Previously builders constructed the Flats with 1.5 FSI and now with 2-2.2 FSI, there by increasing the number of Flats which brings down the UDS but they are not decreasing the per Sqft cost in correspondence to FSI increase.

Increase FSI,decrease UDS,increase in Land cost, increase per Sqft stating increase in Land Cost, vicious circle. Pity of the people who are buying with Home loans for 15-20 years.

The RE has started to spiral again, I wish there should not be any slow down or recession for the next couple of years.

20 Years Flats with 750 Sqft quoted Rs 10000 per Sqft

No Global Crisis

There are similarities between the current Greece crisis and the US one in 2007. The situation in 2008 was a global liquidity problem where the trust between banks worldwide went into a loop.

This resulted in inter-bank lending rates skyrocketing.

The low interest rates and large inflows of foreign funds created easy credit conditions for a number of years prior to the crisis, fueling a housing construction boom and encouraging debt-financed consumption.

The combination of easy credit and money inflow contributed to the US housing bubble.

Between 1997 and 2006, the price of a typical American house increased by 124 per cent. Loans of various types (mortgage, credit card, and auto) were easy to get.

US households and financial institutions became increasingly indebted or over-leveraged during the years preceding the crisis. This increased their vulnerability to the collapse of the housing bubble and worsened the ensuing economic downturns.

As housing prices declined, major global financial institutions that had borrowed and invested heavily in sub-prime derivatives reported significant losses. Falling prices also resulted in homes worth less than the mortgage loans, providing a financial incentive to enter foreclosures.

The crisis rapidly developed and spread into a global economic shock, resulting in a number of European bank failures, declines in various stock indices, and large reductions in the market values of equity.

The difference between 2008 and now is that we do not have an off parallel credit system which came as a surprise to the central banks then.

Investment banks in the US had created at shadow banking system with the help of innovative financial instruments in the derivative arena.

Paul Krugman, the well-known economist, described the run on the shadow banking system as the "core of what happened" to cause the crisis.

He placed significant blame for the freezing of credit markets on a "run" on the entities in the "parallel banking system".

Therefore, the current debt crisis is different from the earlier one on two counts. One, it is not a global liquidity crisis. Second, we do not have a parallel banking system now. All off balance sheet liabilities are more or less out in the open.

We are unlikely to see repeatedly the earlier panic. Policymakers now understand the risks. In many cases, they have in place the liquidity provision programmes they implemented after the Lehman collapse.

So, a systemic crisis can be avoided. But, it will require lot of hand-holding by all the central banks before we come out of this crisis intact.

So,investors should not offload their investments in panic, but invest more in deep corrections.
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  • Is India's High Growth Sustainable?

    After almost 7% growth in 2008/09 fiscal year, in the first three months of 2010 India's economy expanded 8.6% boosted by industrial production and services. But, is the third largest economy in Asia able to keep its high rate of growth?

    Indeed, the better than expected performance of Indian economy in the last few quarters had a lot to do with a significant fiscal stimulus and loose monetary policy. In fact, two stimulus packages providing tax cuts and increasing infrastructure spending in connection with lower interest rates have supported significantly domestic demand. Yet, with demand growing at a faster pace than supply, inflation is becoming a growing concern. Not surprising, the Reserve Bank of India has raised its benchmark interest rates twice to 3.75%. And it is expected that by the end of June the rate may increase as much as 100 basis points. However, India's central bank should be more cautious in shifting its monetary policy. Tightening too much or too early is likely to squeeze credit availability and weight on growth which is essential in keeping fiscal deficit at sustainable levels.

    Looking further, stimulus spending had expanded fiscal deficit from 2.6% of GDP in 2007/08 to 10% in 2009/10. And although due to strong growth numbers the shortfall is more than sustainable, Indian government should be able to better control its expenditure. In fact, while Union Budget for 2011 increases infrastructure spending, raises taxes for petroleum products and reduces for middle-income families it fails to slash inefficient subsidies on fertilizer, fuel and food. More importantly, the new administration is slow in implementing economic reforms promised investors after last year's wider-than-expected election victory. The government has made progress in new tax laws, disinvesting state run companies, it formed an experts panel to ease foreign investment in the financial sector. Yet, labor reforms and farm prices release are far from being executed.

    Read more: http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=INR&File=06022010145738.htm#ixzz0q4FU8Fbg
    CommentQuote
  • Originally Posted by REUser
    After almost 7% growth in 2008/09 fiscal year, in the first three months of 2010 India's economy expanded 8.6% boosted by industrial production and services. But, is the third largest economy in Asia able to keep its high rate of growth?

    Indeed, the better than expected performance of Indian economy in the last few quarters had a lot to do with a significant fiscal stimulus and loose monetary policy. In fact, two stimulus packages providing tax cuts and increasing infrastructure spending in connection with lower interest rates have supported significantly domestic demand. Yet, with demand growing at a faster pace than supply, inflation is becoming a growing concern. Not surprising, the Reserve Bank of India has raised its benchmark interest rates twice to 3.75%. And it is expected that by the end of June the rate may increase as much as 100 basis points. However, India's central bank should be more cautious in shifting its monetary policy. Tightening too much or too early is likely to squeeze credit availability and weight on growth which is essential in keeping fiscal deficit at sustainable levels.

    Looking further, stimulus spending had expanded fiscal deficit from 2.6% of GDP in 2007/08 to 10% in 2009/10. And although due to strong growth numbers the shortfall is more than sustainable, Indian government should be able to better control its expenditure. In fact, while Union Budget for 2011 increases infrastructure spending, raises taxes for petroleum products and reduces for middle-income families it fails to slash inefficient subsidies on fertilizer, fuel and food. More importantly, the new administration is slow in implementing economic reforms promised investors after last year's wider-than-expected election victory. The government has made progress in new tax laws, disinvesting state run companies, it formed an experts panel to ease foreign investment in the financial sector. Yet, labor reforms and farm prices release are far from being executed.

    Read more: http://www.tradingeconomics.com/Economics/GDP-Growth.aspx?Symbol=INR&File=06022010145738.htm#ixzz0q4FU8Fbg


    Enna Thala, Nee Kelvi kekiraya Illa bathil Solraya?

    What is your opinion?
    CommentQuote
  • Originally Posted by Economist
    Enna Thala, Nee Kelvi kekiraya Illa bathil Solraya?

    What is your opinion?


    My wish:

    Collapse of current trend in Indian Economy;
    End to concentrated tumour growth of cities,
    Begining of growth of Parallel Cities
    USD:INR = 1:20

    Reality:

    Downfall of World Economy is aiding India to continue its current Trend.
    Also, Govt is keen on keeping INR devalued and interested in doing patchwork rather than putting efforts on building infrastructure, standard and quality of Living.

    My Opinion:

    The so called 8-9 % growth of GDP is nothing but Inflationary Growth, due to Foreign Investment not home grown.The Inflation is at 13-15% and you have growth at 8-9%, the outcome is you are loosing your purchasing power very badly, day by day.

    Living on Credit has become a Habit, Fashion and LifeStyle. (Digging their own grave similar to the Baby Boomers of US).Greediness of Indians has shooted to dangerous levels.

    Credit bubble is growing in India.
    RE has become Yesteryears Finance Company.
    CommentQuote