Hereby I will prove how the realty boomers arguments are false.

What are the boomers arguments?

1.) Buy today, houses always increase in value in the long run.
WRONG. House prices cannot increase more than incomes in the long run. This is obvious if you think about it. If house prices go up more than people can afford to pay, buying stops, like it has stopped now.
Even Warren Buffett have pointed out that houses don't increase in intrinsic value. Unless there's a bubble or a crash, house prices simply reflect current salaries and interest rates. If a house is 100 years old, it's value in sheltering you is exactly the same as it was 100 years ago. Then came the maintenance as the house didn't renovate itself. It also has taxes, and insurance - costs that always increase and never go away. The price of the house went up about as much as salaries went up.
To put this is simple perspective, vegetable were costing Rs.5-6/kg when 5 digit salary was a rarity.
Today, the prices have gone up by about 4 times but so have the salaries. So, sounds very much like the reasoning people use now when they talk about how much their father's house appreciated "in the long run" without considering that salaries rose a proportional amount.

2.) Renting is just wastage of money.
WRONG. As said before renting is now much cheaper per month than owning. If you don't rent, you either:

* Have a mortgage, in which case you are throwing away money on interest, tax, insurance, maintenance, costs that increase forever.
* Own outright, in which case you are throwing away the extra income you could get by converting your house to cash, investing in bonds, and renting a similar place to live for much less money. This extra income is sufficient for emergency expenses,retirement etc.

Either way, owners lose much more money every month than renters and that's assuming prices don't correct to very high level & everything is smooth in the economy.

3.) As a renter, you won't have any money left as you will spend them on vacations,cars & hence won't have equity/savings etc.
WRONG. Equity is just money. Renters are actually in a better position to build equity/savings through investing in anything but housing. Renters can get rich much faster than owners, just by investing in conservative stocks & bonds.

* Owners are losing every month by paying much more for interest than they would pay for rent. The tax deduction does not come close to making owing competitive with renting.
* Owners must pay taxes simply to own a house. That is not true of stocks, bonds, or any other asset that can build equity/savings. Only houses are such a guaranteed drain on cash.
* Owners must insure a house, but not most other investments.
* Owners must pay to repair a house, but not a stock or a bond.
* Owners lose their money as house prices reduce. The EMI's remain constant in spite of reduction in rates. At the end of loan tenure, they would have paid almost twice than that of current renters who will buy at logical rates. Keep interest rates in mind. Most of the EMI is not principal amount but interest.

4.) There are great tax advantages to owning a house.
WRONG. Many people believe you can just reduce your income tax by the amount you pay in interest, but they are wrong. Buyers may not deduct interest from income tax; they deduct interest from taxable income. And even then, the tax advantage is not significant compared to the large monthly loss from owning.

If you don't own a house but want to live in one, your choice is to rent a house or rent money to buy a house. To rent money is to take out a loan. A mortgage is a money-rental agreement. House renters take no risk at all, but money-renting owners take on the huge risk of falling house prices, as well as all the costs of repairs, insurance, property taxes, etc.

5.) RE is based on local factors, it's not a national phenomenon. RE of Delhi-NCR,Bangalore & rest of the cities has nothing to do with Pune RE.
WRONG. Lending rates remain the same throughout the country. ALL loans are harder to get. This will drive prices down everywhere.

6.) A rental house provides good income. So, you can rent if you have purchased as investment.
WRONG. Rental houses provide very poor income in hyped areas and certainly cannot cover mortgage payments. Remember there is almost 300% difference between EMIs & rent for the same house.

It's pointless to do the work of being a landlord if you can make more money with no risk, no work, and no state income tax by investing in assured good returns bond.

7.) If owning is a loss in monthly cash flow, but appreciation will make up for it.
WRONG. Appreciation is negative. Prices are going down. It only adds to the injury of already high EMI's.

8.) As soon as prices drop a little, the number of buyers on the sidelines willing to jump back in increases.
WRONG. There are very few buyers left, and those who do want to buy will be limited by increasing difficulty of borrowing now that many house owners are near bankrupt as they don't save anything at the end of the month due to high EMI's.
No one has to buy, but there will be more and more people who have no choice but to sell as their payments rise. That will keep driving prices downward for a long time.

9.) House prices never fall atleast in Pune.
WRONG. If you see the RE scenario of 1996, prices crashed by 50% & took a whole 7+ years to recover.
Exact 1996 scenario may not be there today but strong correction is inevitable across the city.

10.) House prices don't fall to zero like stock prices, so it's safer to invest in real estate.
WRONG. House prices won't be zero, but the equity or the principal amount you paid can be zero or even negative. What you will pay as EMIs later in actual terms is not for the principal amount but only the interest as house prices dip. So, you will be only serving the bank.

11.) Prices will soften gradually, won't crash immediately.
WRONG. Prices are falling off a cliff. No one knows exactly what will happen, but it looks like prices will continue to fall for long time. These are just more manipulation of buyer emotions, to get them to buy even while prices are falling.

12.) The bubble prices were driven by supply and demand alone.
WRONG. Prices were driven by low interest rates and risky loans & good returns for investors in initial phases of boom in 2004-05.
Prices went up, interest rates went up & buyers savings went down. So prices are violating the most basic assumptions about supply and demand.

13.) There is lack of land.
WRONG. Ample of land is available & continue to be even in future in Pune. Sales volume are down. Even in Japan (small country with less land), prices went down. Current prices here are the same as that of 23 years ago. If we really had a housing shortage, there would not be so many vacant rentals.

14.) If you don't own, you'll live in a cheap neighborhood later.
WRONG. For the any given monthly payment, you can rent a much better house than you can buy. Renters live better, not worse. There are downsides to renting, such as being told to move at the end of your lease, or having your rent raised, but since there are thousands of vacant rentals, you can take your pick and be quite happy renting during the crash. There are similar but worse problems for owners anyway, such as being fired and losing your house, or having your interest rate and property taxes adjust upward. Remember, property taxes are forever.

15.) There's always someone predicting a real estate crash.
TRUE, yet irrelevant. There are very real crashes every decade or so. Even a broken clock is right twice a day.

16.) Local incomes justify the high prices.
WRONG. The mortgage should be more than your 3 years earning. It is much higher today. Most are already in danger/red zone.

17.) You have to live somewhere.
CORRECT. But that doesn't mean you should waste your life savings on a bad investment. You can live in a better house for much less money by renting during the down slide in RE.

18.) It's not a house, it's a home.
WRONG. Wherever one lives in it is home, be it apartment, condo, bungalow , mansion or house. Calling a house a "home" is a manipulation of your emotions for profit.

19.) If you don't buy now, you'll never get another chance.
WRONG. History proves otherwise.
Here's a beautiful quote from a analyst:-
"The real issue isn't whether you will be stuck being a renter all your life, she says. Its whether you'll get so scared about being shut out that you'll buy at the market's peak and be stuck in a property you can't afford or sell."

20.) It would take major economic recession or a major earthquake that wipes out this area in order for the price to fall by over 50%.
WRONG. Even today, if the prices fall by 50%, there will still be very few people who can buy at this levels due to uncertainty in jobs & most importantly high EMIs. Also, look at the rental rates for equivalent houses. Which loss per month is larger? EMI or rent?

contd....
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  • APPLY THIS TO REAL ESTATE AND READ.

    Inflation, a self-fulfilling prophecy

    T. B. KAPALI

    We recently had some routine economic data releases — high(er) consumer price inflation but lower GDP growth numbers. (Indeed, that combination has become routine!). At about the same time (earlier this month), the rupee also experienced some renewed downward pressure — dropping nearly 3 per cent to the 63.80 levels in a span of a couple of days.

    Immediately, the RBI Governor came out with a statement (November 13) titled “No fundamental reason for rupee volatility”. The Governor gave various figures and estimates in that statement to support the RBI’s perception that fundamentals did not warrant the rupee’s renewed weakness.

    That statement about the rupee also said: “the RBI is concerned about the weak economy as well as high inflation. We believe the weak economy, increases in food supply, and recent policy rate hikes will provide a disinflationary impetus over time, and recent data do not dispel this view. We will watch the incoming data carefully, especially looking for the effects of the harvest on food prices as well as the second round effects of fuel price increases and exchange rate depreciation, before we make further decisions on interest rates”.

    You will not be wrong if you think this statement thoroughly lacks credibility. For, how long, have we heard the view that inflation would get curbed going forward. But, inflation does not show any sign of coming under control.

    This statement, therefore, is no different for the regular reader of the RBI documents. But, it still is interesting for the technical point it makes about a weak economy generating a disinflationary impetus. Note that in the past, we had inflation rising in an economy expanding at about a 7 per cent rate. But, 2011-12, 2012-13 are seeing inflation rising in an economy growing at a vastly slower pace.

    If a weak(ening) economy would generate disinflationary forces (as the RBI asserts in its November 13 statement), we are not seeing — and have not seen — any evidence of this. As the chart shows, inflation has remained high and stubborn with an upward bias even as the economy has noticeably cooled. Dis-inflation, therefore, is not evident in the recorded data.

    So, how is the RBI confident now that the weak(ening) economy would deliver lower price level increases?

    Role of expectations

    The RBI is technically correct, of course, in saying that a weak economy could generate dis-inflationary forces and keep price pressures under control. That view is based on the logic that a weak economy leaves under/unutilised real resources. Weak utilisation of available resources, in turn, would apply downward pressure on the overall cost of producing goods and services. That is, at the aggregate level, it can be expected that the slack in the economy can lower the economy’s entire cost curve. And that, in turn, will result in lower final prices of goods and services.

    That is the hope.

    But, as has been turning out, that hope is not being realised.

    Why?

    One critical reason could be that inflation expectations are now so well entrenched and at such a high level that any softening in real costs of producing goods and services is not getting reflected in realised final prices (and, in turn, on realised price-level changes).

    (It is also not certain that the weak economy has lowered overall production costs.)

    Think of this situation in this manner.

    Producers of goods and services in the economy will fix the selling prices of their products at the current juncture or time — to begin with — on the basis of their current real costs of production as well as the demand for their goods and services. But, in a high inflation situation, they will also take into account how their production costs and demand for their products will evolve between now and the next time they fix their selling prices.

    When they expect high inflation to prevail and when they may not obtain too many opportunities to revise their selling prices, the tendency will be to factor in the “high expected inflation” into the prices they are fixing now. Higher the expected inflation, higher the current price that will be fixed.

    Note that when the higher inflation expectations are realised (or exceeded), the business which has fixed its price at a “high” initial level may still be better off in “relative” terms compared to its competition.

    That is, we broadly are reduced to a situation where

    Current inflation => Real cost of production + expected inflation

    Current inflation then rises as expected future inflation remains at a high level or worse, rises further.

    Expectations Trap

    Entrenched high inflation expectations are a difficult trap for the policy-maker. There is no easy way out. The policy-maker needs very high credibility to influence economic agents — producers, consumers, households — to change their perceptions and move to a lower inflation environment without too much damage to the real sector.

    Does the RBI have the credibility? Do ordinary people believe that the RBI can make their everyday living relatively more affordable?

    A dip in growth has not led to a cooling of prices. This is because current prices are factoring in inflationary expectations.

    (This article was published in the Business Line print edition dated November 30, 2013)
    CommentQuote
  • The harsh realty of regulation

    P. SAHEL

    In recent times, the clamour to grant infrastructure status to the real estate sector has been on the rise. Once the government accords industry or infrastructure status to the sector, it will lead to a simplification of procedures and speedier approvals for projects.

    , A developer of a project is required to comply with a long list of regulations. These include getting approval of development plans and building plans, and ensuring compliance with fire, pollution control, electricity, environment, water and so on.

    approval process

    As per World Bank’s statistics on Dealing with Construction Permits, a developer in India has to procure 34 different approvals before a residential project can get off the ground. This is a massive procedural burden when compared with developed economies, where not more than 15-16 approvals are needed. In fact, it is high even by emerging markets standards — in Brazil it only takes 17 permits, in South Africa 13 and in China 28. There is a need to define at what stage of approval the developer can start marketing his project to consumers.

    As per CREDAI-Jones Lang Lasalle Real Estate Transparency Survey 2011, getting regulatory approval for the construction process takes two to two-and-a-half years in India. The financing cost increases as well — and is passed on to the buyer.

    Fast approval of all such clearances would become a distinct possibility if the sector is granted industry status. It would ensure that projects can get a single-window clearance for regulatory requirements instead of getting them independently from various agencies, wasting time. Industry status would also lead to relaxation of lending norms to the sector.

    Access to capital is the biggest need for many developers today as banks are reluctant to offer a credit line to many projects currently under development. Such constraints force developers to borrow from non-banking institutions at exorbitant rates of interest. It is not uncommon for builders to borrow at 18-24 per cent.

    This aggravates their cash flow and makes it onerous for them to service those debts. Industry status will facilitate real estate loans at a lower rate, boosting the confidence of the sector.

    Beneficial effects

    Given the contribution of the real estate sector to the health of the overall economy, the demand for grant of industry status is justified. The industry is known to contribute approximately 6 per cent to our GDP and is known to be the next biggest employer after agriculture. A host of ancillary industries such as steel, cement, paint, brick, building materials, consumer durables and so on are known to be dependent on it.

    A study by credit rating agency ICRA shows that the construction industry ranks third among the 14 major sectors in terms of direct, indirect and induced effects in all sectors of the Indian economy.

    A unit increase in expenditure in the real estate sector can generate a fivefold increase in income.

    In view of the contribution of the real estate sector, the sooner it is granted industry status the better it will be for the health of our economy.

    Granting infrastructure status to the real estate sector will help it get off the ground.

    (This article was published in the Business Line print edition dated November 30, 2013)
    CommentQuote
  • Loan restructurings fail to pull lenders out of misery, Rs 30,000 cr of loans likely to go bad very soon

    With the economy showing few signs of recovery, as much as Rs 30,000 crore of loans, currently classified as 'standard' because they've been restructured, could go bad very soon.

    Given corporates are under severe financial stress in a sluggish demand environment, bankers estimate that a fifth of all loans that have been recast, via the corporate debt restructuring (CDR) cell could turn into non-performing assets (NPAs). This would be higher than the 15% slippage seen from recast loans till last year.
    bank assets

    If loans recast bilaterally — between banks and borrowers — are also considered, a little over a 10th could become NPAs.

    Complete news here :-

    Loan restructurings fail to pull lenders out of misery, Rs 30,000 cr of loans likely to go bad very soon - Indian Express
    CommentQuote
  • ""Granting infrastructure status to the real estate sector will help it get off the ground.""
    True. it will bring some organization into the industry.Regulation and control will increase.Builders will have to be more accountable in the situation if they get infrastructure status.
    Opaque walls may collapse to some extent.
    Fund flow will improve.
    Many benefits will accrue.
    CommentQuote
  • Originally Posted by realacres

    herohiralal,

    Recently, IL & FS said that another Mumbai based builder has gone bankrupt. Defaults by RE firms clearly indicate that RE bubble was in place, not to forget drop in launches by whopping 46% YoY. RE bulls may not like to accept but RE bubble is at its peak & numerous facts have been put up for the same & more shall come in coming time.
    And RE bears posting on IREF doesn't bursts bubble, but we are just messengers, post what is ground reality.


    This is another example of you taking one case and extrapolating it to suit ur bias. Which firm has defaulted and why? did it default cause it borrowed too much money to buy land and then was not able to launch schemes in time and hence was not able to generate cash to repay interest or did it launch schemes and was not able to generate enough bookings and still continued to construct the project?

    A RE player usually runs into problems only in the following cases
    1. Spends too much in buying up land - e.g. DLF
    2. Builds commercial property and does not sell and instead leases it out - e.g. DLF
    3. Continues to build the schemes even without sufficient booking to cover the cost - this must be the case you are referring to

    Now taking one example of default without knowing the underlying reason for that default and then saying that the whole RE sector is having problems with its loans is like saying that just cause GE got into problems in the credit crisis means that L&T much also face problems.

    There is no denying that RE is a bubble but the most critical question is when is it going to burst? You think it has burst whereas I think it still has to run its course and when it does eventually burst we wont be left with a GDP of 5% or a INR of 62 vs the USD. We will be in a situation far worse.

    You just need to look at the amount of new supply coming into the market to gauge how far away the bubble is from bursting.
    CommentQuote
  • Originally Posted by realacres

    Now that market is thinking rationally & fundamentals have taken over speculation

    Markets thinking rationally?? Stock markets around the world are near or at all time highs.



    home loan NPAs rising


    Source of this data pls. Where can u see home loans turning into NPAs???
    CommentQuote
  • If RBI was serious about controlling inflation then it would not print new money and not allow big business to be referred to the CRD mechanism to get loans renegotiated.

    RBI can do little to control the main source of inflation - food prices - and the govt wont take serious steps to control food prices as they help the middle men and the farmers - both critical vote banks.

    RBI is helpless and no matter how much the media praises the new governor it wont help control inflation. A change in govt will also not help.

    RBI and FM can only pray that oil prices stay low and the monsoon season is normal next yr.

    Originally Posted by rambler
    APPLY THIS TO REAL ESTATE AND READ.

    Inflation, a self-fulfilling prophecy

    T. B. KAPALI

    We recently had some routine economic data releases — high(er) consumer price inflation but lower GDP growth numbers. (Indeed, that combination has become routine!). At about the same time (earlier this month), the rupee also experienced some renewed downward pressure — dropping nearly 3 per cent to the 63.80 levels in a span of a couple of days.

    Immediately, the RBI Governor came out with a statement (November 13) titled “No fundamental reason for rupee volatility”. The Governor gave various figures and estimates in that statement to support the RBI’s perception that fundamentals did not warrant the rupee’s renewed weakness.

    That statement about the rupee also said: “the RBI is concerned about the weak economy as well as high inflation. We believe the weak economy, increases in food supply, and recent policy rate hikes will provide a disinflationary impetus over time, and recent data do not dispel this view. We will watch the incoming data carefully, especially looking for the effects of the harvest on food prices as well as the second round effects of fuel price increases and exchange rate depreciation, before we make further decisions on interest rates”.

    You will not be wrong if you think this statement thoroughly lacks credibility. For, how long, have we heard the view that inflation would get curbed going forward. But, inflation does not show any sign of coming under control.

    This statement, therefore, is no different for the regular reader of the RBI documents. But, it still is interesting for the technical point it makes about a weak economy generating a disinflationary impetus. Note that in the past, we had inflation rising in an economy expanding at about a 7 per cent rate. But, 2011-12, 2012-13 are seeing inflation rising in an economy growing at a vastly slower pace.

    If a weak(ening) economy would generate disinflationary forces (as the RBI asserts in its November 13 statement), we are not seeing — and have not seen — any evidence of this. As the chart shows, inflation has remained high and stubborn with an upward bias even as the economy has noticeably cooled. Dis-inflation, therefore, is not evident in the recorded data.

    So, how is the RBI confident now that the weak(ening) economy would deliver lower price level increases?

    Role of expectations

    The RBI is technically correct, of course, in saying that a weak economy could generate dis-inflationary forces and keep price pressures under control. That view is based on the logic that a weak economy leaves under/unutilised real resources. Weak utilisation of available resources, in turn, would apply downward pressure on the overall cost of producing goods and services. That is, at the aggregate level, it can be expected that the slack in the economy can lower the economy’s entire cost curve. And that, in turn, will result in lower final prices of goods and services.

    That is the hope.

    But, as has been turning out, that hope is not being realised.

    Why?

    One critical reason could be that inflation expectations are now so well entrenched and at such a high level that any softening in real costs of producing goods and services is not getting reflected in realised final prices (and, in turn, on realised price-level changes).

    (It is also not certain that the weak economy has lowered overall production costs.)

    Think of this situation in this manner.

    Producers of goods and services in the economy will fix the selling prices of their products at the current juncture or time — to begin with — on the basis of their current real costs of production as well as the demand for their goods and services. But, in a high inflation situation, they will also take into account how their production costs and demand for their products will evolve between now and the next time they fix their selling prices.

    When they expect high inflation to prevail and when they may not obtain too many opportunities to revise their selling prices, the tendency will be to factor in the “high expected inflation” into the prices they are fixing now. Higher the expected inflation, higher the current price that will be fixed.

    Note that when the higher inflation expectations are realised (or exceeded), the business which has fixed its price at a “high” initial level may still be better off in “relative” terms compared to its competition.

    That is, we broadly are reduced to a situation where

    Current inflation => Real cost of production + expected inflation

    Current inflation then rises as expected future inflation remains at a high level or worse, rises further.

    Expectations Trap

    Entrenched high inflation expectations are a difficult trap for the policy-maker. There is no easy way out. The policy-maker needs very high credibility to influence economic agents — producers, consumers, households — to change their perceptions and move to a lower inflation environment without too much damage to the real sector.

    Does the RBI have the credibility? Do ordinary people believe that the RBI can make their everyday living relatively more affordable?

    A dip in growth has not led to a cooling of prices. This is because current prices are factoring in inflationary expectations.

    (This article was published in the Business Line print edition dated November 30, 2013)
    CommentQuote
  • Originally Posted by pune_friend
    If one has to buy RE for end use, then how does it matter if IT is doing good or not ?


    talking specifically about pune then IT plays a big role. IT drives the RE markets in Pune. If IT does not do well then dont expect people to have the confidence to go out and buy a house.



    I am only trying to point out that if IT doing well is the reason to invest in a scheme or locality and it may take 4-5 years to be ready and to get resale benefits hoping on the fact that some IT guy will buy that flat, it is too long a path. It does not make sense, at least as of now.


    Yes investing in RE is a bad move.
    CommentQuote
  • Originally Posted by herohiralal


    RBI can do little to control the main source of inflation - food prices - and the govt wont take serious steps to control food prices as they help the middle men and the farmers - both critical vote banks.

    RBI is helpless and no matter how much the media praises the new governor it wont help control inflation. A change in govt will also not help.

    RBI and FM can only pray that oil prices stay low and the monsoon season is normal next yr.


    Is it true that food prices are high only because of less crop ? If there was enough crop, would the prices of basic items (onion, tomato, potato) come down to the earlier levels (4 Re kg or 6 Re kg or 10 Re kg etc.) ? Same for pulses ?

    Aren't these also driven by the price of fuel and the fact that cost of living, houses etc. has increased so much ? The overall sentiment is that life has become very costly, so everyone needs to charge lot of money. And that is fueling itself creating a cycle.

    Monsoon has been pretty good this year. Wonder when can we see the effect of that on our daily living.
    CommentQuote
  • Problem is people fail to understand the reason what made builders sustain 2009 :-

    > Loan restructuring,

    > Teaser rates for home buyers which offered lower than real rates to boost demand. This was collusion of builder-banks-Govt,

    > Stimulus given by US Fed & large scale money pumped in sick EU nations.

    All this was nothing but money made out of thin air.
    Realacres

    The Government had no option.It had knowingly pushed itself into this type of corner.
    Loans had to be restructured to ensure that they did not become a total write off which would have created far more problems.
    When many in decision making chain have private interests-deepest- in RE all these teaser schemes in "public" interest will be manufactured and demand sustained.
    Fortunately US stimulus is one thing our decision makers could not influence.
    Point is the price kept on getting inflated and now it is beyond means and demand has fallen/stagnated causing problems to builders who are unable to service interest payments or cash in on assets.
    Builders have exhausted all tricks-unofficial discounts,exhibitions ads by top film stars.
    Priyanka Chopra ad for some company,Aishwarya Rai for some other.Amount given for endorsement could have been profitably used to reduce their flat prices.
    All this has not really moved buyers to buy and become their neighbors.
    RE industry needs to cut prices and deliver in time.Multiple projects using investor/buyers money is not going to help.
    Fundamental and sound business practises need to be introduced and then RE can come back to line.Regulator will improve things.

    Builders need to reinvent themselves in a different manner which places quality and timeliness as their top priority.
    CommentQuote
  • Pls. watch all episodes of this video.(1-5 )

    Its very important to understand that why there is so much inflation from 2008 onward.

    Hidden Secrets of Money - Free Video Series on Money Secrets

    You are about to learn one of the biggest secrets in the history of the world...it's a secret that has huge effects for everyone who lives on this planet. Most people can feel deep down that something isn't quite right with the world economy, but few know what it is. Gone are the days where a family can survive on just one paycheck...every day it seems that things are more and more out of control, yet only one in a million understand why. You are about to discover the system that is ultimately responsible for most of the inequality in our world today. The powers that be DO NOT want you to know about this, as this system is what has kept them at the top of the financial food-chain for the last 100 years...

    Learning this will change your life, because it will change the choices that you make. If enough people learn it, it will change the world...because it will change the system . For this is the biggest Hidden Secret Of Money. Never in human history have so many been plundered by so few, and it's all accomplished through this...The Biggest Scam In The History Of Mankind.
    CommentQuote
  • Originally Posted by pune_friend
    Is it true that food prices are high only because of less crop ? If there was enough crop, would the prices of basic items (onion, tomato, potato) come down to the earlier levels (4 Re kg or 6 Re kg or 10 Re kg etc.) ? Same for pulses ?

    Aren't these also driven by the price of fuel and the fact that cost of living, houses etc. has increased so much ? The overall sentiment is that life has become very costly, so everyone needs to charge lot of money. And that is fueling itself creating a cycle.

    Monsoon has been pretty good this year. Wonder when can we see the effect of that on our daily living.


    Indian infra and polices dont allow food to be sold across states quite easily. Food imports are not feasible in all cases as the infra to handle imports - cold storage and speedy transport links dont exists.

    Railways subsidizes passenger travel by keeping cargo travel rates very high. APMC laws prevent farmers from selling to the wholesaler/retailer directly. There are layers of middlemen.

    Food processing is poor. Who would not prefer canned onions at 20 INR / kg compared to 100 INR / kg of fresh onions for a few weeks every yr?

    Inflation helps entities in too much debt and in India today the biggest debt ridden entity is the Indian govt. Its massive spending spree is coming at a cost. RBI keeps printing new money and the inefficiency of the Indian system keep supply of food restricted or available at high cost.

    Monsoon has been good. Food prices usually cool down in the winter months so expect some relief there and also expect the media to praise the new RBI governor for the awesome job he had done in controlling inflation :)
    CommentQuote
  • Originally Posted by herohiralal
    Indian infra and polices dont allow food to be sold across states quite easily.

    Not a direct point for what you are saying but this is what happened this Mango season in Pune.

    High quality, delicious raw mangoes grown in and shipped from neighboring state at less than 40 Rs/kg.

    And coriander was selling at Rs. 25 a bunch.

    Same for mangoes from within state. Despite news papers announcing that there was lot of supply and prices are coming down heavily, there was no change at all. Looked like they were manipulating just like Pune RE (literally) ;)

    This was the scene in the wholesale Market !!


    Originally Posted by herohiralal

    Railways subsidizes passenger travel by keeping cargo travel rates very high. APMC laws prevent farmers from selling to the wholesaler/retailer directly. There are layers of middlemen.



    Aren't all the Retail chains allowed direct purchase from farmers ? From what I know, they do purchase directly from farmers (and also have their own farms at multiple places in the country).

    Why can't they still afford to sell at prices much more competitive than typical subji mandi ?
    CommentQuote
  • """Why can't they still afford to sell at prices much more competitive than typical subji mandi?"""
    Higher overheads.
    CommentQuote
  • Originally Posted by gms2412
    Pls. watch all episodes of this video.(1-5 )

    Its very important to understand that why there is so much inflation from 2008 onward.

    Hidden Secrets of Money - Free Video Series on Money Secrets

    You are about to learn one of the biggest secrets in the history of the world...it's a secret that has huge effects for everyone who lives on this planet. Most people can feel deep down that something isn't quite right with the world economy, but few know what it is. Gone are the days where a family can survive on just one paycheck...every day it seems that things are more and more out of control, yet only one in a million understand why. You are about to discover the system that is ultimately responsible for most of the inequality in our world today. The powers that be DO NOT want you to know about this, as this system is what has kept them at the top of the financial food-chain for the last 100 years...

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    this is really good. but how much of it is real, and how much of it is conspiracy theory?? frankly, most of it went way over my head :o

    @rambler,
    @wiseman,

    you must watch this. we had a discussion about "why gold has value" earlier.
    the series seems to be sponsored by gold sellers though.
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