Indian Real Estate – Tough Times, But A Resilient Market
India’s GDP stood at 4.4% for Q1FY13-14, and the RBI projects it to reach at 5% by end of FY2013-14. This slow growth projection can primarily be attributed to India’s depressed industrial production and high interest rate environment. The effect of current credit tightening by the RBI is likely to control inflation by this fiscal end. WPI inflation is expected to reach 5.3% by end FY2013-14 from the current 6.5%.
The current quarter and 4Q FY 2013-14 are likely to demonstrate improved momentum on account of agricultural prosperity thanks to a good monsoon and growth in the infrastructure sector pushing up the performance of the industrial sector.
Another effect that the Indian economy will see in 1 H CY 2014 will be on account of the general elections in May. The last elections in 2009 brought an influx of INR 9,000 crore (USD 1.5 billion), of which the Government spent INR 2,100 crore (USD 350 million) merely for conducting the elections. If a similar expenditure happens next year, it is bound to lift the country’s economy.