RBI’s first quarter review-Its impact on real estate
In an attempt to boost the Indian economy, the RBI did not change the interest rates in order to support the ailing rupee. However, according to experts, the liquidity tightening is likely to roll back when the currency market returns to its stable position that will aid it to sustain growth.
According to the new monetary policy statement of RBI for this quarter, the repo rate has been unchanged at 7.25% while the reverse repo is kept at 6.25%. The cash reserve ratio has been kept unchanged at 4%. The Marginal Standing Facility and Bank Rate both are kept fixed at 10.25%.
Gist of Indian economy
In accordance with the market reports, the Indian economy has witnessed a slow trend in the fourth quarter of 2012-13. To add to it, foremost indicators further suggest that there is no possibility of any immediate improvement in the production activity and the recovery is likely to be sluggish in 2013-14.
Good monsoon will aid to promote the agricultural growth and shore up the demand significantly. According to the weighted rainfall index of RBI’s, rainfall was 17% above the long average and this has further contributed to give rise to water levels at major reservoirs to 66% above average.
The growth of industries in the nation is on a slow pace and the supply-side barriers are restraining core industries. However, according to Reserve Bank Service sector’s lead indicators has indicated moderation in the first quarter of 2013-14.
Expected growth of Indian Economy
The GDP for 2013-14 will cut down to 5.5 pct from the earlier 5.7 pct. The sole purpose of the economy will be to contain wholesale rate inflation nearly to 5 pct by March 2014. The growth of banks in non-food credit growth section is likely to be 15% in 2013-14.
Global growth is directly related to the Indian economy, hence if it is subdued it is likely to have a negative impact on India. Enhancement in advanced economies like Japan and US are redeemed by sluggish growth in the main emerging markets and growing economies.
The price inflation in global commodity is likely to remain contained because of slow growth of China. However, upsurge in global crude oil prices curb the risk of increasing geopolitical ambiguities prevalent in the Middle East.
Proposed impact on real estate
Projected growth in the Indian economy will open up new avenues for the real estate sector. Market sources confirm that the total supply pipeline of the Indian real estate is nearly 3.6 billion sq ft, and is expected to mop up by 2013. More than 98% of the units in the pipeline will focus on residential segments, instead of commercial or industrial.
The potential for growth and development of the Indian real estate sector is admirable. With the aid of a flourishing Indian economy, the real estate sector of the nation is estimated to generate more than 17 million employment options across the country, by the end of 2025. Furthermore, this will make a huge contribution towards the GDP of the nation and will set it on an escalating path.
