Nobody seems to really know why Mumbai is rocked by bomb blasts now and then. But there is a theory going around that things turn explosive when the real estate market does not move along wished-for lines
As always, the truth behind why things are the way they are in Mumbai, is never clear. Just like nobody really knows where the rents collected on a per bed basis from the flophouses in central Mumbai for decades go; the truth is that nobody really knows why the city is rocked by bomb blasts every now and then.
But one thing is for certain, there is an economic reason for every action in this world which is not dictated by nature, and in Mumbai, the biggest economic reason has to do with real estate. This is not what I say, this is what a friend of mine, renegade from one of the country's most powerful super-minorities, himself in and around the list of largest land-owners in and around Mumbai, has to say.
Even this is not a secret. Try to sell an apartment in Mumbai, and learn the realities, as a friend who wanted to exit from Mumbai learnt. By the time the deal was closed, he was not just a nervous wreck, but literally glad to accept whatever was offered. And run.
Mumbai, unless you are old money or protected tenancy, bleeds on the grease of real estate transactions. These turn explosive when the real estate market does not move along wished-for lines. May sound simplistic, but this is the theory my friend chooses to expound on, and his family has huge parts of Mumbai and nearby towns in Maharashtra and elsewhere named after them.
So why is an article on the Noida Extension land issue, about to explode into a real estate scam soon, starting with a reference to Mumbai? Simply because, as it is being said in some circles, this was the first real move into real estate in Noida by the Mumbai real estate kingpins. On the surface, this may or may not be true. But if you dig deeper, then the signs are all there, down to the way the projects were executed, and the way the cash-black/cheque-white aspects kicked in.
The advertisements, for example, were huge full-page and predictably said nothing much beyond hype and one-liners and endorsements by sundry cricketers and actors. The prices were pitched artifically low, but the cash/black element was to be paid upfront, even by individual customers, unlike in "usual" transactions in the North where often there are no cash/black elements with the better builders for individual customers, or if they exist, then the cash/black parts are paid at the time of possession. No doubt, this increases the price of the 'project', but there is an element of safety built in which protects the buyer as well as the builder.
But even this is not enough. What is the clinching factor is the brazen way in which those middle-class individual customers who have booked apartments in some of these projects have been told that they can forget the cash/black part, they can forget all the sundry payments made en route, and if they behave themselves, then and only then will they get their white/cheque parts back. Maybe. That is the message out on the streets.
But this is the new aware North. People don't take such things lying down, as they do, apparently, in Mumbai, where lately nobody has had the guts to stand up for too long against the real estate industry. Here, in Delhi, within days, the prospective customers organize themselves, get on the streets, get into the media, and rapidly form something called, Noida Extension Flat Buyers Welfare Association (NEFBWA). Complete with website (http://nefbwa.com/), bye-laws, and steps to get registered. Led by heavy hitters from all segments of society, especially retired civil servants, and a very well designed advertisement in the national dailies, as well as what looks like the beginning of a well-mobilised PR campaign. Ready to take on what threatens to spiral into a huge issue, given the political sensitivities as well as the ramifications of the Supreme Court judgement on other projects in the area.
I spoke with some of the people involved, who at this juncture choose to not provide their identities because they are busy setting up the association and are still looking at their first general body meeting; but all the same, they are going where nobody else has been before. Especially in Maharashtra, which is, apparently, littered with the debris of building projects which have simply ceased or vanished midway.
Certainly, we have a few like this in the North too. Skipper in the middle of Connaught Place is probably the worst example. On the crossing of Tolstoy and Barakhamba stands a ghostly monument to a builder's tricks. But by and large, Delhi as well as the surrounding NCR areas of Gurgaon, Noida and Ghaziabad, have been spared this sort of projects being abandoned half-way.
Some of the steps that this Association proposes to take are indeed very interesting. Apart from legal interventions, of course, there is talk that they might:
# Take the celebrities, who endorsed the projects, into the controversy. This, apparently, includes a few national level cricketers as well as actors. ?Section 68 of the Companies Act, 1956, provides for punishment of any person fraudulently inducing another to invest money through a false or misleading statement made either knowingly or recklessly, and can be used here.
# Look at a co-operative scheme with the farmers directly, along what is increasingly being referred to as the "Magarpatta Model", where the landowners remain stake-holders in larger projects which include mixed habitat, commercial and residential spaces.
# Seek central government intervention in what is essentially a state subject. How they will do this is not clear, but apparently there are ways, especially when fiduciary issues of the black/white sort are involved. And there is a Supreme Court judgment on the issue, still being analysed, but with all-India implications.
Every which way, it does appear as though the people caught in the middle, the long-suffering middle class, are getting together to give the existing inertia levels, as well as their Bombay pattern real estate mafiosi, a good fight.
The fact that it is the internet which is enabling this is not going unnoticed either. Maybe there is a lesson in this for people elsewhere in the country, too, where real estate scams are increasingly not unknown. A good suggestion would be for people in other parts of the country who have suffered along similar lines to get in touch with the NEFBWA too.
And maybe, just maybe, this might put an end to the relentless cycle of blood-letting and violence, bombs and deaths, which are blamed on everything but the truth-the cost of real estate in and around Mumbai.
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The Indian stock market is likely to open lower on mixed cues from the Asian pack after Moody’s threatened to downgrade US’ triple-A rating for the government’s failure to raise its debt ceiling even as the 2nd August deadline draws near. Earlier, in overnight trade US stocks closed higher as Federal Reserve chief Ben Bernanke assured investors that it would consider additional measures to support the economy if things get worse.
Back home, the government is expected to release headline inflation numbers for June. The fuel price hike by the government last month will see the inflation going up. Inflation for May stood at 9.06%. It has been above 8% since January 2010 and It has stayed above 9% since December last year but moderated to 8.66% in April this year. Besides, the weekly food inflation data will also be released today.
The market snapped its three-day losing streak to close higher on Wednesday, along with its Asian peers and all-round buying support from institutional investors. Earlier, the Nifty opened 16 points higher at 5,542 and the Sensex resumed trade at 18,469, up 57 points from its previous close. The indices touched the day's low in the initial session, with the Nifty dipping marginally to 5,541 and the Sensex a tad lower to 18,465. Subsequently, the market resumed its upmove on good buying in the realty, consumer durables and healthcare sectors.
The market pared a small portion of its gains in mid-morning trade, but continued its northbound journey on support from institutional investors. Despite choppiness in the post-noon session, consumer durables and oil & gas sectors were the top sectoral gainers in post-noon trade. The indices touched their day's high in the closing minutes of trade, with the Nifty scaling 5,596, and the Sensex at 18,626.
All-round buying support ensured that the markets closed near the day's highs. The Nifty closed 59 points up at 5,585 and the Sensex settled at 18,596, up 184 points.
On Tuesday, we had mentioned that the Nifty would rise to 5,600. The index was close to this level today. The Nifty may now rally up to 5,665.
US stocks rose higher on Wednesday as Fed chief Bernanke asserted that the central bank would consider new initiatives to support the economy if things get worse. The Fed’s $600 billion bond-buying programme, known as QE2, has contributed to huge equity gains since September last year.
However, Moody’s warning that it would downgrade the US credit rating of ‘triple-A’ as the government is still not able to find support for raising its debt ceiling. The move is expected to impact stocks on Thursday.
The Dow gained 44.73 points (0.36%) to settle at 12,491.61. The S&P 500 added 4.08 points (0.31%) to 1,317.72 and the Nasdaq rose 15.01 points (0.54%) to 2,796.92.
Markets in Asia were mixed in early trade on Thursday after Moody’s said that it would downgrade US government debt. The threat pushed the dollar lower against other global currencies and weighed on investor sentiments. Besides, investors are also concerned about the worsening debt situation in Europe.
The Shanghai Composite gained 0.36%, the Jakarta Composite rose 0.15%, the Straits Times advanced 0.23% and the Taiwan Weighed added 0.19%. On the other hand, the Hang Seng fell 0.16%, the KLSE Composite shed 0.07%, the Nikkei 225 declined 0.37% and the Seoul Composite fell 0.42% in early trade.
Back home, Indian lenders are not in favour of the Reserve Bank of India’s (RBI) proposal to deregulate savings deposit rate—the only regulated one in the system now—citing the current volatile market environment.
Savings deposits that are a source of low-cost funds for banks form 22% of banks' total deposit base, the RBI had said in late April.
The Indian Banks’ Association (IBA), the apex banking body, has conveyed banks’ stance to the RBI ahead of its quarterly monetary policy review on 26th July.