In Nov 2007, a four-bedroom apartment in NCPA Building at Nariman Point, South Mumbai was sold for Rs 34 crore to a UK-based NRI. That makes the price of one square foot of space nearly one lakh rupees. How many people in India will be able to pay that kind of price for space to live?
If you want to take a two-bedroom apartment on rent in Mumbai or Delhi it will cost you at least Rs 20,000 a month. How many people in India will be able to pay such rates of rent?
Here's an advertisement from the Classified Columns of Sulekha itself:
Residential flat for sale at Pitampura, Delhi. 1665 sqft built-up area in ground floor with triple bedroom, hall and kitchen. Situated in Shakti Vihar. Price - 1.15 crores.
- Location: Pitampura
- Area: 1665 Sq Feet
- Bedrooms: 3
- Price:
Rs. 1.15 Crores - Transaction Type: Resale
[Link: http://classifieds.sulekha.com/delhi/alllocalities/real-estate/apartments-flats/adlistings.aspx accessed on March 30, 2008]
And what about flats on rent?
3BHK flat for rent in ground floor with basement. Located in Greater Kailash-II. Area of 2200sq.ft fully furnished, attached bathroom, air conditioned, car parking, good location and 24 hours security. Price-Rs.65,000 p.m
- Location: Greater Kailash - II
- Area: 2200 Sq Feet
- Bedrooms: 3
- Rent: Rs. 65,000
[Link: http://classifieds.sulekha.com/delhi/alllocalities/rentals/apartments-flats/adlistings.aspx accessed on March 30, 2008]
On March 14, 2008 a major Wall Street bank, Bear Stearns, all but collapsed. Had the Federal Reserve not stepped in with life-supporting measures Bear Stearns would have been history today. Yet Bear Stearns was a bank that supported and was supported in return by economic liberalisation.
Economic liberalisation, as well as the capitalist ideology in which it is embedded, promises to bring more wealth to people. Bear Stearns which brought more wealth to its customers through shady lending practices shows us that wealth creation is not as easy as the advocates of liberalisation make it appear to be. If you keep on adding debt upon debt - through credit cards or bank loans or any such methods - you will have more wealth but in the form of debt. Anyone with a modicum of common sense will sooner or later realise that such a system cannot work effectively for long.
And the system is indeed collapsing. The whole US financial structure is crumbling. In the last quarter of 2007 the US economy grew at the rate of 0.6 percent. [Contrast it with India's pre-globalisation growth rate of 3 percent which was ridiculed by the West as the "Hindu rate of growth".]
The wealthy people are now distancing themselves from the financial markets to real estate and gold. They are losing faith in financial assets. Land and gold are more real than paper currency and the less palpable electronic versions such as demat accounts. As a result, prices of land and gold are reaching heights unimaginable for the vast majority in the world!
There's so much rush for wealth. So much rush for technology. For luxury. For novelty.
Imagine a situation. Suppose China or India achieves the miracle promised by liberalisation. Suppose China or India becomes so prosperous that every citizen is wealthy like the Tatas or Ambanis or Gateses or... Suppose the one billion Indians want to buy two or three vehicles each and two or three villas each. Where will they run those vehicles? Where will they construct those villas? Will India be a network of highways squirming through a network of concrete structures?
In short,
the promises of economic liberalisation seem to be
neither feasible
nor advisable.
The earth has enough for everyone's need, not for everyone's greed. The Mahatma was right.
Close
excellent.
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Unfortunately, Sampath ji, you’re so right. We have taken America as the role model, for growth, for lifestyle, for food, for culture, you name it. Maybe, it’s the law of nature that those who appear to be successful and powerful become the role models for others.
I too read in today’s newspaper, Raj, that news about the possibility of burying our ashes in moon! That’s one of the many possibilities that science and tech will offer us. You do have a point when you say that scientists (and I may add intellectuals) may be able to bring about certain changes. But as Raghuram fears scientists and intellectuals too will be helpless unless the very conscience or level of consciousness of people in general does not undergo a radical change. If we remain as greedy as we are, we’ll only think of conquering the moon or as Dawn says the Mars.
You’re right, Shajan, we took Keynes too seriously and mistook our pretensions for our truths.
The IT boom has certainly added to the problem, Indu. Not only in Hyderabad, it’s happening in other places like Kochi or Trivandrum too. You can’t blame the real estate dealers alone, either. They are businessmen and like all others in their profession will make hay while the sun shines. Globalisation has enabled and attracted many to come from other countries with their fat wallets and invest in real estate in poorer countries. The earth is a sound investment, you see; they don’t make it any more – I mean the quantity of earth (land) available is limited and the buyers are too many.
Most people don’t want to learn, Lakshmi. They just follow the trend. That’s one sad fact about this rational creature called man!
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How about shifting to Mars? But the greedy ones are strictly prohibited!
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matheikal,
I think one of the MANY causes for the greed is the wish for instant gratification.....whether one has the means or not..........credit cards and spiralling debt by not knowing how to manage the cards is one example...get no, think of paying later syndrome.
Seeing the US economy unravelling does not seem to be teaching us much........
Lakshmi
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"... bring more wealth to people" - This is the problem not only because it is open ended but also because of what it does not say; add the caveat "for the few" at the end and the thing becomes clear. This was the justification for capitalism which never anywhere said that growth will be equitable; the excuse was that is a moral thing and cannot find a place in economic equations. This justification was clothed in the social version of Darwin's ideas, especially in the vicious form of "survival of the fittest".
To come to Raj's comment, let me make the following statement: his faith in technological solutions is, at the very least, misplaced. Something in the conscience of people has to churn. DS, the first comment, made a stab at it, ina tongue in cheek manner.
Raghuram Ekambaram
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The earth has enough for everyone's need, not for everyone's greed.
Very thought provoking article. You know what I think this is a vicious circle. In Hyderabad too the real estate prices have gone up to unbelievable prices.
The reason which we are finding ( may be right, may be wrong) the growing IT industries, which are bringing NRIs, High Tech Malls , and highly paid IT jobs , and in turn the increase in the cost of living.
The rentals are going high , the arguments of the land lords is that they are increasing the rents because of the increase in cost of living.
Every city, town in India is facing this problem. Salaries are being increased because of increase in cost of living, because cost of living is going up demands for increase in salaries are becoming more and more.
Where is the end?
Indu
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Lord Keynes said in 1930 - 'For at least another hundred years we must pretend to ourselves and to every one that fair is foul and foul is fair; for foul is useful and fair is not. Avarice and usury and precaution must be our gods for a little longer still. For only they can lead us out of the tunnel of economic necessity into daylight'
We have taken this advice to our hearts, forgetting that it was meant to be a pretence.
-shajan
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Only today I read, Matheikal, how one can pay tons of money to a US company to have one's ashes buried on the moon!
I thought to myself how silly that was but put that info beside your blog - and it seems surreal and absurd and downright idiotic! It sure looks like the earth is not enough for everyone's greed! - we want the moon too, even in our deaths!
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The situation in Australia is similar to what you have mentioned in terms of real estate values: it is estimated property prices here will go up by as much as 40% over the next four years! Prices have already gone up and the young and those not already owning property are stressed out. Those having a mortgage are going through what is known as mortgage stress.
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I don't know if such a dire situation as you describe will come about or if the markets worldwide are just going through a cycle. Also I am optimstic that science will deliver solutions - once we get rid of all these poiticians and greedy businesses which stand in the way. If only scientists were allowed some kind of constitutional freedom with the necessary checks and balances, many of our economic and envioronmental woes can be speedily overcome.
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i want more
i wnt to substitute my
search for well being by acquiring...
i want much more than security....
America is our wonderful model..
whe shed our pride and adopt a model toally alien to us...
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