Narendra Modi's top 10 to-do list as PM of India

1) GOODS AND SERVICES TAX (GST): India's most ambitious indirect tax reform would replace existing state and federal levies with a uniform tax, boosting revenue collection while cutting business transaction costs. GST, which could boost India's economy by up to two percentage points, has so far faced resistance from various states, including those governed by the BJP who fear a loss of their fiscal powers. The BJP aims to address state concerns and implement GST in an "appropriate timeframe". The Congress party would back the reform in opposition, a senior party member told Reuters earlier this month. The reform needs broad backing because it requires a change in the constitution.

 

2) RESERVE BANK OF INDIA-  A Reserve Bank of India panel in January proposed key changes including targeting consumer price inflation and making a committee responsible for monetary policy, and not the RBI governor alone. This would require changes to the RBI Act. The BJP top brass has not spoken widely on the issue, but it will likely be a tough sell for RBI Governor Raghuram Rajan. He has the backing of some global agencies like the International Monetary Fund. Modi's government may also look to eventually separate the debt management function from the RBI, on the gounds that debt management sometimes conflicts with the central bank's monetary policy stance.

 

3) PRIVATISATION The new government is likely to focus on selling its holdings in state-run firms that could raise much-needed revenues to trim India's ballooning fiscal deficit and boost economic growth. The rising stock market helped New Delhi raise more than $3 billion via stake sales in the fiscal year to March 31 - but that was only a third of the government's original target. The outgoing government announced plans to raise 569 billion rupees ($9.62 billion) through asset sales in 2014/15. This could help achieve a lower fiscal deficit target of 4.1 percent of GDP. These estimates may be revised by the next government.

 

4) SUBSIDIES Modi's government needs to examine how it subsidises basic commodities if it is to contain the fiscal deficit and avoid a ratings downgrade. Subsidies cost an estimated 2.2 percent of India's GDP in 2013-14. The BJP in its manifesto said it will seek greater fiscal discipline without compromising on the availability of funds for development.

 

5) LABOUR The BJP wants to reform labour laws to boost job-intensive manufacturing and create as many as 10 million jobs a year for young Indians entering the workforce. Changing the law would be politically tricky, though, and Modi may seek to encourage competition between India's states to boost job creation.

 

6) DEFENCE More foreign investment in defence would help India reduce imports, modernise weapons systems and speed up deliveries of hardware it needs for operations and training. India, the world's biggest arms importer, now allows 26 percent foreign ownership in defence, and proposals to exceed that limit are considered only for state-of-the-art technology. The BJP has said it would allow some greater foreign investment in defence industries.

 

7) INSURANCE Attempts to raise the cap on foreign investment in India's $45 billion insurance sector, to 49 percent from 26 percent, have met resistance from employees at state-controlled insurers and their political backers. A BJP leader said in March the party had held talks with Congress to break the deadlock.

 

8) BANKING The next government will need to help state-run lenders battling rising bad loans caused by the slowing economy, rising interest rates and project delays. Stressed loans in India - either bad and restructured - total $100 billion, or about 10 percent of all loans. Fitch Ratings expects that ratio to reach 14 percent by March 2015. Rising bad loans threaten to choke the gradual recovery in Asia's third-largest economy, according to the OECD. The interim budget in February set aside 112 billion rupees ($1.89 billion) to help the sector meet key capital ratios, but analysts say more money is needed.

 

9) POWER A BJP-led government may implement the so-called Gujarat model of distributing electricity that has been widely praised for delivering reliable 24-hour power supplies in the state. Modi provided different power feeds to farmers, households, and companies instead of a uniform feed in his home state.

 

10) GAS PRICING In January India notified the new gas pricing formula that could double the prices of locally produced gas from April 1, but the poll regulator stopped the government from raising the prices until the elections are over.Reliance Industries and its partners BP and Niko Resources last week issued a notice of arbitration to the government seeking implementation of higher gas prices. The BJP-led government may review the formula on the lines suggested by a senior party leader last year and announce the date of implementation of new prices.

Realty looks for a revival in India

SummaryThe real estate industry is looking for a stable government, which could take steps to reverse the current slowdown. Experts, however, say that it could take at least a year for recovery to set in the market


As India queues up to exercise its democratic right to elect the next Lok Sabha, it is not just political parties and poll watchers who are keen to keep a count of the inked fingers. The depressed real estate sector is counting alongside, hoping for political stability and strong decision-making which could mark the beginning of a revival.

Across the industry, both developers and consultants agree that post-elections, the slowdown would give way to a much-needed spurt in construction activity, attracting the first-time buyers.

In the October-December quarter, the growth in the construction sector was an abysmal 0.6 per cent, as per the data from the Central Statistics Office. Production of steel and cement, which together have a weight of almost 9 per cent in the set of eight core industries, have also not fared well. While cement production remained below 6 per cent throughout the year barring one occasion, steel production could not rise above 7 per cent during the last fiscal.

“We are hoping for a stable government. With that, we expect the buyers to start investinginvesting again. After the elections, first-time investors should immediately move in because prices are expected to rise. We expect the market to improve dramatically on a stable government,” Navin Raheja, chairman, Naredco and managing director, Raheja Developers told The Indian Express. 

He added that the election manifestoes of the two large parties have laid down several initiatives in the infrastructure space, which will act as catalyst for real estate activity.

The BJP, in its manifesto unveiled last week, has emphasised that its government will take steps towards the transport and housing sector for urban upliftment. It will initiate building of 100 new cities and expand the Indian Railways network, including covering a million plus cities by high-speed rail, among other initiatives.

In a note issued last month, ICICI Securities also said that while the outcome of the general elections in May would be crucial, better governance would lead to revival in infrastructure spending driving demand growth.

Sanjay Dutt, executive managing director, South Asia, Cushman and Wakefield, said, that the sector is affected by sentiments for a short period and takes a minimum of 12 months to see a positive change in economic fundamentals. “Before the boom, a buzz is witnessed,” said Dutt.

“The sales velocity and overall real estate traction comes back only after a minimum of 3-4 quarter-on-quarter results start depicting real growth in GDP, corporate profit,

5 booster projects for the new government to kick-start the economy

Whatever be the political coalition that comes to power at the Centre after May 16, the new government will have five ongoing projects to kick-start a sluggish economy. These low-hanging fruits of labour of the two-term UPA government - the eastern and western Dedicated Freight Corridor (DFC) projects, the first phase of the Delhi-Mumbai Industrial Corridor (DMIC), Metro rail projects in nine cities, airport modernisation in six cities, including Chennai and Kolkata, and power projects that have signed fuel-supply agreements (FSAs) - are there for the new dispensation to pluck.

Here's a quick status check of these projects, which could help the economy beat the slowdown blues and earn brownie points for the new government

1 Dedicated Freight Corridor projects
With 94% of the land for the projects acquired, and all major statutory clearances in place, DFC is on the fast-track, backed by institutional finance from the World Bank (eastern corridor) and Japan International Cooperation Agency (western corridor). Civil contracts for 1,100 km were given out in 2013. Contracts for another 1,100 km, worth over Rs 7,000 crore, are expected to be awarded in 2014. Aimed at decongesting freight routes, this project involves setting up high-speed railway corridors with Rs 95,000-crore investmentsinvestments. It is slated for completion by FY18.

2 Delhi-Mumbai Industrial Corridor (Phase-I)
If things go as planned, the ambitious DMIC project - building manufacturing centres and townships along the 1,483-km Delhi-Mumbai freight corridor - will see two groundbreaking events in 2014. In the October-December quarter, global bids are likely to be awarded for creation of truck infrastructure at four project sites - industrial townships at Dholera (Gujarat), Vikram Udyogpuri (near Ujjain, Madhya Pradesh) and two multi-modal logistics hubs at Shendra (Maharashtra) and Greater Noida. The pre-engineering master plans for the four sites are expected to be finalised by June. This will be followed by a contractor outreach programme in July. The $90-billion project spread over eight states had to be ring-fenced from political challenges. According to Shinya Ejima, India representative of Japan International Cooperation Agency, which is funding the project, such sovereign-guaranteed projects aren't affected by change in governments at the state or Centre. But experts point out the government of the day could play a key role in accelerating the pace on the ground.

3 Metro rail projects (Mumbai, Delhi, Gurgaon, Bangalore, Hyderabad, Kolkata, Chennai, Kochi and Jaipur)
Metro rail projects under implementation in nine cities could be the cornerstone of any urban infrastructure development programme by the new government, says Rohit Inamdar, vice-president, Icra. Sector experts point out civil construction typically constitutes 35-50% of the project cost of a Metro system. Given the muted activity in other infrastructure sectors, construction companies have bid aggressively for work on superstructures and foundation work. A renewed thrust from the government will help improve cash flow for these companies and enhance economic activity on the ground.

4 Airport modernisation (Kolkata, Chennai, Lucknow, Ahmedabad, Guwahati, Jaipur)
The Airports Authority of India's ongoing airport modernisation programme for Kolkata and Chennai airports, at Rs 2,325 crore and Rs 2,015 crore, respectively, will be re-started only after a new government takes office. So will bids for the upgrade of airports at Guwahati, Jaipur, Ahmedabad and Lucknow, amid criticism over the drafting of the concession agreements. Several political parties and AAI employees had opposed the modernisation initiative through the public-private-partnership route. Experts expect the new Navi Mumbai airport development project to gather stream in 2014, following a global tender earlier this year. A tender for construction of the terminal building for an international airport at Kannur (Kerala) was floated in February. AAI has plans to build 50 low-cost airports, providing a boost to construction companies. With two new airlines from Tata group - AirAsia and Tata-SIA - expected to take to the skies in 2014, the new government will have its hands full when it comes to the aviation sector.

5 Power projects with FSAs in place
Over the previous 12 months, 150 fuel supply agreements were signed between Coal India and power plant promoters, creating capacity for generating 75,000 Mw by 2015. Experts point out many of these projects will start firing in 2014, creating employment and spurring growth momentum.

Why to invest in Indian real estate sector : KPMG Report

The residential segment which contributes about 80 per cent to the real estate sector is expected to grow significantly over the next few decades. It is estimated that Indian cities need to develop at-least two million  houses annually for the growing population.

The actual number could be much higher as it does not include push in demand from re-development and shrinking size of households. Further, there was a housing shortage of about 18.7 million in 2012.

Thus, India needs to develop almost 45-50 million housing units by 2028

 

Drivers of the real estate sector

1. India economy is expected to be the fastest growing economy for the next few decades
2. The growth could be primarily driven by infrastructure investment and the rising manufacturing and service sector
3. The per-capita income in urban India is expected to triple from USD2,800 in 2012 to USD8,300 in 2028
4. About 10 million people are moving to Indian cities every year
5. About two million houses are required to be developed each year, typically in the affordable segment.
6. About 35 per cent of India’s population is between 15-35 age bracket which is expected to drive the demand for housing over the next 15 year.

 

Affordable housing :

 

Affordable housing in India refersto housing for the economically weaker section (EWS) and lower

income group (LIG) households. Thissegment is expected to account for85-90 per cent of the total residentialdevelopment (number of housingunits) i.e. about 40-45 million housingunits by 2028. Affordable housing inIndia ranges from 250-650 squarefeet (one or two bedroom set)and typically costs between USD8,000-17,000 per unit. Considering an average housing size of 400 square

feet, India requires about 15-18 billion square feet of development in this segment alone.

 

Mid-income housing :

As the name suggests, the mid-income housing is for households where income ranges from

USD3,000-28,000 per annum.By the year 2026, it is expected that middle class households may triple from 31.4 million to 113.8 million. Themid-income housing market is expected to account for 7 per cent of the total housing demand till 2028 which is 3-3.5 million houses. An average mid-income

house is about 800-1,200 square feet (two or three bedroom set) taking the total development to about 3-3.5 billion square feet. A mid-income house can range anywhere between USD17,000-

170,000 varying across different cities. 

 

Luxury housing :

The luxury housing is the fastest growing segment among residential housing. Between 2008 and 2012, about 182 luxury projects comprising 25,570 units across top seven units were launched

with a value of about USD30 billion. Many of these units were absorbed, fuelled by a strong growth in high net worth individual population. In 2012, India clocked an impressive second highest growth of about 22.2 per cent in its HNI population. It is expected that the India’s HNI population would more

than triple to 329,000 by 2018. Luxury housing concept in India generally refers to houses which are more than USD170,000 and are at least 1,200 square feet in size with no cap on the higher side. It is expected that India would require 1.5 million luxury houses over the next 15 years.

 

The latest trend among luxury housing is branded residences and golf townships. Leading developers in India are collaborating with renowned global luxury brands and hotel chains to develop

branded-luxury villas, flats and service apartments. The developers are scouting for new ideas to attract the HNIs’ attention and luxury livings

 

 

 

CII unveils 100-day agenda for new govt; stresses on GST

CII president says India can achieve GDP growth rate of over 6%, provided systemic reforms are carried out quickly by the new govt

CII’s new president Ajay Shriram said that a strong economic revival package and right implementation of policies by the new government can help create as many as 150 million jobs in the next 10 years. 

 

New Delhi: Boosting economic growth in India requires immediate introduction of Goods and Services Tax (GST), containing subsidies, monetary easing and fast-tracking of stalled projects, Confederation of Indian Industry (CII) said on Tuesday. 

 

In its 100-day action agenda for the new government, the industry body said a strong inter-ministerial coordination group is required to resolve sticky issues like the “mining conundrum” and “raw material securitisation” for sectors like steel. 

 

“Economic growth and investments have stagnated. We require rapid economic growth for job creation. We will share the agenda with the new government and discuss each point with them. Implementation of GST will boost GDP by 1.5-2%,” CII’s new president Ajay Shriram told reporters.

He said India can achieve GDP growth rate of over 6%, provided systemic reforms are carried out quickly by the new government. However, Shriram added that in case of a fractured mandate in the ensuing general elections, “there would be loss of investor confidence and jobs would be destroyed in organised sector with no signs of economic reforms”.

 

A strong economic revival package and right implementation of policies by the new government can help create as many as 150 million jobs in the next 10 years, he said. 

 

“Industry is looking for top policy steps such 

1. Introduction of GST
2. Easing of interest rates by 100 bps
3. Keeping subsidies at 1.7% of GDP
4. Restructuring of labour laws to promote mass manufacturing
5. Market-friendly environment is required to promote investments, business and entrepreneurship.
6. Timely implementation of the Delhi-Mumbai Industrial Corridor (DMIC) project
7. Setting up of state level mechanisms similar to project monitoring group and an institutional mechanism to renegotiate the terms of concession in public private partnership (PPP) contracts to salvage stranded investments.
8. Urgent need to expand e-governance and technology based initiatives to simplify processes and online monitoring of application forms besides time-bound approvals by introducing deemed approvals in case of delays beyond prescribed limit
Restructuring of labour laws