Originally Posted by jadhav_ravi

Great observation Vishal.

As you said, the corrections are a mere gimmick. 100 Rs off for diwali :-).

If you just take into account inflation (Salary, Raw materials, CPI), there is no way that prices can go down. In America they go down because people put 10% of their money and 90% is mortgage and then they see foreclosures and depressed sales.

In India, thanks to NRIs and old philosophy, loans maybe make 50% of the transactions. Rest are outright purchases. Even people who take loans have 30% down payment. Indians are more prudent. They do not have a reckless lifestyle (although this is changing). In such a case there is no stimulus for deep correction.

India is a rich nation of poor people. The wealth distribution is very skewed. So though Indian GDP may be 1/100th of USA, many people (NRIS, professionals/businessman in cities) have similar income as in USA.If you look around you will find many bank/IT/telecom/retail guys who have incomes in excess of 10L. A married couple hardly finds it difficult to pay an EMI of 50K per month. That is about 50 Lakhs for the price of flat. So where do you see correction. Given the supply, there is ample demand (atleast in Mumbai)

What fascinates me is where do people get their money from. But it all seems to work. People are hard working and hell-bent to succeed and make money.
- Many people earn from stock markets. FIIs put money and support these incomes.
- Banks take 12% interest. Look at SBI/ICICI profits, they are huge. So they pay their employees good
- Insurance was inexistant till 5 years ago. Insurance companies are making big profits so they hand out huge money to their employees
- Airlines, they have good business. They pay excessive salaries.
- Businessman - Give the population of Mumbai even a good vada paav shop rakes in a turnover of 15-20K a day. So he has an income of 5K a day or 1.5L a month.
- Same with retail, telecom and ....
So who is poor: the rickshawman, the manual labourers, maids,... who live in slums.

It may all seem bad, dirty and miserable on CNN, BBC and Slumdog Millionaire but the ground reality is that many Mumbaikars do have the capacity to buy a flat of 1C while NRIs stare at the outskirts to get a roof and then sing about: NPAs/bad debt/GDP/GNI/debt-restructuring/per-capita/roads/slums and compare prices with manhattan.