‘POSITIVE SENTIMENT AUGURS WELL FOR INDIAN ECONOMY GIVEN GDP GROWTH OF 7.0 PER CENT’ : DR NIRANJAN HIRANANDANI

MUMBAI, 01 MARCH 2017: India has retained the title of ‘the world’s
fastest growing major economy’, with annual gross domestic product
(GDP) growth for the October-December 2016 period being reported at 7.0
percent. I am delighted by this statistic, and hope it results in
positive sentiment across different sectors of the economy.

Economic data and Statistics are something that evoke positive sentiment
– at times, disagreement. The latest data shows annual gross domestic
product (GDP) growth for the October-December 2016 period at 7.0 per
cent, which is lower than 7.4 per cent clocked in the previous quarter
– and, higher than what was forecast by many experts and economists,
as quoted in media reports over the past few months.

Given that it was the first such event across the world, there exists no
previous data which would help gauge the impact of demonetization on the
Indian economy, and largely the presumption was that India being a
cash-driven economy, it would bear the brunt of demonetization  in form
of a fall in the GDP growth rate.

The ‘less-cash’ model which was aggressively pushed by the Indian
Government post demonetization has resulted in huge amount of money
being transacted through banking and the institutional financial route,
effectively pushing up numbers across different sectors of the economy.
Logic says the additional amounts which were routed through organized
financial institutions and digital financial options would result in
higher numbers; the deposits in form of the demonetized Rs 500 and Rs
1000 notes would also add to parameters which comprise the ‘organized,
formal economy’.

Which brings us to the data released on 28 February 2017: it puts
India’s GDP growth of 7.0 per cent for the Oct-Dec 2017 Quarter,
higher than China’s 6.8 percent growth for the last three months of
2016 – suggesting that India retains the sobriquet of being the
world’s fastest growing economy. We will see responses to this largely
in line with political thought: the ruling coalition at the Centre will
laud the data, those in opposition will question it.

I would look away from the political posturing aspect, and consider the
same from the perspective of Indian real estate. The impact of
demonetization came down to one basic issue: markets where cash was a
major component reportedly slowed down. The Hiranandani Group of
Companies have been dealing in full cheque payments since some years
now, we did not face the perceived negative impact of demonetization,
and I know this holds true for all organized players in Indian real
estate who deal in a transparent manner, and transact ‘cash-less’.
For Indian real estate, demonetization was part of a series of
government-lead reforms, including RERA, GST and the law on
‘_benami_’ ownership of property, which will change how business is
transacted in the real estate industry. During any changeover, a
slow-down is invariably seen; this will be the scenario in segments
which will make the shift to ‘less-cash’ and ultimately,
‘cash-less’ mode of transactions. Once this happens, the recovery
will be swift and quantum of buying will go up as buyer confidence will
rise on enhanced transparency in Indian real estate.

As an industry, real estate will post lower sales figures for the
quarter Oct-Dec 2016, this will largely be because post any major move
on part of the Government – like demonetization – potential buyers
would tend to wait and watch before they go ahead with planned
transactions. The Hon’ble Finance Minister Shri Arun Jaitley, in his
recent Budget Speech, gave the real estate industry as also home seekers
aspects to cheer – and I am sure the positive sentiment will
positively impact sales figures for Indian real estate by the quarter
Apr-Jun 2017.

In the midst of all this, the GDP growth figures released on 28 February
2017 suggest positive sentiment can be pre-poned, given that India has
clocked a GDP growth of 7.0 per cent in the Oct-Dec 2017 quarter. While
political pundits and economists will continue to debate over the
methodology and what aspects of the economy were covered, I think that
positive statistical data should augur well for the Indian economy – as
also for real estate.

_~ DR NIRANJAN HIRANANDANI IS FOUNDER & CMD, HIRANANDANI GROUP. HIS
RECENT INITIATIVE IS HIRANANDANI COMMUNITIES. HE IS THE FOUNDER AND
FIRST PRESIDENT (MAHARASHTRA), NATIONAL REAL ESTATE DEVELOPMENT COUNCIL
(NAREDCO), WHICH WORKS UNDER THE AEGIS OF MINISTRY OF HOUSING & URBAN
POVERTY ALLEVIATION, GOVERNMENT OF INDIA._

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s