Way Out!

How the loan scam discovery will shape up the realty market in the future, will it be a win-win proposition in the market and how the common man should read in between the lines; these are some of the apprehension which can’t be answered in a very immediate term instead one has to wait and watch to see the market reacting.

The loan scam was busted with the allegation that few private institutes have benefited some real-estate players by compromising stringent procedure of funding and providing funding to real-estate players in return of monetary benefits. The day since this loan scam was busted the stocks of funding companies whose names was involved in the scam and the real estate player are bleeding. Stocks even breached there year low’s since the discovery came to the light.

Well there is mixed reaction from the market regarding property prices projections for days to come. With every passing day new names and new ways of misappropriation are getting exposed including writing off of bad debts and malpractices. I anticipate some new imposition from government in a very immediate term, to curb malpractices in future transactions. This will lead to tougher financing guidelines resulting liquidity crunch to real estate developers which in turn will slowdown there upcoming projects.

It is also learnt that Real estate developers are having an outstanding obligations tuning to 25,000 Crore rupees to honor, for which they can’t look back at market. Tough time for real estate companies doesn’t ends here, the Public offers which were in the pipeline to hit the market are taken a back as there is a subdued interest on investor in real estate stocks post scam, Investors are in a pause mode and it seems that real estate sector has suddenly lost its shine.

In this entire development the developers are bleeding and to honor there existing obligation they may take a decision of reducing the price for there completed and upcoming projects as well

On the same time projects with clean image will beg a premium for there upcoming and completed projects, scarcity of the new projects and premium from these developers will push the prices.

In nutshell how the market will react to this development is not very certain and if you are thinking for a dream house of yours I will suggest you to watch the situation and then take an informed decision.

Image source: princetonrealestatehomes.com

All in the name of education !!

It has been few months since the landmark discussion of “Education as a fundamental Right” came into force. Policy makers thought that Education and access to education should be for everyone and there is a necessity to declare as fundamental right. Policy makers thought that if children are nurtured and equipped with right education then, India’s future as a strong and prosperous country is secure and only education can change the face of India’s tomorrow.

Central and state Governments joined hands and left no stone unturned in launching and adhering to the new directive, initiatives were taken to ensure that no child is deprived of his fundamental right. Right from recruiting teachers (both on temporary and permanent basis), offering good pay structure as an incentive for getting posted in rural areas, Mid day meal for students and kids attending the school, freebies etc.

Apart from government schooling machinery, all private institutes were summoned for implementing the new directive. The new directives/ norms and standard stats that; All schools have to prescribe to norms and standards laid out in the Act within 3 years, failing to which they will not be allowed to function. Schools have to apply for recognition, failure to which will attract penalty of Rs 1 lakh and further functioning will be liable for 10,000 INR penalties per day.

It will be also mandatory for private schools to enroll children from weaker sections and disadvantaged communities to the extent of 25% of their enrolment. Selection of group of children will be based on simple random selection and no seats of this 25% quota can be left vacant. Children from weaker and disadvantaged communities have to be treated on par with all the other children in the school.

“Right to education” gives a sort of relief to all the patriotic souls, but on the same time raises eyebrows about the exorbitant fee charged by the private schooling institute. Private schools charge heavily under various heads be it admission fee, imprest money or caution money. I remember my good school and college days, my yearly college fees used to be less than today’s kinder garten monthly fees. I’m not telling a 50 years old story it’s hardly 10 years back proposition. Even though if I add inflationary parameters to it still it will be lower.

I wish and pray to government machinery to device some mechanism to put a upper ceiling in the fee structure. One amazing thing which I came across was a 40,000 INR deposit as caution money in the school. Didn’t get the logic....???? what assets does the school has worth 40,000 which they feel is endangered....???? against which they are looking for a collateral, Hope that this is getting heard and addressed by someone.

Image source: michaeljackson-art.com, exposenewspaper.com, willourworld.com



Inclusive growth


We as a nation boast on robust economic growth but isn’t’ our growth superficial and peripheral or have we achieved an all Inclusive growth

Economic Growth

Wealth of High net worth individuals soared drastically even though we have not fully recovered from the downturn. With economy knocking 8-10% growth rate rich yet got richer but contrary life has not changed much for a big chunk of peoples for whom the struggle for bread& butter is a never ending battle.

Unemployment

Villagers seeking better life; migrate to the cities, adding inorganic element to the growth of cities; in form of slums and load on the resources like potable water, energy, housing, sanitation and transportation. Unavailability of accommodation results in slums wherein many people share the resources, life in such slums is really harrowing and living condition extremely difficult.

Gender equality

Many of the unemployed migrated workers work on pity jobs like construction sites carrying all sorts of head load and with there children play around the site. Nursing mother taking out time in between to feed there babies and such breaks results in lower pay scale as compared to there counterparts males. Moreover women are seen as physically weaker then men and compromises on wages as compared to men.

Socio economic

Gap between rich and poor is widening, we boast on increased number of millionaires on y-o-y basis; implicitly we mean that in increase in number of poor on y-o-y basis. One side we have plush residential complexes with all the amenities and lavishness; also we have people who stay on pavement, huts on the other side, striving to meet there ends meet

Infrastructure

Overcrowded cities with denizens having higher disposable income putting a lot of load on infrastructure. Rapidly growing cities attracts lot number of people to participate in the growth story and be a part of growth as a result of which cities are running short of roads, portable water, power and hygiene, demand of power, water is constantly increasing and we are always in deficit to meet the demands.

Conclusions: Looking at this I think that the numbers can be indicators for the external world to show that we are not only alive but are growing; but these numbers do not justify growth in its entirety and are not all inclusive.

Image Source: economic-growth.info

Why food inflation!!


This being a vicious circle, difficult to find the start and end but as far as I think, IT Sector was the instrumental in rewriting the growth story of India Inc. It all started in late 80 with the growth saga of Information Technology sector; this sector started attracting the talent from the core industries, high profit margin/cash rich IT companies could leverage double, quadruple salary expectations for the experienced recruits. There were never like before demand of engineering graduates all across the country and existing machinery of colleges were not sufficient to meet the industry demand.

To meet the demand of engineering graduates, education sector started to grow as an industry in it and in the past decades ample number of engineering colleges mushroomed across the country. Now this industry is producing engineering graduates more than what they are required globally; this is my assumption.

High salary packages of IT industry apparently pressurized other sector to revise their base packages and to preserve brain drain, manufacturing and service sector followed the suite and offered good package and perquisites to their employees. The salary of the Entire private sector companies got revived and IT sector was an instrumental and trend setter for revival of the salaries for the entire India Inc. High salaries increased the leverages in terms of disposable income and people started spending on their wants.

Young graduates getting hefty packages started spending lavishly; there was spurt in demand for luxurious commodities, housing, food and clothing. As they were spending heavily and buying something or other, the related industries which were the net producers went for a head spin profits and thus the entire value chain started making money, money got mobilizing and started exchanging hands and in turn everyone getting a pie of the transaction.

Money and trend started mobilizing towards other cities and now this euphoria is all over the country; you find people with ample disposable income and lavish expenditure. Increased disposable income also pushed the demand of investment, the handful avenues everyone short listed being gold, housing and equity and the money started flowing. The soaring profits of these sector pulled many investor and money in turn; henceforth more money started flowing in the system.

Of all the favorite investment avenues, the Only demand which I believe will be hampering in long turn will be the bizarre demand of Housing, as equity and gold is something virtual and not much to do with a common man, but housing demand is something which is a basic need and “not a want” and unprecedented demand of housing will further push the prices of all commodities in the entire value chain.

To meet the unprecedented demand of housing sector agricultural land is getting sacrificed, agricultural land is rapidly winding up, though there are norms for not using agricultural land for housing purposes but hardly does it comply. In the past I have seen catchments of land which were used for agricultural purposes, lying vacant for few years and then emerging as residential colonies.

India is rapidly growing in population and so is the demand for housing, but if we keep on losing agricultural land in lieu of residential projects than the expected agricultural output will never be able to meet the demand of growing population and the commodities prices will be always inflated.

Now whom should we blame for the any of the inflation? Is it High Industry packages, aspirations or desire to fulfill the wants?

Images source : smartgrowth.bc.ca

Number Port-un-ability


If you are fed up with your existing mobile service provider and wanted to switch to a more competitive service provider who is better in terms of tariff and network coverage, then you have to wait for the dawn of the New Year. No way I’m Exaggerating. The mobile number portability (MNP) is in pipeline from last few years and every time missing the deadline with a substantial margin and topped up with a new deadline.

This reminds me of a dialogue of a famous Bolloywood movie “Tareekh pe Tareekh” means deferment after deferment. After much of deferment it is learnt that finally it is going to be implemented from 25th Nov-2010 starting from the state of Haryana. However it is also learnt that the MNP will be implement in rest of country in a phased manner, schedule for which is yet to decided and disclosed; means that there is wait for new Tareekh by the rest of the country.

MNP in state of Haryana will be a case study in itself, and the outcome will decide the fate of MNP in rest of the country. The state might have been chosen strategically as in principal it is a small state and doesn’t rank among the top in terms of subscriber base, population and mobile phones.

Let’s keep our fingers crossed for the successful implementation of MNP in the state of Haryana, as there has been a lot of delay due to non-preparedness by the operators, technical glitches and what not. Service provider themselves were not and are not in sync with the idea of number portability as they think that there customer base will shift to their competitors and will erode their bottom lines.

Whatever may be the reason, with MNP in place competition will be fierce and customer retention would be a mirkier business in days to come, while on the other hand customer will have an ease to switch the service provider at free will and go for lucrative options.

The hidden message being that bottom line of telecom operator will be eroded and one should not invest into the sector until the stock prices bottom outs and guidelines are announced for the year to come.

All that will shine is Silver!


An ounce of Gold is priced around 60 times to that of silver and you will be surprised to learn that silver is having better utility as compared to gold and there are less stocks of silver as compared to gold. With above facts in place the prices of gold Vis-à-vis silver do not compliment the real facts, I believe that the opportunity existing with silver are immense and no other commodity can be as much profitable as silver in years to come.


There are three interesting fact to compliment my though process,

1) There are not much dedicated mines for extracting silver the way there are mines for gold, coal, diamonds etc. Silver is an outcome of the mining activities happening globally for various reasons and not much of term as silver mines exist, which implies that if we wanted to increase the production of Silver suddenly we simply can’t.

2) Silver will be more profitable as compared to gold in the longer run because, Silver now a days is finding wider industrial application right from batteries, electric appliance, glass tint, pharmaceuticals etc; to catalyst to many reactions. Silver used in any of the industrial application is difficult to recover unlike Gold which can be recovered from the ornaments.

3) Today globally the silver inventory is around 250 million ounces and most of which is tied up and unavailable, today the silver inventory are lowest of last 200 years. Industrial requirement of silver is around 900 million ounces a year, and Mining and recycling fall short of providing the necessary silver.

Looking at this facts, silver outlook seems brighter but will it outshine gold is a debatable question and can only be answered in the time to come, but looking at the facts and figure Bull Run in silver will continue.

Image source: thesculpturewebsite.co.uk