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Over the past 20 years Mumbai has suffered several terror attacks. Surprisingly, the market has been up the next day
Terror attacks, as happened in three places in Mumbai on Wednesday evening, wreak havoc where they strike. Precious lives are lost and there is fear and panic. But as far the markets are concerned, the terrorists don't matter.
Markets have shown the middle finger each time terrorists have struck Mumbai. Take a look at the following table.
The first major blast was in March 1993 when there were 13 blasts across the city in reaction to the demolition of the Babri Masjid structure. The very next day, the Sensex jumped by 3%.
There followed a decade of calm and then in 2003 there were three attacks on Mumbai.
In March 2003, terrorists struck. As a train pulled into the Mulund suburb, a bomb placed in the first class compartment went off. Officially, 11 people were killed. The Sensex closed at 3,108 that day and was only marginally down the next day.
Three months later there was another attack. This time a powerful blast went off in a bus in Ghatkopar. At least four people were killed and 40 injured. The Sensex closed at 3,583 that day and ended higher the next day at 3,607.
Just two months later there was a big attack on Zaveri Bazar-where there was a blast again yesterday-and also at the Gateway of India. Some 54 people were killed officially and 244 injured. The Sensex was at that time at the start of a major bull run. It shrugged the effect of the twin blasts and ended up with a huge 3.56% gain the next day. That percentage gain meant a move of over 600 points in terms of today's Sensex level.
Exactly five years ago, on 11 July 2006, over 200 people were killed and 700 wounded in serial train bombings that occurred within a few minutes of each other on the suburban Western Railway. Again, the Sensex put on 3% the day after the tragedy.
The city suffered the most daring terror attack on 26 November 2008. It was a simultaneous attack on the Taj Palace hotel, Oberoi Trident, Leopold Café and Chhatrapati Shivaji railway Terminus station, which made worldwide headlines. This really shook the financial capital and it seemed like the end of Mumbai. And how did the Sensex respond? Stunningly, it was up again the next day.
Today, the Sensex opened just 30 points down from its previous close, then slipped further by almost 1% in initial trade, but it has recovered since. We are not forecasting that the Sensex will end higher. Simply that amid the depressing pictures of lives lost and our vulnerability to such terror attacks being exposed, there is hope.
The market price-a way of getting a collective verdict of a set of people-does not think terrorists deserve much attention.
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.