Economy
Residential market continues to struggle with sluggish growth

According to a report from Liases Foras, despite improvement in sales in the residential market during the December quarter, overall growth continues to fall as it witnesses a 1.1% decline since FY14 

 

The latest quarterly report released by Liases Foras reveals that the realty sector has witnessed a few improvements this quarter, but continues to wrestle with poor growth. Yearly sales across six major cities witnessed a 1.1% decline, while the unsold stock has increased by 17% since the last financial year. The report provides data for the third quarter of FY15 and focuses on six major cities – Bengaluru, Chennai, Hyderabad, Pune, Mumbai Metropolitan Region (MMR) and National Capital Region (NCR). 

 

 
Liases Foras said, growth in prices across these cities ranged from 3% to 9.5% except in Bengaluru where it dropped by 0.39%. Average prices across these cities remained relatively stable and did not witness any remarkable acceleration. There was a marginal decline in the weighted average price of Bengaluru and Hyderabad by 2.05% and 2%, respectively. 
 
There are positive movements with respect to sales, which were up by a good 31% from the previous quarter. Hyderabad and NCR witnessed maximum recovery, with a 55% and 60% growth in sales respectively. However, it is important to note that Q2 FY15 was the worst quarter with respect to sales in the past five years. “33% of sales happened in the cost bracket of Rs50 lakh to Rs1 crore followed by the cost bracket of Rs25 lakh to Rs50 lakh, which constituted 31% of the sales. Two BHKs contributed to 32% of the sales, while 33% was contributed by the sale of 3 BHKs,” Liases Foras said. 
 
 
According to the report, another positive improvement can be seen in terms of efficiency, where except MMR, all other cities saw a decline in the month’s inventory. NCR witnessed a remarkable change from an inventory standing at 83 months in the previous quarter to 51 months this quarter. 
 
 
While the unsold stock in the six cities increased by 2% this quarter, the new supplies have declined by 9%. According to the report of the total new additions, 39% were in the cost range of Rs50 lakh to Rs1 crore followed by the cost range Rs25 lakh to Rs50 lakh, which contributed 32%.” 
 
Most significant contributions to new supply came from MMR and Bengaluru (21% and 36% respectively). MMR was the only city, which witnessed a significant growth in new supply in the price range of over Rs2 crore, followed by NCR and Bengaluru. Interestingly, in MMR, new supplies for the relatively more affordable housing (in the price range of Rs50 lakh to Rs1 crore) were the lowest.  New supplies in the price range of Rs25-50 lakh were prominent only in NCR and Pune, Liases Foras said. 
 

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Air Pegasus may soon commence operations from Bengaluru!
With the likely entry of Air Pegasus and Air Kerala in domestic market, intense competition is expected, resulting, hopefully, in better service at competitive prices, much to the delight of the air passengers
 
There have been major developments in the domestic airline industry. The first major change covers arrival of Ajay Singh, the erstwhile co-promoter of SpiceJet, who returns back to take full control of this ailing airline, though Kalanidhi Maran still holds some minor convertible holdings that he may utilize to advantage.  Ajay Singh is expected to bring about some favourable changes, including reduction of flights to some areas and increasing in some where the demand has grown considerably, such as the Vijayawada-Hyderabad sector.
 
In the meantime, Air Pegasus, hub-based in Bengaluru, with a fleet of 3 ATR aircraft received the Air Operators' Permit last year and are now in the process of carrying out a "proving flight", next week, as per the DGCA specifications.  It may be remembered that the Director General of Civil Aviation (DGCA) needs to be satisfied that the airline has all the basic operational capabilities in terms of operation, ground handling and other related procedures.
 
According to the information available, Air Pegasus expects to commence its operations from Bengaluru to Thirvananthapuram and back; they will also operate from Bengaluru to Hubli and back as a start.
 
The second base is expected to be Chennai, from where they expect to cover Tuticorin, Rajamundhry, Hyderabad and Kochi.  Shyson Thomas, MD of this airline, is reported to have said that "all formalities have been completed".  Further details are expected to be announced in the press very soon.
 
As many as 75 international airlines have regular scheduled operations to and from India. Out of the top ten carriers, who ferry passengers, in and out of India, Jet Airways (5.50 million), Air India (4.98 m), Air India Express (3.31 m) and IndiGo 1.49 m) have played a vital role. Others are Emirates (4.83 m), Qatar Airways (1.85m) Air Arabia (1.64 m) and Oman Airways (1.22 m).  If the 5/20 Rule is waived or relaxed, chances are Air Asia India and Vistara may become serious contenders to offer better service at competitive prices.  There is likely to be competition once this happens.  Air Kerala, which has not yet started its service, would have an inherent advantage of being able to serve the booming Keralite population working in the Gulf and this may adversely affect Air India Express.
 
In the meantime, Mittu Chandilya, the CEO of Air Asia India is reported to have stated that they are  awaiting the DGCA final verdict on the 5/20 Rule, which has been opposed by the existing carriers that waiver would give undue advantage particularly to Air Asia India and Vistara, who have established their base in India recently, and, who neither completed 5 years of flying experience or have 20 aircraft each!
 
Air Asia currently flies only three planes and expects to add one more shortly. It is likely to break even when the fleet goes to six aircraft. Its plans are to get 10 more in 2015, as this will strengthen its base and also help them to plan new destinations, which include Delhi.  However, they are hesitant to announce their schedule as they wait for the government decision  on 5/20 Rule, because, Mittu Chandilya is reported to have said, according to the media, that once schedules are announced, it would be difficult to make changes.
 
With the announcement of Air Pegasus and Air Kerala entry in domestic market, intense competition is expected, resulting, hopefully, in better service at competitive prices, much to the delight of the air passengers.  At this stage, it may be worthwhile for DGCA to make a detailed study of the passenger needs and actual movement to consider whether they should, temporarily, stop issuing further licences so that domestic industry moves from loss making concerns to profit oriented operations. We must remember most of the airline companies are in serious debt situations that may impact banking institutions if they are unable to service the loans taken.
 
(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)

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LC Goyal replaces Anil Goswami as Home Secretary

Goyal succeeds Goswami who was forced out Wednesday night in the wake of his alleged attempt to stall the arrest of an accused in Saradha scam

 

Senior officer LC Goyal on Thursday took over as the Home Secretary, succeeding Anil Goswami who was forced out last night in the wake of his alleged attempt to stall the arrest of Saradha scam accused Matang Sinh by Central Bureau of Investigation (CBI).
 
Goyal, a 1979-batch IAS officer of Kerala cadre, was the Rural Development Secretary till now. He will have a tenure of two years.
 
Soon after taking over, he called on Home Minister Rajnath Singh.
 
"I feel humbled by this huge responsibility. I will fulfil this responsibility with utmost sincerity, commitment, diligence and with a profound sense of accountability. To be able to do so, I solicit active support and cooperation of all stakeholders.
 
"The Ministry of Home Affairs' mandate is essentially to ensure effective maintenance of internal security in the country. To achieve this, necessary mechanisms, policies, and measures are in place. Wherever required and appropriate, improvements will be made within the given time-lines. This will be so done in close association and coordination with the state governments and Union Territories," Goyal said.
 
Goswami was last night shown the door in the wake of the controversy over his alleged attempt to talk to CBI officers to stall the arrest of Sinh, a former Congress minister at the Centre. Sinh was arrested on Saturday last.
 
After he was asked to resign, Goswami, a 1978-batch IAS officer of Jammu and Kashmir cadre, made a request for voluntary retirement with immediate effect by waiving the notice period which was accepted by the government.
 
Goswami was appointed as Home Secretary in 2013 during the tenure of UPA Government. He turned 60 last month and would have continued till 30th June.
 

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