Page 57 - Kolte Patil AR 2019-20
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Global economic review

            The global economy grew 2.9% in 2019   is projected to shrink global growth   markets and low-income nations across
            compared to 3.6% in 2018, the result   significantly in the foreseeable future.   Africa, Latin America and most Asian
            of an increase in trade disputes global   As a result of the novel coronavirus   regions face high-risks due to weaker
            and slowdown of the manufacturing   pandemic, the global economy is   health systems and densely populated
            sector, coupled with a global financial   expected to de-grow by 4.9% in 2020   cities.
            crisis and Brexit. The Great Lockdown   as per one expert estimate. Emerging

             Indian economic review
            The growth of the Indian economy   the corporate tax rate to 22% from 30%   and utilisation of welfare funds for
            slowed to 4.2% in FY20 compared to   to promote investment; it announced a   construction workers to offset the
            6.1% in FY19. The nominal per capita   new tax rate of 15% for new domestic   adverse impact on rural demand. The
            net national income was estimated   manufacturing companies, providing a   third tranche of the stimulus package
            at C135,050 in FY20, up 6.8% from   boost to the Make-in-India initiative.  aimed at India’s rural economy (worth
            C126,406 in FY19. Retail inflation   The outbreak of COVID-19 and the   around C1 Lakh Crore) is intended
            climbed to a six-year high of 7.59% in   subsequent lockdown enforced in   to reinforce the rural economy, a
            January, settling at 5.91% in March,   the country moderated consumer   substantial part of which will go
            2020.                                                             into building a more modern and
                                             demand. To mitigate the impact the
            India emerged as the fifth-largest   Indian Finance Minister announced   efficient agricultural infrastructure.
                                                                              It also ushered new laws to promote
            world economy in 2019, overtaking the   a C1.7 trillion relief package for   contract farming. The changes in the
            UK and France with a gross domestic   migrant workers (post-Balance Sheet   ECA and creating a ‘One Nation One
            product (GDP) of USD 2.94 trillion. India  development). The Government   Market’ could increase private sector
            jumped 14 places to 63 in the 2020   announced a slew of measures like   investment. Besides, the focus on
            World Bank’s Ease of Doing Business   direct cash transfer to farmers, hiking   MGNREGA is expected to strengthen
            ranking. The government moderated   wages under the MGNREGA scheme,
                                                                              rural incomes.

                                    Q1, FY20           Q2, FY20          Q3 FY20           Q4,FY20
             Real GDP growth (%)    5.2                4.4               4.1               3.1
            (Source: Economic Times, CSO, Economic Survey, IMF, RBI, Franklin Templeton, PIB)

             Indian real estate sector overview

            The real estate sector, comprising   promised specifications. This sectorial   least share with ~10% (23,000 units).
            residential, retail, hospitality and   disruption is already visible, resulting   Housing sales in 2019 reported a growth
            commercial segments, is the third   in the unorganised part of the sector   of ~4-5% as 2.58 Lakh homes were sold.
            largest component of the Indian   getting increasingly marginalised and,   New housing launches reported growth
            economy. Several far-reaching policy   to some extent, expansion of confidence  of 18-20% totaling 2.3 Lakh units.
            initiatives and structural reforms   among buyers.                This was a result of key initiatives
            have been introduced in recent   The sector experienced the impact of   undertaken by the government to revive
            years, including the Real Estate   the NBFC liquidity crisis during the year  the realty sector. In the Union Budget
            Regulation Act (RERA), Goods and   under review. There were limitations of   FY20, the government had already
            Services Act (GST) and Insolvency   funding, a key driver of demand, which   announced an additional deduction of
            and Bankruptcy Code (IBC) that have   resulted in subdued visibility across   upto C1.5 Lakh on the interest paid on
            brought in more transparency and   projects in key markets. On the brighter   loans that were borrowed until 31st
            accountability, creating the framework   side, the successful launch of India’s   March, 2020. Alongside this, the GST
            for consolidation towards players with   first Real Estate Investment Trust (REIT)  cut rate was also announced under the
            strong execution capabilities and   opened new avenues for investments   new scheme of ~1% in the affordable
            governance practices.
                                             and government initiatives provided   housing segment and ~5% for other
            Driving sustainable growth, India’s   relief to the housing sector.   categories. The government also set up
            real estate sector is expected to grow   New launches were estimated at 2.3   an alternative investment fund worth
            from an estimated C12,000 Crore in   Lakh units in 2019 in the top seven   C25,000 Crore of projects that were not
            2019 to C65,000 Crore in 2040 (Source:   cities, among which ~40% (92,000   completed. The Union Cabinet also
            IBEF). Underlying this broad theme of   units) were in the affordable segment,   made changes to the partial credit
            expansion will be greater consolidation   followed by the mid-segment with a   guarantee scheme, enabling them to
            to the benefit of strong and trusted   ~33% market share. The luxury and   purchase high-rate assets from NBFCs
            brands with demonstrated ability to   ultra-luxury segments reported the   and HFCs. (Source: IBEF, CNBC)
            execute projects on-time meeting
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