Economic progress in real sense

My driver, who has been with us for past ten years or so, lives in a chawl very close to our house. His house and his locality is an absolute sanitation disaster. I am certain any of us who would be reading this blog would not like to visit such a place apart from trying to gain ‘insights’ on where most of the “India” lives!

I was shocked when he told me that his barely one-room house is now likely to fetch him Rs. 15 lakhs! Some builder is eyeing their chawl for redevelopment!

In 2001, we bought a house in a good housing society, built by a builder of repute, meant for white collared people like us. We got this 4 room house for around Rs. 16 lakhs.

In Mumbai, the standard of living has not gone up in the last 10 yrs. In fact, far from it. There is no improvement in access to cleaner air, water, roads and transport, and recreation. It has become increasingly more difficult to travel within the city; hence visiting friends and relatives has also become an ordeal and is now treated as a major activity on weekends.

In the last 10 yrs. or so we have chased the housing prices up; that has become our satisfaction driver. The land that can be used to build wider roads is today more valuable if a housing society is built on it.

I am not the one who is against those who have invested in real estate market, with the hope to make risk adjusted returns in a real sense. In fact, I am one of them too. The question is should the returns be in terms of capital appreciation or should the returns be income generated by sweating the assets.

I think one can still make returns on investments in real estate but perhaps with a different mix. If the situation turns out to be that, people rent a house and get 8-10% return in terms of rent income and 2-4% returns on capital investment, everyone would be as happy, instead of the reverse situation which exists today.

I believe if we reach that kind of return mix, more money will flow into infra bonds and those investments which would lead to better infrastructure.

If we are able to create a situation where these investments are channelled to infrastructure and industries,  with an objective to create a social infra structure where every Indian has increasingly better life in terms of access to basic needs, shelter, education, sanitation, medical facilities and recreation, then we all will be better tomorrow than we are today.

I would have been very happy if my driver would have said that he was buying a similar house that I had bought 10 yrs ago! That would have been economic progress and prosperity in the real sense.

All of us are responsible to make the change happen. I am hopeful that it will happen! As things develop and change around us, we all need to have a view and opinion on what is the desired direction..