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Real Estate market revival, Hyped Housing Prices, Interest Rates cuts to spur lending. India's subprime crisis in making?

Created by : Anshum Dua, Core Lead, Managed Services  | 09 14 2009 06:51:41 +0000
Functional Area : Capital Management(Corporate Finance)
Keywords : economic growth interest rate cuts. financial reforms
Activity:  190 views;  last activity : 07 06 2010 20:18:09 +0000

Real estate in most metros showing signs of revival, Most builders have been able to get rid of their inventories, the housing prices are seeing an uptrend once again, Banks offering lower interest rates- several points as compared to peak. Is this simulated borrowing and purchase beyond capacity to pay, and above economic value of assets funded? Is this similar to what happened in US and spread out to the world? Can India's middle class- service sector pull this off or will this result into a Prime/Subprime crisis for India?

 
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This is required to bring economic growth back on track? Vs This needs a cautious approach with govt. intervention?
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While it is mandatory at this stage that govt. takes lead to get back on growth track and then only Private sector will have enough confidence in the economy; however, high dependance on service sector to promote spending is a crucial factor in Indian economy. With this dependance, Indian economy becomes vulnerable on economic conditions and demand from countries which utilize these services. At the same time, the dependance of Indian economy on FII/FDI is huge, thereby making it difficult for govt. to totally avoid such reforms.

The answer might lie in Public Private Participation- Public to ensure equality in growth, Private to ensure efficiency which Public sector has struggled to achieve. Also, this needs a change in the socio political set up to support tougher decissions by Govt. to reduce subsidies and popular short term measures, for achieving long term competitive advantage for the nation.

Above should help to start a fruitful discussion.

Cheers
By Anshum Dua, Core Lead, Managed Services  09 14 2009 06:51:41 +0000
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I also believe that at this time govt. should take lead to get back on growth track and then only Private sector will have enough confidence in the economy; It should also ensure public for equality in growth, Private to ensure efficiency which Public sector has struggled to achieve. It also needs a change in the socio political set up to support tougher decisions by Govt. to reduce subsidies and popular short term measures, for achieving long term competitive advantage for the nation.
By Esha Johar, Risk Analyst, Irevna  | 09 14 2009 07:55:23 +0000
Argue for "This is required to bring economic growth back on track? "
Argue for "This needs a cautious approach with govt. intervention? "
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