AA Edit | Will real estate fuel growth?

Double-digit growth in high-end property purchases above Rs 4 crores underscores investor confidence and robustness of the economy

A double-digit growth in the sale of luxury homes priced above Rs 4 crores in the March quarter shows an Indian economy that is on an upswing. New launches in the luxury segment, according to the real estate group CBRE, saw 64 per cent growth during the quarter.

Typically, a person invests in real estate, which is the most illiquid in nature among all investment options, only when he is confident about the economy’s growth prospectus and is sure his business does not face a liquidity crunch in near future.

This kind of growth in high-ticket real estate, therefore, indicates the bullishness of people with deep pockets and, by extension, robustness of the Indian economy. The fact that Hyderabad and Pune — two cities that are a notch below Mumbai and Delhi — are leading the pack in the luxury real estate sales hint at the secular progression of wealth in the country.

The growth figures for the core sector also attest to the strength of the Indian economy. More importantly, cement and electricity sectors — which are the most important elements for any industrial activity — have clocked a growth of 10.6 per cent and eight per cent, respectively.

Other high-frequency indicators also support investor confidence in the Indian economy. The Purchasing Managers’ Index (PMI) for manufacturing is at a 16-year high. UPI, the leading digital payments system, had 134 crore transactions in March, the highest volume since its inception in 2016, which indicates faster formalisation of the economy.

Retail inflation based on Consumer Price Index (CPI) has declined to 4.9 per cent in March from 5.1 per cent in February, while core inflation came down to 3.2 per cent during the same period, which augurs well for the economy.

With its foundational basics going strong, the Indian economy could take off to the next level after the Lok Sabha election.

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