Archive for January 2017

Demonetisation may compel government to provide stimulus: Ind-Ra

India Ratings estimates that GDP growth in the current fiscal will decline to 6.8 per cent from its earlier estimates of 7.8 per cent.

Demonetisation may compel government to provide stimulus: Ind-RaNEW DELHI: Finance Minister Arun Jaitley in his Budget on February 1 may have to provide stimulus to the economy reeling under the ‘Tsunami’ of demonetisation, India Ratings and Research said today.

Amidst an uncertain global scenario, the Fitch Group company said that the Indian economy was cruising well till the tsunami of de-legalisation of high denomination currency hit the country.

“…the major dilemma for the finance minister in the Union Budget FY18 is — will a fresh round of fiscal stimulus be required to offset some of the ill effects of the currency de-legalisation,” it said, in a report titled ‘De-legalisation Tsunami May Compel Government to Provide Stimulus in Union Budget FY18’.

India Ratings estimates that GDP growth in the current fiscal will decline to 6.8 per cent from its earlier estimates of 7.8 per cent and “based on the present situation, the adverse impact may flow into 2017-18 too”.

The sudden decision of demonetising Rs 500/1,000 notes and the “chaos created thereafter” due to the limited availability of new currency has caused significant disruption to the economy, it said.

The informal sector is not a standalone sector and has strong-weak linkages with the formal sector, depending on the nature of goods/services dealt in. Therefore, where business in the informal sector has come to a grinding halt or down by 30-40 per cent and beyond, it has resulted in either ‘nil’ or lower income generation, the agency said.

“Therefore, the ripple effect of de-legalisation is proving to be quite disruptive for the overall economic activity and employment,” India Ratings said.

It further said as the government embarks on preparing the budget, “the central question before it is – whether a fresh round of fiscal stimulus is required to offset some of the ill effects of currency de-legalisation”.

According to the agency, Indian public finances (central, state and local bodies) suffer from committed expenditure syndrome as a large part of current expenditure is inflexible and cannot be reduced/curtailed in the short-run.

“Therefore, the fiscal room for stepping up expenditure has to either come from higher revenue collection or higher fiscal deficit. With growth expected to fall not only in FY17 but also in FY18, the government is clearly staring at lower tax collection,” said India Ratings.

The headroom for the government to provide a stimulus either from the consumption side or investment side is quite limited and if a boost is to be provided then perhaps it will require compromising the fiscal deficit target and the fiscal consolidation process, it added.

India Ratings believes, the implications of the integration of the railway budget into the general budget will show an increase in capital expenditure.

DISCLAIMER

The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

Consolidation in realty sector to gain momentum post note ban: JLL

In the longer term, demonetisation move and the RERA would indeed transform the overall image of the Indian real estate sector, JLL India’s Shobhit Agarwal said.

 

Consolidation in realty sector to gain momentum post note ban: JLLNEW DELHI: The real estate sector is likely to witness further consolidation as property sales and demand have been affected post demonetisation, according to realty consultant JLL India.

By 2021, the consultant expects that larger players would consolidate their positions even further while the number of smaller players would reduce considerably.

“The government’s demonetisation move is bound to lead to further consolidation in the overcrowded Indian real estate industry,” JLL India Managing Director – Capital Markets Shobhit Agarwal said in a report.

The demonetisation move has started affecting demand for developers who preferred unaccounted money, he said.

“Debt-laden developers, who have been gearing up for bigger cash crunch with the implementation of Real Estate (Regulation and Development) Bill or RERA, now have demonetisation to add to their woes,” Agarwal said.

In the longer term, he said the demonetisation move and the RERA would indeed transform the overall image of the Indian real estate sector.

“In the interim, however, the overcrowded Indian real estate industry is set to see consolidation activity pick up pace,” Agarwal said.

The three ways through which consolidation would be seen are: “Developers/landowners finding development/ marketing partners in large, reputable developers though the joint development or joint venture or development management model. “Smaller developers being absorbed by larger developers; Cash- starved developers monetising their land bank by selling it to cash-rich / opportunistic developers”.

The consultant cited various examples of consolidation in recent time such as Noida-based Lotus Greens tying up with both Tata Housing and Godrej Properties as well as Ace group partnering Godrej Properties for township project in Greater Noida.

“While the consolidation is undeniable, the pace of it will depend on the quantum of equity infusion by the larger PE investors and the strategy adopted by foreign developers who may enter,” JLL said.

CCI orders probe against DDA for abuse of dominant position

The detailed investigation has been ordered after finding that DDA prima facie violated competition norms.

CCI orders probe against DDA for abuse of dominant positionNEW DELHI: The Competition Commission has ordered a detailed probe against Delhi Development Authority (DDA) for allegedly abusing its dominant position related to a residential plot scheme that was launched way back in 1981.

The detailed investigation has been ordered after finding that DDA prima facie violated competition norms.

To assess the complaint, CCI considered `market for provision of services of development and sale of residential plots in the National Capital Territory of Delhi‘ as the relevant one. The regulator’s investi gation arm -Director General (DG) -would conduct the detailed probe into the matter.

DG would also probe the role of officialspersons, who at the time of such contravention, were in-charge of and responsible for the conduct of DDA ‘s business.

During the course of investigation, if the involvement of any other party is found then those those entities would also be probed.

The complaint pertained to Rohini Residential Plot Scheme, 1981, under which the plots were to be allotted over a period of five years.

Following a court case, the draw of lots under the scheme happened in March 2012 and the allotment letter was issued to the complainant’s wife in November 2014.

CCI noted that the time period of five years mentioned for phased allotment of plots as promised in the scheme’s brochure being extended to 33 years cannot be considered as reasonable.

In a 20-page order, issued this month, the regulator said DDA is a public body that is also a revenue-producing monopoly but compliance with competition law should not materially impede public bodies’ efficient exercise of their functions.

“However, public bodies need to ensure that their conduct is compliant with competition law. Effective competition in such markets can benefit the wider economy by encouraging greater productivity and innovation and preserving long term growth, while continuing to provide greater value for money to the taxpayer,“ CCI noted.

Ordering the probe, it also observed that “prima facie“ it appears that such was not the conduct of DDA.

DISCLAIMER

The news and data posted here is from various sources, published and electronically available. We have taken all possible care to verify and crosscheck the accuracy of the same. However, despite due diligence, sources may contain occasional errors.www.noidapropertydealers.co.in will not be responsible for any errors in such an instance.

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