This is a piece, I have given for the magazine of the real estate Company I was working for , Mantri deveopers. I am not sure whether this will get published. Anyway, I thought , since I am the author of the piece , I might as well post it here. It may be worth seeing after a few years and take stock of how things are at that point of time.
The larger Picture –Go for it , It is for Real
There used to be enormous speculation on the direction that the Government budget takes before the same is announced. Progressive Governments have made this activity less speculative by being consistent and taking a broadly pre determined direction.This time around, for a change there was speculation as to what the real attributes and what the budget meant for the tax paying citizenry of the nation, post the announcement of the budget. The Hon Finance Minister had this uncanny knack of carefully hiding the goodies from public glare.
It had a lot more indirect good measures than was apparent.
Across the world , countries have been trying to pump prime the economies by infusion of greater capital, effectively they have been trying to create liquidity to facilitate greater economic activity. Our budget and fiscal measures were no different in that respect.
The outlays for NREGA ( National Rural employment Guarantee ..) and various other welfare schemes envisage substantial infusion of money in to the system, more than Rs 391 Bio Crs.
Government has started encouraging Public Private partnership in the Infrastructure arena and to facilitate refinancing of projects ,have budgeted a substantial sourcing through IIFCL ( India Infrastructure Finance Corporation Limited ) .
The above steps on macro economic front would have , what is popularly termed the trickle down effect. Money flows down and increases cash in the hands of people.
Successive Governments have done their bit to the Individuals also, albeit slowly.
The measures proposed and announced are very much in line with the reform process which started in 1991-92.
If one travels back the reform road of past 17 years, one will observe that there has been some direction to the exercise. Delicensing , standardization and rationalisation of tax laws, reduction in Indirect taxes,enabling provisions to bring in more foreign capital, privatization . The blips in the reform process have been more in response to exigencies demanded by cobbled up political alliances. That is no more than political diplomacy . The direction is clear and unrelenting and independent of the Government in power.
There is talk of monsoon failure . While there are chances of monsoon failing, impact of monsoon on the Indian economy is not very significant.
On the tax front, apart from removing surcharge and there has been reduction of service tax by 2% . Reaffirmation of GST ( Goods and servces Tax ) , a unified and comprehensive tax structure across is a major boost.
One can see in the recent announcement of Direct tax code that there is a great propensity to take a big leap and not the incremental steps of the past several decades.
It envisages substantial reduction in tax rates of individual and the Companies.Net cash increase in the hands of tax payers would be as much as 10% of the income. The emphasis has been on broadening tax base by bringing more people in to the tax ambit , better collection by greater compliance, doing away with industry and assessee based exemptions.
India is not just poised for 6% growth, the pent up demand of the past several decades, should give rise to much greater growth. Per Capita consumption of any item in India is far lower than most of the other countries.
Is it a good time to buy or would it be better to buy Residentiel house later ?
God in His infinite wisdom continues to let proliferation of human beings , but does not create additional land nor is he adding to the natural resources like basic metals et al.
Real estate story in India is one of simple equation, one has on the supply side, restricted land availability , limited natural resources in terms of building materials ,and on the demand side, we have a 1 Billion population, significant number of whom are still in need of housing and with their income levels all the time rising . It is no brainer as they say.
If interest rate goes up , so will cost of various building materials and land.
With decrease in tax rates as recommended in the Direct tax code, with larger disposable cash, one can budget for larger EMI s also.
There has never been a better inflation hedge than Real estate . Take data for past several years. There has never been a band of 7-10 years when an investment in real estate has fared worse than so called safe forms of investment like Fixed deposits, sovereign bonds etc.
Other forms of investment , say the stocks, are for market wizards .To quote a famous economist “the markets have an uncanny knack of being irrational longer than you can remain solvent “. Stay out if you are not an expert.
Prices correct much more than warranted after any crisis , as has been the case recently. Catching the bottom while buying and the top at the time of selling is an art seldom mastered . With investment in Real estate, you get more than what you would bargain for. In a bullish market people seldom see the negatives and in a perceived downturn, people seldom see the positives.
There can be no better time than now to go for real estate investment
The larger Picture –Go for it , It is for Real
There used to be enormous speculation on the direction that the Government budget takes before the same is announced. Progressive Governments have made this activity less speculative by being consistent and taking a broadly pre determined direction.This time around, for a change there was speculation as to what the real attributes and what the budget meant for the tax paying citizenry of the nation, post the announcement of the budget. The Hon Finance Minister had this uncanny knack of carefully hiding the goodies from public glare.
It had a lot more indirect good measures than was apparent.
Across the world , countries have been trying to pump prime the economies by infusion of greater capital, effectively they have been trying to create liquidity to facilitate greater economic activity. Our budget and fiscal measures were no different in that respect.
The outlays for NREGA ( National Rural employment Guarantee ..) and various other welfare schemes envisage substantial infusion of money in to the system, more than Rs 391 Bio Crs.
Government has started encouraging Public Private partnership in the Infrastructure arena and to facilitate refinancing of projects ,have budgeted a substantial sourcing through IIFCL ( India Infrastructure Finance Corporation Limited ) .
The above steps on macro economic front would have , what is popularly termed the trickle down effect. Money flows down and increases cash in the hands of people.
Successive Governments have done their bit to the Individuals also, albeit slowly.
The measures proposed and announced are very much in line with the reform process which started in 1991-92.
If one travels back the reform road of past 17 years, one will observe that there has been some direction to the exercise. Delicensing , standardization and rationalisation of tax laws, reduction in Indirect taxes,enabling provisions to bring in more foreign capital, privatization . The blips in the reform process have been more in response to exigencies demanded by cobbled up political alliances. That is no more than political diplomacy . The direction is clear and unrelenting and independent of the Government in power.
There is talk of monsoon failure . While there are chances of monsoon failing, impact of monsoon on the Indian economy is not very significant.
On the tax front, apart from removing surcharge and there has been reduction of service tax by 2% . Reaffirmation of GST ( Goods and servces Tax ) , a unified and comprehensive tax structure across is a major boost.
One can see in the recent announcement of Direct tax code that there is a great propensity to take a big leap and not the incremental steps of the past several decades.
It envisages substantial reduction in tax rates of individual and the Companies.Net cash increase in the hands of tax payers would be as much as 10% of the income. The emphasis has been on broadening tax base by bringing more people in to the tax ambit , better collection by greater compliance, doing away with industry and assessee based exemptions.
India is not just poised for 6% growth, the pent up demand of the past several decades, should give rise to much greater growth. Per Capita consumption of any item in India is far lower than most of the other countries.
Is it a good time to buy or would it be better to buy Residentiel house later ?
God in His infinite wisdom continues to let proliferation of human beings , but does not create additional land nor is he adding to the natural resources like basic metals et al.
Real estate story in India is one of simple equation, one has on the supply side, restricted land availability , limited natural resources in terms of building materials ,and on the demand side, we have a 1 Billion population, significant number of whom are still in need of housing and with their income levels all the time rising . It is no brainer as they say.
If interest rate goes up , so will cost of various building materials and land.
With decrease in tax rates as recommended in the Direct tax code, with larger disposable cash, one can budget for larger EMI s also.
There has never been a better inflation hedge than Real estate . Take data for past several years. There has never been a band of 7-10 years when an investment in real estate has fared worse than so called safe forms of investment like Fixed deposits, sovereign bonds etc.
Other forms of investment , say the stocks, are for market wizards .To quote a famous economist “the markets have an uncanny knack of being irrational longer than you can remain solvent “. Stay out if you are not an expert.
Prices correct much more than warranted after any crisis , as has been the case recently. Catching the bottom while buying and the top at the time of selling is an art seldom mastered . With investment in Real estate, you get more than what you would bargain for. In a bullish market people seldom see the negatives and in a perceived downturn, people seldom see the positives.
There can be no better time than now to go for real estate investment
