RBI cuts repo rate by another 50 basis points and CRR by 100 basis points

It is a timely move that RBI did finally by reducing the repo rates by 50basis points and cut with CRR by 100 basis points effectively bring additional liquidity to the system by another Rs85000crore. 

As the major impact was to real estate sector already the major real estate companies like Parsvanth developers have very openly sought that we don't require any bailout package from the government as they  did for the aviation sector(extending credit terms) but we require only policy change like a steep cut in CRR and Repo rate cut to 5.5%.Also he had indicated that his organization will identify 15% of the non performers and retrench them which is inevitable.

The worst hit sector was real estate sector and the big players started feeling the heat and openly accepted the crisis in terms of liquidity.This move by the government would definitely boost the sentiments in the real estate sector.Inspite of the banks move on increasing the margin money for the Home loan from 20-25% and to maximum of 40% will not cause much impact.The good news is  for the consumer in the personal,carloan and home loan segment could see the real benefit in the coming months.

Investing in stocks would be an attractive option, as the deposit interest will also come down in the future.It is a positive cue and definitely boost the sentiments of the stock market in the coming months.

Thanks to recession as the figure sequentially started falling down on the fourth week of October as the global commodity prices also falling down then it is a positive sign for the Indian economy.

The only one left out is the correction of the fuel prices ,there might be certain factors petroleum ministry might look into .One is the OPEC countries stopped producing 1.5 million barrels a day from November first onwards.Already crude price is highly fluctuating and impact on the decision of OPEC will reflect after one or 2 months.Moreover average price for  the inventory built up over months is also a concern.

Though the crude price rules around $67 a barrel the oil marketing companies are still making a loss and the government is sharing the loss by way of subsidy.

Even then only pending action  from the government is the reduction of the Petrol and diesel price.Once it is through we can see the substantial impact in the inflation index. Then it would definitely vouch the Indian economy is stronger.

Recent collapse of a high raise apartment in Bangalore

The question surmounts every ones mind that whether shall we buy a high raise apartment in Bangalore. The recent collapse of the the 14 storey apartment which was under construction from Prestige Shantiniketan.Definitely hammers the people who are about to buy a dream class apartments like Mantri,Greengage,Concorde apartments etc.

Already people who invested in such a high raise  buildings cant imagine this type of disaster. The apartments were selling at a rate 3700Rs/sqft.The apartment cost would be a minimum of 50lacs and plus.

The people who had invested their hard earned money to buy this kind of apartment. Just imagine it is not the question of the money they have invested, any way the insurance companies will compensate for the damage, it is the life and safety of the people who buys the flat. If such stray incidents happen if after people occupies the flat what will happen?

“Excerpts from Hindu dt 24/10/2008”

The block which collapsed is part of the 20 blocks under construction by Prestige in a joint venture with Shantiniketan. The top floor slab which collapsed first was laid only a few days ago.

"The police told The Hindu that the accident occurred around 5 p.m. when a small portion of the top floor collapsed resulting in the slab of the floor below it collapsing in a short while. Owing to sheer weight, the slabs of the lower floors collapsed subsequently, all in a span of 50 minutes, although the embedded steel rods prevented the slabs from falling in a heap. "

"According to an eyewitness, around 4.50 p.m., the slabs of the building started to collapse. Then there were around 120 people, including women and children. “Immediately after the incident, the workers at the construction site had left. Very soon they were sent to isolated places in a few trucks.”

“A Few officers, perhaps from the contractors side, had shifted all the workers to some other location immediately. They instructed the security guard and other workers at the construction site not to answer the media or the police,” he said.

The Bruhat Bangalore Mahanagara Palike has taken a serious note of the accident. Directions have been issued to stop construction pending an inquiry. “

There are some question arises in our mind which is obvious for a common man:

• Even if they cite as an accident how the entire building collapse due to the fall of a slab?
• Why the safety measures have not been followed while construction?
• Is there any impact analysis done for the concrete structures and floors?
• Is there any governmental mechanism to track the structural stability of such high raise building?
• Already many high raise apartments occupied by the people Are those people are at risk or whether the government will take some initiative on this to see the stability of such buildings constructed and under construction?
• What is the criteria when the governmental agencies giving nod for such a high raise building considering the seismic parameters of Bangalore.
• Will the governmental agency is awake and whether the adequate safety is been taken care in the construction sites?

Now it is not the time to ignore this as another incident recently a flyover bridge collapsed in Delhi. This kind of incidents can not be ignored and openly throws the light the tracking mechanism is improper which applies to every one including the poor buyer.

I think it is the right time for people to throw away their myth or assumption  with just builders of reputation will be of always of good quality .As per murphy’s law If worst think has to happen it has to  happen and to  to any one .Proved to us already by the disaster of Lehman brothers.(158 year old company).

Just imagine the position of the people who have invested their most part of their life’s savings to buy this kind of apartments. Already the global environment and the stock markets are giving shocking news for an average middle class investor. Again this would not rub on the wound , atleast government should be considerate and safeguard the interest of the middle class people..