The British policy of Divide and Rule is not new to any of us. Our history books have given us detailed reports of instances where this policy was followed to create rift between people who united for a cause. The latest division of Andhra Pradesh in to two and the recognition of Telengana as India’s 29th state, raises a question whether Indian Government has learnt a lesson from the successful policy of the British and implemented it for its own gains? Previously states of Uttar Pradesh, Bihar, Madhya Pradesh went through divisions due to pressure and uprisings that forced the government to give in to the demands of the people. When protestations bring rewards it is highly likely that others with similar demands will also begin their demonstrations. Past experiences from states of Gujarat and Haryana have taught us that such divisions have been fruitful and have led to progress if done following logic and not due to pressure. In wake of the division of states with many more impending ones, a question arises. On what basis should a state be formed? When Sardar Patel had formed the states of India merging the erstwhile princely states, he had grouped areas on the basis of language, culture and not so sound logic. The arrangement worked in a freshly independent India. In my opinion keeping in view today’s burgeoning population of India, states ought to be divided into smaller more manageable territories. But logic needs to be applied in such divisions to bring uniformity and progress. For instance we can see sharp disparity between states such as Uttar Pradesh with a population of 20 crores and Sikkim with a mere 6 lakhs. Another unfortunate part of divisions is the sharing of central taxes like income taxes, excise and customs with the states. The usual policy is to give the state a share of its collection. As a result Maharashtra gets the lion’s share as majority of registered offices of big companies are located in Mumbai. Whereas the factories which are located in far flung states and which actually are the main grosser are of no financial advantage to the states they are in. Culture, language and logic should be the basis of division of states with fair division of revenue to ensure further equalisation along with effective administration.
Wah Taj! Yes, like millions before me even
I uttered this when I first beheld the manmade wonder. Having been a real estate person for so many
years, I had thought that I had seen it all. But on 21st July 2013,
I met the wonder of wonders that is truly a masterpiece, a class beyond
compare.
The Taj Mahal is probably the
single most popular building in the world and I am sure there is no one who has
walked on Mother Earth who is not acquainted with this monument of true love.
Folklore says that it took 22 long years to build the Taj and the estimated
cost at that time was 32 million rupees. And no labour costs too which would
have been preposterously high in today’s scenario. Indeed it is an insane
value!
In my view a poor country like
India cannot afford such luxuries. Even at the time when the Taj was built, the
heavy expenditure made then cannot be supported. According to many like me, it
is totally a wasteful way for money to go. In fact it is said that Shah Jahan
had drained the coffers of India to build this monument. Showing his love for
his dead wife is quite alright but spending the nation’s wealth in such a crazy
manner is indeed deplorable. It is believed that his son, Aurangzeb, over threw
and held him captive because of his foolish decision.
The rationale behind such a
stupendous expenditure is difficult to comprehend. Probably this money could
have gone into helping the poor or building the country’s defences at that
time. Even an investment in improving agricultural productivity would have
proved to be very sound.
I feel that if a democratic
government starts building such an irrational piece of extravaganza
anti-incumbency would soon come in to play and 22 years of construction would
never get over. Not to mention that it would be labelled as one of the worst
decisions.
Probably that’s what happened with
Shah Jahan.
But hold on! Is the investment as
frivolous as we deem it to be? On second thoughts the investment in terms of
real estate may not actually be a foolish one. It has been about 400 years
since the Taj Mahal came into being and has been unrivalled in beauty and
magnificence ever since with no close second. Over these four centuries no one
has been able to make anything even remotely as marvellous.
Today Taj Mahal is the icon of
India and people from all over the world recognise our country as the place
where the most beautiful wonder belongs. This iconic monument draws more than 2
lakh tourists every year from all over the world. During my visit, four
busloads of Chinese and Japanese visitors arrived to gaze at the Taj. Just to
mention a point here- the entry fee for foreigners is Rs 750 per head.
Ever since the Taj was made, it
has attracted tourists. The controversies surrounding the Taj has further
increased its value as a ‘must see’ place. It is a splendour that is found in
each and every world tourist guide or any list of ‘Places to see before you
die’. Recently a poll was held wherein people from across the globe
participated to rank the 7 Wonders of the Modern World and unsurprisingly the
Taj Mahal outshone the rest (the Giza Pyramids were exempted and included in a
separate category).
In terms of revenue from tourism
earned by Taj, not only the city of Agra, but the entire country has benefitted
with the figures going up each year. There has been no recession or
depreciation in the market in this regard. The Muslim countries have been
bestowed with the riches of oil, however, they do not have the wherewithal to
even plan for such a monument. No matter how much the Muslims hate ‘Hindustan’ this
land is the proud possessor of the Taj Mahal.
India’s
Top 5 Monuments
Revenues – Top 5 monuments
(Rs crore)
2011
Change%
Taj Mahal
19.9
15
Agra fort
10.4
-5
Qutub Minar
10.1
13
Humayun’s Tomb
6.2
11
Red fort
5.9
6
Source: ASI
All the
top ASI monuments listed above are in the “Delhi Circuit” and I am sure that
without the Taj Mahal there would be 50% reduction in the “Delhi Circuit”
tourists.
Consider
this: If a foreigner spends about Rs. 750/- for entry fee then he stays 1 day
in a hotel for not less than Rs. 5,000/-. And of course he spends at the souvenir shops too, carrying home a piece of memory. This way even if we assume the
revenues are Rs. 5 crores from entry fees from foreigners then approximately
Rs. 33 crores we get additional foreign exchange as tourists spend 1 more day
in hotel to see the Taj Mahal.
Looking back it seems it is the
best real estate investment that any country could have made. Even Aurangzeb
would have agreed with me on this! Shah Jahan’s name is immortal and so is his
idea of tagging the wonderful monument as a tribute to his great love for his
wife, adding the much needed romanticism that makes any monument famous. Agra
is earning a lot due to Taj Mahal. And so is India.
Moral of my visit to the Taj: Investments in real estate – give
you good returns over a period of time.
The recent revelation that more than half of the candidates who
happen to join Indian Institute of Technology (IITs) were from the Central
Board of Secondary Education (CBSE) has left the educationists looking for
reasons for the unprecedented success of the CBSE students in the fiercely
competitive IIT examination.
According to available data, out of 9,700 students who qualified for the IIT
this year, 5,500 were from the CBSE. It means the CBSE board students
contributed to 56 per cent of the total students joining the IITs.
In the year 2011, the success rate of CBSE board student was 56 per cent and in
2010 it was 58 per cent. This is a remarkably high percentage as compared to
other boards, which contribute marginally in sending their students to the
IITs.
According to education experts, the reasons why more CBSE students get admitted
to IITs are:
1. The CBSE has a numerical advantage as more students appear in the Class 12th
board exam than any other board. In 2012-2013 over 6.99 lakhs students appeared
for the class XII CBSE examination.
2. It enjoys a geographical advantage as the numbers of schools affiliated to
CBSE board are more in metro and major cities of the country.
3. These cities have better IIT coaching facilities and many of these coaching
centres start training students from an early age.
4. The course syllabus also contributes to the success of CBSE students in
joining the IITs. The syllabus, although marginally similar to IIT examination,
lays a sound foundation for facing the IIT entrance examination.
5. The other reason which contributes to high CBSE success rate is its course
structure – It’s based more on reasoning and analytical abilities than
memorizing the facts.
With the Union Cabinet approving the Real Estate (Regulation and Development) Bill, the popular view is that it will helpproperty buyers benefit and make the system more transparent. The real purpose of the bill is to give a reliability of the delivery of the project once it is launched. While the bill has its good intentions, precedents show us how such regulations usually eliminate the small builders completely.
Highlights of the bill:
1.All residential projects having units that are more than 4000 sq mts will fall in the ambit of this regulation.
2.All projects to be launched only after all the permissions have been received for the construction of the project.
3.About 70% of all the money collected for the project has to be used only for this project.
4.Projects to be sold on carpet area only.
5.Each state will have a tribunal for redressal of complaints.
In the past India has seen regulators like IRDA, SEBI, TRAI, CCI, RBI, DGCA, ICAI. What each of the regulator has undoubtedly brought in is the required “buyer benefit”. However, a side effect of such a regulator’s impact on the market is consolidation. For example, the proposed real estate regulator in the new bill makes it compulsory for all new projects which are more than the size of 4,000 square meters to follow a few rules. Now such a regulation would actually harm the big projects and builders would try to divide projects and do smaller projects only. However, a few factors like cost of construction, cost of marketing and the cost of providing common facilities push builders to do larger projects only. The customer eventually thinks that he should invest his hard earned money in a project which is regulated rather than an ‘unscrupulous’ builders’ unviable project. This breaks the back of small builders, who survive on a single scheme at a time.
These days in a metro city there is already a lot of consolidation with a few names like Lodha, DLF, Hiranandani, etc. dominating the real estate sales market. Lodha claims sale of Rs. 10,000 crores in the last fiscal which is more than DLF’s sale of Rs. npr ask me another 9,000 crores in the same period. In a Tier 2 city there are lot of local builders operating in selected areas of the city. Usually the local builder association has about 2,000 small and medium builders which are now dormant – due to slow market conditions. The SME segment has already got the burden of lack of reliable brand, inability of having fixed salaried staff and inability to invest in modern techniques of construction. When such a builder wants to scale up to large sized projects, he will need to comply with the regulator’s provisions which will deter him further.
We have seen in stock market that eventually all the small and medium sized IPO and brokers are eliminated from the market. It is said that SEBI regulations have closed more brokers than the slow market. So we have a handful of stock broking houses like Motilal Oswal, Angel Broking, Share Khan, etc. who own practically the lion’s share of the market. It is said that unless a broking house has 10,000 customers there is no viability to run the operation. Oligopoly is the future of real estate sector, be it a builder or a broker.
The proposed bill has a concept called “registered brokers”. Hence brokers are also going to fall in to the ambit of regulation, which until now has been totally out of regulation. Such regulations in other countries have streamlined the entire industry and have brought a lot of transparency. Brokers slowly adapt to the regulated world and start building their own brand. This indirectly regulates the secondary market also.
Even the CREDAI (Confederation of Real Estate Developers Associations of India) has ‘strong reservations’ according to the Credai president C Shekhar Reddy. He has expressed his concerns about the License Raj re-entering the real estate world and unnecessary victimisation of members. It is important that the Bill maintains equilibrium between the developers and end users. Implementation of this Bill as it is will cause substantial increase in cost to buyers. In the long run the bill has the potential to actually shatter the government’s initiative of ‘housing for all’ at affordable rates.
Right now the cabinet has passed the bill and it is scheduled to be tabled in both the houses in the monsoon session. The bill most probably will get passed uneventfully as officially only the state of Chhattisgarh has opposed it. So the regulator will actually cause ‘irregulations’ as it is not conducive to the small time brokers and is quite lopsided in approach. Oligopoly seems to be imminent.
Source: National Association of Colleges and Employers (US)
Teacher’s income paints a dismal picture
Imagine after years of grueling studies and facing bitter competition, one makes it to his or her dream career ‘teaching’. The happy bubble bursts when one realises that he or she is being paid a lot less than the friends who took up other professions. And that’s when a teacher starts having second thoughts and others around learn from her mistakes early in life and pursue other careers.
Unless a person has taken up teaching as a career because of fewer working hours, secure work environment, or the paid holidays or other reasons apart from the joy of teaching, he or she will soon be rethinking this particular career choice.
So what happens when a talented person with degrees is paid less? Of course he or she makes one of the two obvious choices-a. resorts to other means of income b. opts for a career change.
The story is same everywhere
The disparity in teacher’s income is true for almost all nations, whether a developed one like US or a growing one like India. Even in US the top college grads do not opt for teaching as their desired work area as there are other well-paying jobs and even people who take up teaching supplement it with other part time jobs to subsist.
In India a teacher’s income is not enough to run the house and one often comes across teachers with dual jobs or with an extra income source like private tuition, which is actually an illegal income making source.
Higher GDP means more job opportunities
GDP is on the rise and most countries are economically booming. But what we don’t realise is that with a booming economy and better salaries, teaching as a career does not appeal to most.
Take a look at the GDP growth of US, a developed country, and India, a growing nation. You will find that the trend of growth in India follows on the lines of US in recent years.
So if in US college grads are not taking up a career in education, the same fate can be expected in India too as the GDP is growing and there are other well paying career avenues.
Teaching is a recession-proof career and it was only during the recent economic depression that one found a surge in people opting for school jobs as ‘safe jobs’. Speaks volumes, doesn’t it?
News excerpt during recession:
Government jobs are probably the best places to find real security. That includes people who work in public schools. Recently, even former Wall Streeters accustomed to megabonuses and fast routes up the corporate ladder have been turning to teaching opportunities in the New York City public school system, where pay is much lower but security is much greater. While private-sector employees are generally vulnerable to the whims of their employer thanks to at-will employment contracts, tenure laws in most states protect teachers. Tenure generally comes after a few years of teaching, and employers must then provide just cause and due process in a firing.
Why should we be bothered?
Since education is the background of any country and makes more difference to a nation’s progress than we can imagine, what can be said for any nation where teaching is not the number one priority even for teachers? Not only that even those who made the mistake of pursuing their dream career as a teacher leave for greener pastures when they find that their hours of toil are not getting them anywhere or stay on because of the secure job environment.
Why don’t schools pay more?
The popular opinion of people who are not so wise about these things is ‘why doesn’t the school pay more in terms of salaries?’ or ‘why don’t schools collect more fees so that they can pay their teachers well?’ This is rendered impossible because of the government’s directive according to which a school cannot escalate the fees as and when they want.
The government norm is that a school can make a hike of only a certain percentage on the total fees. If it is a new school with a high fee structure then the cap will not affect the teacher’s salary. However most new schools then go empty and a few also close down. If it is a 20 years plus school then it will have an existing fee structure which even hiked by a percentage every year will not be able to do justice to the pay educators get. This is basically the reason why new schools have better teachers and old schools end up with “Talent Exodus”!
Conclusion: Better GDP leads to poor quality of education
Indian surveys indicate that the top students would like to take up teaching provided the pay is raised substantially. The question is whether this can be done. If we are looking at the ‘future’ then this should definitely be done.
Finally we come to our topic- how does the improvement in GDP reduce the quality of education? By now you must have guessed what I am getting to. Yes, if the economy is doing well, well-paying jobs will be more in number and we can expect most top grads to take these up. So, what about the educator jobs then which try as much as we can cannot compare with the pay doled out by other professions?
We are back to where we began. Less pay, incompetent employees and the education system takes a major hit. And who suffers the loss if education quality is dismal?- of course the country!
On Monday, the day of Akshaya Tritiya to be precise, one is sure to find crowds clamouring to buy a piece of the yellow metal that indisputably has been in vogue for 5000 years. But fans of gold have diminished and are now looking at other investments (except on days when they buy the yellow metal to appease their superstitions).
It is true that even a few decades back people used to buy gold, especially during economically uncertain times. But then there was no other choice in terms of investment. In recent years Real Estate investments is giving gold a run for its money, literally!
The biggest common factor because of which they are comparable to each other is the investment of black money. There are very few options available in the market for keeping black money safe, and earning a return on such investment.
Gold advocates proclaim that the metal is immune to inflation, economic or political crises. And Realtors argue that investing in property is secure. They consider gold or any other metal to be money and are vulnerable like other currencies. They can be considered a part of savings but not as an investment as such.
In the Gold Vs Real Estate scenario, real estate definitely has the upper edge as a potential of yielding higher returns consistently. A few reasons are-
Gold can be confiscated easily
Gold liquidity doesn’t work in terms of profitability as one needs to consider handling expenses, deductions for ‘melting’ and other expenditures
Lack of liquidity of Real Estate makes it less volatile and this is beneficial
Rise in Gold value coincides with paper currency devaluation and hence the appreciation of gold is actually nominal and not an increase in the buying power as we often think
Gold like other precious metals, is prone to manipulation by those who wish suppress its value to boost paper currency in a bid to benefit
Real estate has further income potential in terms of rent/lease which gold doesn’t have
Ever since there was recession of 2008, Real Estate prices went south and Gold prices went north. Looking at the disparity the layman started investing more in Gold which further jacked up the prices. In fact most of the investment done in Gold is because of the reason of lack of avenues of investing. One major thing which Real Estate provides and gold doesn’t is “yield”. Gold is the single biggest non yielding investment in the global economy. This makes gold the most speculated investment: as there is no discounted cash flow!
Also if the capital appreciation is not present then the investors have no interest in investing in Gold. In the chart below you can see that gold has crashed for 5 years in 1963. And hence a crash was evident and which is exactly what we are experiencing now.
So how to use this information to convince investors to invest in Real Estate?
* Investors have to be explained that Gold is a speculative asset which cannot be consumed. Real Estate on the other hand is consumed and there is a demand of real estate due to demographics.
* Gold is a movable asset which can be stolen
* Non yielding asset, so no rent you can earn on this.
* Can’t be used for own jewellery beyond a point.
The main argument for buying gold as an investment was the capital price but now even that is as uncertain as real estate escalations.
A question arises in the mind that if lawyers can do so much to improve the economy, can we just pass requisite regulations and “become” a developed country?
Well let me give you an example:
In USA, 15 years after the law was passed for making seat belts mandatory in all cars and wearing them, hardly 11% people wore them. As compared to today 85% people use a seat belt to make their travel safe.
40,000 people die annually in USA due to road accident today. Which is roughly the same before the invention of seat belt. Of course the number of people-miles ( number of people X number of miles) would have increased exponentially so the invention of seat belt has actually made road travel safer.
When I used to go to US when I was a child, all my aunties would proudly comment that “we all wear seat belt here”. The fact of the matter is that this voluntary compliance of wearing a seat belt to make your own life safer didn’t come just due to regulation.
Currently it is estimated that around 2 lakh people die on road in India. The problem could have been worse if the traffic was not so bad. Due to congestion in city roads, the speed has dropped drastically, hence leading to less accidents. All the city traffic police in India boast of huge safety improvement. Most of the drop in fatalities in cities are due to show moving traffic rather than any safety law enforcement.
To make people wear seat belts, helmets and drive safely requires a behavioral change. This doesn’t come through regulation.
Nothing has a proven effect on impacting a behavioral change in the people. Even in countries which have found success in one change, have miserable failed in bringing about another change.
Peer pressure has an effect on ones behavior but it may boomerang. Say for instance you tell all the residents of a society that most neighbors in this society are environment friendly, are you? Many will change. But it may boomerang if you use the same tactic in another society where hardly any one is environment friendly.
I personally think it is just matter of time and persuasion. Once people get convinced what is good for them, they do it. We just need to persuade them and keep up our hopes. cheap hotels .
