The Realty Sector Growth Continues

India, Day 1

LIC office in New Delhi

On March 7, T.S.Vijayan chairman of Life Insurance Corporation of India (LIC), India’s No. 1 insurer announced that LIC will invest nearly Rs 36,000cr in infrastructure in 2010-11 on the sidelines of a stone-laying function of a housing complex for its policyholders in Kolkata. He said LIC would undertake realty projects, both commercial and residential, across the country and the company expected an income of Rs 200-300cr from its real estate foray this year. LIC contributes to 4% of the country’s GDP as well as pays hefty dividends to the exchequer.

Most of the builders have increased prices and thus it is likely that real estate may see some slowdown in demand in the long term despite the fact that the housing finance companies like HDFC, SBI, and LIC Housing reported a strong 30% growth in loan disbursal in the December 2009 quarter over last year. Even the stock market performance of the sector has been good in the recent as The Sensex touched a high of 17,000.01 last week which is a benchmark.

The realty sector in India continues to grow particularly more after the fiscal  year 2010-11 budgets was presented. The investors rejoiced when the finance minister Pranab Mukherjee said while reading the budget “We hope to breach the 10% growth mark in the not-too-distant future”. Now Tax allowances are raised, putting more cash in people’s pockets and large housing companies are trying to make full use of it.

But Lack of long term strategic thinking will lead to unplanned development that will not only have an adverse impact on real estate investment and development but also on
macro economic and societal development. That is why it is important for Indian cities to provide a good quality of life to their people because economic success in the 21st century is going to be determined by the human capital a society is able to attract and nurture.

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