The Tribune, Chandigarh, India

	Property prices fall 15% in a month Rising interest rates, hike in collector rates leading to crash in demand; developers offering 10-15% discount Ruchika M Khanna Tribune News Service Chandigarh, August 31 Rising interest rates on home loans and loans taken by real estate builders; hike in collector rates; and a total crash in demand for property, has led to a sharp fall in real estate prices in the region. Prices in Chandigarh, Panchkula, Mohali and the periphery have fallen almost 15 per cent over the past month. With finances drying up for finishing projects, because banks are over-cautious in lending to the sector, developers see discounts as an option to give them some much-needed cash. Most developers in the region are offering flats at a discount of 10- 15 per cent. With investors a rarity, most developers are also offering an additional discount of 5 per cent, in case the investor agrees to make a down payment. Some property dealers are offering a discount in the form of assured rentals through post-dated cheques. In Chandigarh and in the developed sectors of Panchkula and Mohali, prices have seen a marginal correction (between 5-10 per cent), mainly because there are no buyers. Sources said that because of the sharp increase in the collector rates (rates on which property is registered), transactions have reached an all-time low. Transactions taking place now are being concluded at a lower price than earlier this year. Though property prices in Ludhiana, Jalandhar and Panipat have not seen a fall in prices, property prices have reached a plateau in these cities. A leading property dealer in Ludhiana said that with most new developers declining to accept any black money (unaccounted for money) to sell their plots, people have started taking home loans. “In the past year, interest rate on home loans has shot up by almost 2 per cent. So, people are postponing their decision to buy property, thus creating a lull in the realty sector,” he said. The real estate developer is also increasingly unable to hold on to the prices quoted when the projects were announced. NO TAKERS With investors a rarity, most developers are also offering an additional discount of 5 per cent, in case the investor agrees to make a down payment
	Maruti resumes production, unions to hold rally today New Delhi, August 31 Maruti Suzuki India (MSI) today said it had resumed rolling out cars from its Manesar plant as it looks to normalise operations, even as tension between the management and workers continued for the third day. In the meantime, the labour dispute at the car maker’s facility is threatening to spread to other manufacturing units in the Gurgaon-Manesar industrial belt, with the All India Trade Union Congress (AITUC), the Centre of Indian Trade Unions (CITU) and the Hind Mazdoor Sabha (HMS) planning to hold a joint protest rally and public meeting tomorrow in front of the MSI plant. “Maruti Suzuki began assembly operations at the Manesar plant this morning. The factory rolled out its first fully-made Swift since production was halted on Monday morning. In all, the company manufactured 60 cars at the plant today,” MSI said in a statement. Over the last two days, the company had done the ground work for resumption of work in the press, weld and paint shops by bringing in additional workers. These sections of the plant are highly automated, it added. “The company brought in 120 ITI-trained workers this morning to the plant on a contract basis to strengthen manpower for assembly operations,” an MSI spokesperson said. In addition, 50 engineers from the Gurgaon plant and 290 supervisors are working at the Manesar plant. The engineers are strengthening quality systems and preparing for a ramp-up, he added. “The company now has 500 trained and experienced people available for production. They will be deployed in phases in the next few days,” MSI said. With vehicle production being completely affected, MSI has suffered an estimated production loss of about 2,400 units, valued at around Rs 120 crore till yesterday. The company did not suffer any production loss today as it was a scheduled holiday for Eid-ul-Fitr. With no end to the impasse in sight, AITUC, CITU and HMS have come out in support of MSI's workers with a protest rally being planned. “There will also be a public meeting. Workers and union representatives of various factories, including Hero MotoCorp, Honda Motorcycle & Scooter India, Sona Koyo Steering and Rico Auto, will join it,” AITUC Secretary D L Sachdev said. — PTI
	Govt to release Rs 705 crore to AI soon New Delhi, August 31 After an ad-hoc payment of Rs 500 crore to partly clear its dues to Air India, The government would release another tranche of Rs 705 crore to the national carrier very soon, official sources said today. Air India estimates that about Rs 613 crore are owed to it by various Ministries, government departments and agencies, apart from the cost of maintenance of aircraft taken out of the operational fleet for VVIP operations. The national carrier has neem experiencing a severe financial crisis owing to massive fixed costs like very high expenditure on insurance, interest on working capital, aircraft loan and leasing of aircraft. Around Rs 373 crore has already been raised by the government from some ministries and departments on account of operating chartered VVIP flights, the sources said. — PTI
	REFORMS ARE NOW IRREVERSIBLE While India has every reason to look back at the last 20 years with pride, Indian industry seems to be less optimistic about the economic prognosis for the country today than it was earlier. Even as the momentum in consumption has been regained, private investment is being held back, complains the Union Finance Minister Pranab Mukherjee The year 1991 stands out as a landmark year for the changes it brought about in economic policy and administration in the country. Though the winds of change had started gathering momentum in the early 1980s, it was the Union Budget of July 1991 that brought major economic policy initiatives to the forefront. It gradually helped the economy towards newer heights of achievements, opportunities and capacity to confront the ever changing challenges of a globalised world. I have always maintained that reforms are an on-going process, not a one-time event. The developments in 1980s created the platform for major changes that occurred in July 1991 and in the subsequent years. Similarly, developments in the past decade have set the stage for the future agenda of our economic reforms. It is sometimes suggested that we were perhaps a decade or two late in launching our reforms. There are also some who are of the view that these changes should have never happened. I do not sympathise with either of these positions. In life one has to be pragmatic. The economic reforms since 1991 have enjoyed a bipartisan support, with successive Governments at the Centre working towards liberalising and unshackling restrictions on enterprise and addressing distortions in different markets. The result has been the flowering of Indian private enterprise, which has made its mark at home and at the most competitive international level. It is true that sometimes the process of reforms has been held hostage by political events and this is in the very nature of our democracy and its polity. Despite ideological differences, the principal political parties have been able to work together on most issues. It is in that context that I have no hesitation in saying that the process of economic reforms in India is irreversible and that the economic stakeholders have no reason to fear introduction of any regressive policy measures at any point of time. Thus, for instance, there are no proposals for introducing dual pricing for diesel or increase in duties for bridging any perceived shortfalls in tax revenues, as has been highlighted by a speculating media in the past couple of days. As we take stock of the two decades of economic reforms and the state of our economy today, it is important to also dwell on where we want to go from here and how do we want to reach that destination. The global economy has just witnessed one of its worst crises in recent history and is still suffering from its aftermath. It is a matter of pride for us that the Indian economy experienced only a brief pause in its rapid growth and could recover with an average of over 8 per cent growth in the years following the outbreak of crisis. In the past two decades, the economy has rapidly globalised and from around 2003-04, it has moved on to a higher GDP growth rate of 8.5 to 9 per cent per annum. Today, India is the second fastest-growing large economy in the world and is widely expected to be among the top three economies in the next two decades. The experience in the post-2004 period shows that the economy has become resilient to both external and domestic shocks. It has undergone a significant structural change with a decline in the share of agriculture and allied sectors to about 14 per cent and a rise in the share of services to nearly 58 per cent and that of industry to 28 per cent. We have been able to increase the rate of savings and investment, our exports have increased robustly and at $250 billion in 2010-11 have crossed the $200 billion mark for the first time. The foreign exchange reserves, which were almost depleted in 1991, have crossed $300 billion mark. The Government's tax and non-tax revenue have increased manifold and the fiscal health is robust. It has provided us with the means to bridge our development gaps and renew the efforts to overcome the disparities in social well being by implementing some flagship programmes. The social indicators have improved and the poverty incidence has come down. The agriculture diversification has added to its resilience in the face of uneven and sometimes delayed monsoons. The agriculture year 2010-11 has seen production record a new high. The food grain production at 242 million tonnes has grown by 11 per cent over last year's production. We are getting close to self-sufficiency in pulses with record production of over 18 million tonnes. We would continue to achieve appreciable growth despite negative sentiments across the world. These sentiments in the developed nations affected our markets also. But we witnessed some recovery already and this is testimony to our capacity for resilience. Our growth story is intact and the fundamentals are strong. Our markets have the capacity to withstand the negative sentiments affecting the external world. We have taken several measures to make our markets attractive, robust and vibrant and would continue to do so, making it an attractive investment destination for foreign capital. As global investors look for opportunities across the world, India's attraction as an investment destination would continue to grow. Favourable factors There are several reasons that growth, it is almost universally predicted by economic analysts, will be sustained at a high rate of 8 to 9 per cent per annum and more, over the next few decades. First, the savings and investment ratios have gone up in the last few years and are reminiscent of the high growth East Asian economies. Secondly , India's working age population is young with over half the population in their twenties. Thirdly , growing middle class incomes have led to self sustaining buoyancy in domestic demand, particularly in the rural areas. Fourthly,India is making rapid progress in infrastructure, both social and physical, and along with better access to cutting edge technology is likely to see improvement in productivity. Although these are the primary factors for India's dynamic growth, there are many other drivers of India’s growth story including the energy and vibrancy of our entrepreneurs, strong services sectors, emerging knowledge spheres and sunrise sectors and growing number of engineers and scientists. I am recollecting these factors here because Indian industry seems to be less optimistic about the economic prognosis for the country today than it was earlier. Private sector investment has been a critical growth driver in the recent past along with growth in private consumption. The rise in the share of private investment in domestic demand helped in improving economic efficiency and productivity. While the momentum in consumption has been sustained as the economy has recovered from the slowdown in 2008-09, the recovery in private investment growth has been held back. It is a matter of concern and we must together do what is required to improve business sentiments to restore the investment growth seen in the years before the global crisis. Inflation Our major challenge in the short-term is inflation, which has implications of sustaining our growth momentum.Inflationary pressures persist both from higher global commodity prices and domestic structural demand-supply imbalances in several commodities. The management of inflationary pressures in the medium term is critically dependent on an improvement in the supply response of agriculture to the expanding domestic demand and in the short-term by taking steps to moderate aggregate demand. In the past few weeks we have taken measures to address these concerns. The monetary policy has been gradually tightened, at the same time new initiatives were announced in the Union Budget to address some of the bottlenecks in the food supply chain that were behind the inflationary spikes in past years. The monetary measure may end up moderating the growth rate, if they have to be persisted for an extended period of time. I am hopeful that we should together be able to repeat the growth performance of 2010-11 in the current year as well. Challenges ahead As we look ahead to join the ranks of developed countries in the coming decade or so, there are several challenges that we need to address in the medium term. First, our future reforms will need to improve economic efficiency and spread the benefits of growth equitably across states and address disparities between urban and rural areas. Growth has to be more inclusive and pursued more vigorously. Improved productivity in agriculture is central to meeting this objective. There is urgent need to address the constraints on the growth of output and incomes in this sector. We have to renew our efforts and perhaps find new mechanisms to incentivise the state governments to take a lead in addressing local policy gaps in agriculture. Secondly, education with special thrust on skill formation, health and sanitation are core areas that should receive urgent attention. We need to bridge the human resource deficit that could prevent us from harnessing the demographic dividend and sustain high growth. Policy and regulatory framework is being put in place for the higher education system to develop the required intellectual capital for growth and development. Similarly, vocational education has to be reoriented in such a way that imbalance between supply and demand in skills at different levels and tiers are gradually bridged. I am very optimistic about the progress being made by the ongoing mission led by the Prime Minister's National Council on Skill Development. I expect the private sector to strongly participate in skills development activities to make our emerging large workforce globally capable and competitive. Thirdly, India needs to invest an additional 3-4 per cent of GDP on infrastructure to sustain current levels of growth or higher, over the next couple of decades. Development of quality infrastructure and ensuring its broad-based, regional and rural-urban balance is central to sustaining high growth. Areas like power and energy, ports and airports, water resources, rural connectivity and urban infrastructure are in need of resources and managerial best-practices. The Government has laid emphasis on Public Private Partnerships (PPPs) which combine the efficiency and technological prowess of the private sector, with the public welfare orientation of the Government. We have established unique and innovative financing support such as the scheme to support Viability Gap Funding for PPP projects. The enabling framework for Infrastructure Debt Funds to effectively meet the long-term debt requirements of the infrastructure sector has also been finalised. Fourthly, issues like land acquisition, environment clearance and resettlement and rehabilitation have to be addressed satisfactorily, with a view to de-risking development and meeting environmental concerns. The new land acquisition bill is in the public domain and is likely to be introduced in Parliament shortly. A committee constituted by the Group of Ministers to consider all issues relating to reconciliation of environmental concerns emanating from various development activities related to infrastructure and mining and to examine the efficacy and legality of existing forest clearance norms and procedures being followed, has just finalised its report which will be considered in the next few days. Fifthly , we have to deepen the policy reforms in the financial sector and address gaps in the overall economic regulatory architecture. The Government has outlined a significant legislative agenda for the financial sector which we hope to pursue in the coming days in the ongoing Parliament session. The Financial Sector Legislative Reforms Commission that has been constituted is working towards the harmonisation of the existing laws, regulations and rules. The FSDC has become operational. It will ensure better inter-regulatory coordination for financial stability and development. SEBI has already approved the new Takeover Code keeping in view the interests of the domestic industry, help Mutual Funds get more retail investors and making it easier and safer for small investors to access the markets. Finally, we have to recognise that the success of our efforts in the coming years hinges critically on our ability to strengthen our macro-economic environment. We need to have the necessary head-room and policy flexibility to address challenges emanating from global markets. In the post-global crisis context, we have already begun the process of fiscal consolidation and succeeded in reducing the fiscal deficit to 4.7 per cent in 2010-11. I am committed to the fiscal balance targeted for the current financial year end. The state governments also need to work towards fiscal sustainability for meeting their development goals in the medium term. Edited excerpts from the Finance Minister’s key-note address on “ Two decades of Reforms — The Economy Today” at a CII function in August
	Reforms and the man on the street Sanjeev Sharma India is taking stock of the last 20 years of rather successful economic reforms but the mood is sombre as the second fastest growing economy in the world looks for the next level of reforms in an uncertain world to continue on the growth track. Unlike China, which has moved in a sledge hammer approach that is decisive, sharp and goal-oriented to ensure growth, India with its thriving democracy has had a lot of attendant chaos along the way. In 1991, India was on the verge of a default, precariously poised with dwindling foreign exchange reserves. That's when Prime Minister P V Narasimha Rao entrusted Dr Manmohan Singh, the then Finance Minister, with the task of initiating reforms and liberalise the economy. On July 24, 1991, Dr Singh famously quoted Victor Hugo in his Budget speech and the time for the idea had come. Successive governments have broadly carried the process forward with varying styles and priorities. The second big bang of reforms took place in 2004 with the “dream team” of Dr Singh, P Chidambaram and Montek Singh Ahluwalia. In simple terms, the reforms process is about government giving up control, letting private enterprise operate under defined regulations, market forces at play, letting supply and demand and competition to create markets which benefit the end users. Enterprise flowered Driven by rising incomes, a young population and expanding middle class, robust domestic demand is fuelling the growth of sectors from FMCG and durables to services such as telecom and aviation, says the CII report. The big phenomenon of the reforms process has been the unleashing of Indian enterprise. Historically, Indian entrepreneurship has been strong and with greater freedom from government controls it has, as the Finance Minister puts it “flowered”. The Forbes list now counts 55 Indian billionaires. Wherever government has withdrawn from industry, the private sector has moved in to make goods and services more easily available to consumers. This has created efficiency, jobs, home-grown conglomerates and wealth for entrepreneurs and shareholders. Some critics say that growth has happened despite the government and controls were just stifling enterprise and as soon as they have gone, industry has flourished. However, as recent scams show, growth of enterprise without adequate regulation comes with its own set of problems in the form of crony capitalism. A big challenge for the Indian economy will come from this danger, which, if unchecked, can create oligarchies which are just too big to control and can exert influence on all the pillars of a democracy. How has life changed for the average person? The long queues for getting telephones, gas cylinders, sugar are a thing of the past. Reforms need some symbols as numbers can be boring. The mobile phone represents the telecom growth with teledensity crossing 70 per cent. ATMs represent the banking and financial sector reforms, which have made life easier for the consumer — not needing to stand in long lines to get his/her passbook updated. Reforms have translated into economic freedom and empowerment for the individual. The IT revolution, while providing ease of transacting, has in a big way brought about transparency for instance in railway bookings or e-governance. Infrastructure has improved with roads, railways, private airlines, millions of cars and two wheelers on the roads. The bumps ahead Going forward, the challenges are bigger. One, people have become more aspirational. Second, the easier reforms may have been done first. For instance, India’s financial markets are very sophisticated but there is abject poverty in both urban and rural areas, there are shortages of water and electricity, and much leaves to be desired in areas of poor sanitation, health, nutrition, education and reforms in agriculture. Hydrocarbon reforms have not been completed with the government still subsidising products like diesel and cooking gas which is also leading to questions if subsidies are really reaching the poor. This has also led to the debate that the reforms have created two nations: India and Bharat. India, that is flourishing, swish, savvy and Bharat that has been neglected and where reforms have not percolated fast enough. The UPA II government is focusing on inclusive growth and as the Finance Minister said, “Future reforms will need to improve economic efficiency and spread the benefits of growth equitably across states and address disparities between urban and rural areas. Growth has to be more inclusive and pursued more vigorously.”