Page 57 - Kolte Patil AR 2019-20

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
Annual Report 2019-20 | 55