempt to restructure the civil service although more than six hundred committees and commissions have looked into different aspects.”

Each of these changes is massive and intergenerational. Leaving them untouched and hoping that growth or the passage of time will solve the problem will not work. They require leadership with a focus on sustained implementation. The leadership must be far-sighted enough to realise that, even if gains are not apparent by the time of the next election, reforms must be initiated for the sake of the country’s future.

The Congress Party has the chance to provide that leadership. If it can steer India clear of the middle income trap, more than one billion potential middle class Indians stand to benefit from the rewards of this decisive leadership long into the future.

—The writer is a senior fellow at Brookings Institution and was a member of Centennial Group team that prepared the India 2039 Study

India attracts $2.34 billion FDI in first month of the fiscal news

India attracts $2.34 billion FDI in first month of the fiscal news
The Financial Express, June 24, 2009, Page 2

India has attracted $2.34 billion in foreign investments in April, a rise of 19.3 per cent over the previous month.

This was however lower compared to the figure in April last year. According to sources, in April 2009, the FDI was about 19 per cent higher than March.

The capital investments in April and March last year were $3.74 billion and $1.96 billion, respectively.

In the last two years, the first six months saw investments worth $27.30 billion and $24.5 billion in 2008-09 and 2007-08 respectively.

According to the rating agency CRISIL's principal economist D K Joshi, the current financial year would see more challenges due to the global recession.

"Given the poor global economic scenario, the figures are not too discouraging but the year 2009-10 will be more challenging," Joshi said.

India's FDI target was scaled down by 5 billion from $35 billion last year. The cumulative FDI from April 2000 to March 2009 was about $90 billion.

TCS, Infosys see signs of recovery

TCS, Infosys see signs of recovery
The Economic Times, June 24, 2009, Page 7

ET NOW

INDIA’s top two software exporters, TCS and Infosys, are seeing the first signs of an economic recovery, as their top customers start discussing outsourcing contracts in order to further reduce their operational expenses. For instance, customers of Infosys, which signed over $100 million contract with Australian phone firm Telstra earlier this month, are now saying that the worst may be behind them.

“There is a lot more confidence amongst our clients; they feel that the worst is behind them. Especially in the US, many customers are saying that they were aggressive in reacting (to the recession)- they cut costs and renegotiated contracts,” S Gopalakrishnan, chief executive of Infosys told ET Now.

In a year when both Infosys and TCS have cautioned their investors on lower to negative growth in revenues, India’s $40 billion software exports industry is going through one of the toughest recessions in over two decades.

TCS, which counts Citigroup and GE among its top customers, is also seeing the first signs of recovery when it comes to the IT spending. “We are seeing a recovery, but at a slow pace. The overall decline is slowly getting arrested. The recovery is showing but can’t predict the slope of this recovery,” N Chandrasekaran, chief operating officer, TCS told ET Now.

Despite, financial problems and tightened IT budgets customers continue to work with offshore outsourcing companies in order to lower their operational costs anywhere between 20-30%.

As reported by ET earlier, tech biggies such as TCS, Infosys, Wipro and HCL are all set to get new outsourcing contracts worth $4 billion from top customers including British Telecom, Citi, GE and Bank of America this year. In a bid to cope with their tightened budgets, these companies plan to send their information technology works to offshore locations such as India.

Meanwhile, the ongoing slump is forcing many customers to evaluate different models of outsourcing, beyond traditional mode of structuring a contract based on number of hours and number of professionals on different projects.

“In the BSFI Segment itself I think that the downturn will drive some changes in terms of how clients engage with their partners. One major shift is shifting from capital expense to operational expense-it may be an interesting model to watch for in the future,” Mr Gopalakrishnan said. While top customers in the US are gradually beginning to discuss new outsourcing contracts, companies in Europe have been more active on the outsourcing front. According to research firm Gartner, almost 60 per cent of organisations in Western Europe will outsource more IT and business process functions in 2009, while renegotiation of existing contracts will rise to more than 60%.

“The focus on cost reduction is driving a high usage of outsourcing and global delivery in Europe in 2009 and 2010. However, under the current economic and technological conditions prices are going to decrease, creating a market full of opportunities and challenges for both end-users and external service providers,” said Claudio Da Rold, vice president and distinguished analyst at Gartner. Gartner anticipates prices of IT services outsourcing to decline by 5% to 20% through 2010.

ECBs for SEZs may be allowed

ECBs for SEZs may be allowed
The Economic Times, June 24, 2009, Page 9

NEW DELHI: The government is considering to permit developers and units in the special economic zones (SEZs) to raise external commercial borrowings, a move that could reopen the window for mopping up overseas funds. An announcement to this effect could be made in the Budget scheduled to be unveiled by finance minister Pranab Mukherjee in the Lok Sabha on July 6. The decision, sources said, would promote development of the special economic zones, besides helping the government in arresting decline in the foreign exchange reserves.

Fiscal deficit hits 16% of full year’s count in April

Fiscal deficit hits 16% of full year’s count in April
The Economic Times, June 24, 2009, Page 9

Our Bureau NEW DELHI

THE fiscal deficit for the first month of current financial year has shot up to Rs 54,100 crore, or 16.3% of the projected deficit for the entire year, due to accelerated public spending and a sharp drop in revenue collection, data released by the Controller General of Accounts on Tuesday shows.

Fiscal deficit—excess of government expenditure over receipts less borrowings—is a measure of the amount the government needs to borrow to meet its expenditure. Large government borrowing can cause interest rates to go up sharply.

However, bond market dealers, who watch the revenue figures closely as they provide a picture of the government’s financial health, shrugged off the deficit figures.

“The market has already factored in an upwardly revision of borrowing targets. We are waiting to see the quantum of the upward revision. Although there is enough liquidity in the system, if the borrowing target is upwardly revised by more than Rs 50,000 crore, the yields will see an upward spike,” said IndusInd Bank head (global markets group) Moses Harding.

The government has, in the interim budget, indicated a record Rs 3.62 lakh crore of gross borrowings in the year to March 31. This is higher than the Rs 3.06 lakh crore it borrowed a year earlier. In the current fiscal, it has already borrowed in excess of Rs 18,000 crore above its scheduled borrowing till June 26.

Primary dealers in the bond market pointed out that the fiscal gap may narrow in the coming months with tax collection picking up due to a revival in the economy and the government managing to raise money through disinvestment and auction of spectrum for 3G services.

Government spending in April almost doubled from the same period last year even as net tax receipts fell by 32% on an year-on-year basis. However, net tax receipts have started showing signs of revival with May showing an increase of more than 10%. Government expenditure is also expected to move up from the levels suggested in the interim budget as the forthcoming budget is likely to step up public spending.

Replacement for FRBM Act

THE government is likely to come out with a successor to the Fiscal Responsibility & Budget Management (FRBM) Act in the Budget to continue the consolidation of government finances, which got derailed due to the global financial crisis. The duration of the FRBM Act, enacted in 2003, has come to an end. — PTI

Recession in US should be over by next year

Recession in US should be over by next year
The Economic Times, June 24, 2009, Page 10

MARK Zandi, chief economist at Moody’s Economy.com, expects the recession in the US to end by the end of 2009 and a modest recovery through 2010. In an interview with Andy Mukherjee of ET NOW, Mr Zandi says the banking system in the US will be in a better shape by 2011-12.

The World Bank came out with a report on Monday, saying the recession will deepen further. Do you think the $13 trillion that the US government has spent, lent or guaranteed, in addition to the stupendous easing of monetary policy, will put an end to the recession this year?

Yeah, that’s right. I think the policy response, the monetary and fiscal stimulus that’s now starting to kick in and efforts to shore-up the banking system are working reasonably well, and the recession should be over by the end of the year.

Well, if the recession is coming to an end by December, then what are your growth expectations for the US economy next year? Is it likely to record a GDP expansion?

Yeah, I expect the recession to end this year, and then in 2010 we’ll see some growth, not a recession. But it will be a modest kind of growth. We’ll be uncomfortable with it, which will rise through the first half of the year. It won’t be until 2011-12 before we start to see a meaningful growth. The key reason for that is there are large parts of our economy that are struggling — housing, vehicles — and while the banking industry is better, it’s not really providing the kind of credit. So I think we’ll get just as much growth to get out of recession but not more than that.

S&P recently cut its credit ratings for 18 banks in the US. Is this a pointer to continued weakness in the US banking system? But we’ve also seen big US banks return TARP funds to taxpayers and they’re now able to raise money from capital markets on their own. So that’s a green shoot, right?

Yeah, we’re past the worst of it and the recession can come to an end, but as you point out credit conditions and underwriting standards are still very tough and they are not going to get any easier, so that’s the reason. In the next year, the economy has some difficulty getting going. I think by 2011-12, the banking system will be in a much better shape and those underwriting standards will start to ease up. We’ll get more credit and the economy will start to get going again, but it will be 2011-12 till that happens.

DLF in talks with StanChart for $300m loan at 7%

DLF in talks with StanChart for $300m loan at 7%
The Economic Times, June 24, 2009, Page 4

Sanjeev Choudhary NEW DELHI

INDIA’S largest real estate firm DLF is close to raising $300 million by way of a foreign currency loan at a rate significantly lower than what it would have to pay in the domestic market, a top company executive told ET.

The company is raising the loan from Standard Chartered Bank at an interest rate of around 7%, as against its current average borrowing cost of 12.5% in the domestic market, said the executive who asked not to be named.

The 7-year loan is being raised at a rate of Libor plus 500 bps. The loan will be used for one of the integrated township projects of DLF. The realty firm is developing around half-a-dozen townships, but it could not be immediately ascertained which project this fund will be deployed.

A DLF spokesman declined to comment. Stanchart India too declined to comment, citing “confidentiality reasons”.

The loan will be through the external commercial borrowings (ECB) route. Current central bank rules permit such overseas loans to be raised only for integrated township projects.

The Reserve Bank of India (RBI) had permitted real estate companies to raise funds through the ECB window for integrated townships late last year to boost activity in the housing sector in the light of a serious liquidity crunch at home.

But the seizure in the international credit market in the aftermath of the collapse of US investment bank Lehman Brothers last September meant overseas markets were not available for fund raising.

DLF, which had net debt of Rs 14,000 crore at the end of March, has been raising long-term loans in the domestic market to replace shorter duration debt. Since December last year, it has raised at least Rs 3,000 crore of long-term debt from a clutch of state-run banks and insurance major LIC at an average borrowing cost of 14%.

Sobha explores PE, QIP routes to raise money

Sobha explores PE, QIP routes to raise money
The Economic Times, June 24, 2009, Page 4

J Padmapriya & Boby Kurian BANGALORE

REAL estate major Sobha Developers is in talks with private equity players such as J P Morgan, Actis and IL&FS for a stake sale in some of its projects to raise much-needed money. The Bangalore-based firm is also planning a QIP to reduce debt burden by almost Rs 800 crore in this fiscal, sources said.

The capital raised through QIP is aimed at paying off its debt while roping in financial investors at SPV level is about kick-starting certain projects with near-term development horizon. Sobha Developers carries a debt in the region of Rs 1,850 crore, and the promoters, who hold 87% stake, maybe open to diluting their holding by 26%, to raise cash.

Sobha is looking to raise up to Rs 1,500 crore via the QIP route in the coming weeks. The exact quantum of mop up would be announced soon. The developer has been looking at a three-pronged approach—QIP at entity level, SPV deals and divesting some its land bank assets - in its capital raising plans. Sources said the first two options looked brighter.

New slum development scheme to cover 74 cities

New slum development scheme to cover 74 cities
The Hindu Business Line, June 24, 2009, Page 15

Rs 1.5 lakh Central assistance to be given to each family.

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Conditional aid
Assistance is, however, conditional upon the State governments concerned assigning property rights to slum-dwellers.

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Harish Damodaran, New Delhi

Barely a fortnight after the President’s address to Parliament outlining the new Government’s development priorities, work is under way on translating some of these goals into actionable programmes.

The Prime Minister’s Office (PMO), it is learnt, has already drawn the broad contours of an affordable housing scheme for urban slum-dwellers across 74 cities having a population of half-a-million and above as per the 2001 Census.

The idea is to “create a slum-free India in five years,” as the President, Ms Pratibha Patil, underlined in her June 4 address.

The scheme — to be called Rajiv Awas Yojana on the lines of the existing Indira Awas Yojana to meet the housing needs of the rural poor — proposes Central assistance of Rs 1.5 lakh for each family living in slums.

“The plan is to extend Rs 50,000 as grant and the balance Rs 1 lakh as a 20-year bank loan. Banks will be given an interest subvention of five per cent to enable them to lend at 4 per cent. The equated monthly instalment (EMI) would work out to around Rs 600 in this case,” official sources told Business Line.

This assistance is, however, conditional upon the State Governments concerned assigning property rights to slum-dwellers.

“It could be on the land on which they are already squatting or even tenements being built under various slum rehabilitation projects involving public-private partnerships. How the States do it is not our concern; the sole criteria is that the beneficiary be assigned a clear heritable title to the property,” the sources noted.

Many real estate players — HDIL, Akruti Nirman Ltd, DB Reality, Sumer Builders, SD Corporation (a Shapoorji Pallonji-Dilip Thacker joint venture) and Rizvi Builders, among others — have interests in slum redevelopment, which is seen as an area offering significant business potential.

According to the 2001 Census, the country has 74 towns/urban agglomerations with population above half-a-million. This includes 35 with more than a million and of which six have more than five million (Greater Mumbai, Kolkata, Delhi, Chennai, Hyderabad and Bangalore in that order).

The 2001 Census recorded the country’s total population residing in slums (as notified by State/local governments) at 40.30 million. Of this, 16.57 million were concentrated in 26 municipal corporations, including 5.82 million in Greater Mumbai, 1.85 million in Delhi, 1.49 million in Kolkata and 0.75 million in Chennai.

The new scheme is tentatively being planned for launch on August 20, the birth date of the late Prime Minister Rajiv Gandhi.

“Well, that’s what we are aiming for, though the scheme’s finer details have to be worked out by the Ministry of Urban Development,” the sources added.

ID cards

Meanwhile, the Union Cabinet, on Thursday, is expected to clear the establishment of the National Authority for Unique Identity Authority (NAUID), likely to be headed by the Co-Chairman of Infosys Technologies, Mr Nandan Nilekani.

The Authority will oversee the implementation of the current Government’s ambitious programme of providing all citizens with a unique identity number that would be a permanent marker right from their birth to death.

In her speech, the President had set a three-year time frame for completion of the project. “The Cabinet will basically approve the governance structure for the NAUID, with its chairman to be given the rank of a Cabinet Minister,” the sources informed.