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Note ban will hit property sales by 20-30% this year: Fitch

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Mumbai, January 25: Disruptions caused by demonetisation and the general caution on the part of buyers will hit property sales in India by at least 20-30 percent in 2017, Fitch Ratings said in its latest report.

“We expect home prices also to decline this year because demand for residential property has weakened significantly in the fourth quarter of 2016, following the demonetisation of large denomination notes in November last year,” said the ratings agency.

The worst downturn in home sales is likely to occur in the first half of 2017.

“The worst downturn in home sales is likely to occur in the first half of 2017. Demand is likely to recover moderately in the second half as festive season approaches, and because banks have cut interest rates on home loans by 50-60 basis points over the last 12 months to multi-year lows,” it said.

“Demonetisation has made it harder for home buyers to use undeclared wealth for property buys. The number of residential units sold in the fourth quarter of 2016 fell 44 per cent year-on-year, dragging down overall units sold in 2016 by 9 per cent, based on data compiled by Knight Frank Research.”

The volume of new units launched fell by 61 per cent.

Fitch expected the largest cuts to selling prices in the National Capital Region where unsold inventory is the highest over 16 quarters of sales, followed by Mumbai, where it is 10 quarters, based on market estimates.

The NCR, it said, is known to have the largest cash-based economy in the country, and therefore demand is likely to suffer more from the currency demonetisation than other regions. It expected demand for homes in Chennai and Pune to be less affected by the downturn.

At the same time, Fitch said, even as property construction was hampered for a few weeks after demonetisation, most homebuilders were able to work around practical issues related to making payments to suppliers and contractors, and construction has since resumed.

“Smaller and second-tier homebuilders across the country have also started offering discounts of around 25-30 percent to attract buyers.”

IANS

Analysis

Actual sugarcane FRP hike is Rs 6, not 20: Agri activists

The government has approved a premium of Rs 2.75 per quintal for each 0.1 per cent increase in the recovery over and above 10 per cent.

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New Delhi, July 18 (IANS) The government’s decision on Wednesday to increase the Fair and Remunerative Price (FRP) for sugarcane for 2018-19 (October-September) season by Rs 20 to Rs 275 for a quintal comes with a rider that the new rate will be applicable only when the recovery rate is 10 per cent.

The recovery rate — of sugar from sugarcane — was 9.5 per cent when the government had fixed the FRP of Rs 255 for a quintal in 2017-18.

If the recovery rate of 9.5 per cent is considered for 2018-19, the farmers will get only Rs 261.25, which is a hike of roughly Rs 6.25, on year-on-year basis.

According to Union Food Minister Ram Vilas Paswan, 295 mills of the total 550-odd mills in the country have reported recovery rate of over 10 per cent.

“Earlier, the recovery rate was 9.5 per cent. But it is increasing now. There are 295 mills which have reported over 10 per cent recovery rate, 82 have between 9.5 and 10 per cent, while there are only 127 mills that have below 10 per cent recovery rate. As the majority is of 10 per cent, we have gone with it (while fixing the FRP),” Paswan told reporters here.

The average national recovery rate is 10.51 per cent, while it is 10.20 per cent and 11.47 per cent in major sugar producing states of Uttar Pradesh and Maharashtra, respectively, he said.

However, agriculture activists called the hike in the FRP “shameful”, saying the actual hike would be below 3 per cent.

“It’s like peanuts. It is not even 3 per cent since expenses on electricity, labour and fertlizer have gone up significantly. The hike should have been done rationally,” said V.M. Singh, president of Rashtriya Kisan Majdoor Party.

He said the remuneration at 10 per cent recovery rate in 2017-18 was Rs 268, which means the actual hike is only of Rs 7 this year.

There are about five crore sugarcane farmers in the country and about five lakh workers are directly employed in sugar mills.

The total remittance to sugarcane farmers by the millers would be over Rs 83,000 crore.

The government has approved a premium of Rs 2.75 per quintal for each 0.1 per cent increase in the recovery over and above 10 per cent.

According to the government, the production cost of sugarcane for 2018-19 is pegged at Rs 155 per quintal, so the FRP of Rs 275 per quintal would provide a return of 77.42 per cent.

The FRP is determined on the basis of recommendations of the Commission for Agricultural Costs and Prices (CACP).

Paswan said there will not be any reduction in case recovery rate goes below 9.5 per cent and farmers will get Rs 261.25 per quintal.

As per the Food Ministry’s figures, the cane arrears, which stood at Rs 14,538 crore at FRP (Rs 23,232 crore at state advisory price – SAP) on May 21, has come down to Rs 9,319 crore (Rs 17,824 at SAP) following the various steps taken by the government in May including the Rs 7,000-crore package.

“Our top priority is farmers. To ensure that millers can pay farmers their dues, we give them such facilities,” Paswan said.

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Business

Chidambaram slams government over ‘economic mismanagement’

“After 5-month-high inflation and 7-month-low industrial growth comes the news of soaring trade deficit.”

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New Delhi, July 14 : Senior Congress leader P. Chidambaram on Friday slammed the government over its poor management of economy, saying inflation is at five-month high, industrial growth at five-month low and the trade deficit has soared.

Chidambaram, a former Finance Minister, said in tweets that exports were lower in June compared to May and the imports higher.

He said despite the higher trade deficit, the government would continue to say that all is well.

“After 5-month-high inflation and 7-month-low industrial growth comes the news of soaring trade deficit.”

“June exports lower than May. June imports higher than May. June trade deficit higher by $2 billion. But the government will say all is well,” he said.

Chidambaram said the Congress leaders had estimated that demonetisation would lead to a cut in growth rate by 1.5 per cent and the outgoing Chief Economic Advisor Arvind Subramanian has said that purging high currency notes in November 2016 led to a definite slowing down of economy.

The official data showed on Thursday that retail inflation in India touched the 5 per cent-mark in June, compared to 4.87 per cent in May, even as industrial output in May grew at 3.2 per cent compared to the same month last year but declined as compared to rise of 4.9 per cent in April mainly on account of a decline in manufacturing.

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India

Online hiring for government jobs fell 20% in June: Report

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New Delhi, July 5: Online recruitment activity for government services, including public sector enterprises and defence sector, declined by 20 per cent in June on a year-on-year basis, a monster.com report said here on Thursday.

Overall online recruitment in June 2018 fell by three per cent on a year-on-year basis and eight per cent compared with May 2018, the Monster Employment Index for June 2018 said.

“Printing and packaging sector witnessed the steepest decline — 27 per cent year-on-year basis and 15 per cent month-on-month basis,” the report said.

In the agriculture-based industries, online hiring declined by 19 per cent in June 2018, compared with June 2017.

However, the production and manufacturing segment registered a 49 per cent rise in online recruitment. Home appliances segment registered a 27 per cent fall.

“Production and manufacturing (up 49 per cent) led all monitored industry sectors by the way of long-term growth for the third month in succession,” the report said.

IANS

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