BUSINESS
Interview with co-founder and managing director, Hiranandani Group
Hiranandani Group co-founder and managing director Niranjan Hiranandani, who is also the president of National Real Estate Development Council and senior vice president of trade organisation Assocham, believes that the liquidity crisis faced by the non-banking finance companies (NBFCs) will blow up if the government doesn't address it in another two months. In an interview with Ateeq Shaikh, he also talks about the current residential inventory and the emergence of rental housing.
We have to understand three things. First, the GDP (gross domestic product) is definitely growing, whether it is at six or seven percent, growth has taken place. There is no doubt about it. Second, which is definitely a positive, is the fact that infrastructure is definitely improving. Look at the national highways, the rate at which highway construction is happening. With GST (Goods and Services Tax), all these boundaries at the city level have gone. So the advantage is that you are now getting a seamless India. The time taken for a truck to go from North to South has come down to half. The third advantage that is happening is the fact that the cost of logistics will keep on falling in the next couple of years, which is exactly what happened in China because of rail and other factors. The railway network is also improving. One bullet train doesn't make an India, but you're going to see 10 bullet trains in the next five years after that. Also, let's take Housing for All. The target of 1.10 crore houses will not be fulfilled by 2022, but it will be fulfilled in 2024. But it won't happen in every city in India. The next are the four or five things which the PM has been talking about - Swachh Bharat, cleaning of the Ganga, toilets scheme and putting Rs 6,000 per year into the account of each farmer. What is going to be a big issue is water. Every city will have to recycle all water. Now, let's look at the negatives. The biggest is the liquidity position in the market. It is unprecedentedly bad. There is no way this country can survive without improvement in liquidity. After GST, demonetisation and RERA (Real Estate (Regulation and Development) Act, 2016), the liquidity position in the market has gone down.
RBI (Reserve Bank of India) has taken several steps to release liquidity into the banks, but due to various reasons, banks are unable to extend the required credit in the business market. The lending of credit didn't match the market growth requirement. Initially, there was liquidity flow to mutual funds and NBFCs, which eventually got squeezed in the wake of several events. Liquidity is the oil of the economic growth engine. Hence it is imperative for the government and apex bodies to pump in enough liquidity back into the market. Say if I have upgraded to a bigger car because the economy has grown, and I've got the fuel but there's no oil in the engine, what will happen to the car? It will be stationary. That is the position of the economy now. The liquidity is the oil, which is the driving force, and that is gone. So the oil in the economy is missing. It's such a serious problem that if this is not solved, the engine of India will shut down some day. The signals are already there; smaller people are finding it difficult. The small and medium-sized enterprises are not getting the money. They are getting the orders, but they don't have money to invest. They are not getting credit from banks. Payments are getting delayed; there is also the input tax credit issue.
So the liquidity of India has tightened, the oil has gone out. When demonetisation took place, the cash in the economy was Rs 15 lakh crore and Rs 15 lakh crore came back. The Reserve Bank of India is responsible to supply enough liquidity in ATMs for cash withdrawal by citizens or else there could be an issue. But liquidity responsibility (for market) is denied by RBI, which says that banks are supposed to do that and RBI is only there to rescue them. Whereas, the Ministry of Finance says liquidity is the responsibility of RBI. Whose responsibility is it? After IL&FS, NBFCs are also not giving money. The situation is that this is the biggest crisis India has ever faced. In 2008, it was not so bad. We bailed ourselves out by allowing NPAs to be rolled over. If you don't improve liquidity position now, this economy is going to get tightened up. So unless you put in the oil quickly, it will slowly get jammed, and it has (jamming up) already started.
Everybody saw it coming. If they don't address the liquidity issue, then at least another half-a-dozen NBFCs will be in difficulty. Mutual funds are not a problem as they are getting a lot of money from the public and the stock market has moved up. But NBFCs may have a problem. If this liquidity (issue is not addressed) in 60 days, then you will see it (deepening of NBFC crisis).
Around Rs 30-40,000 crore.
We are hopeful that RBI in concurrence with the government and other apex bodies will quickly take corrective measures to improve liquidity in the economy for its quick revival. They will have to reduce interest rates and pass on the benefit to the end users. It is up to the RBI on how to resolve liquidity squeeze issues quickly.
No. Just because there are excess clothes for all it doesn't mean the textile industry is gone. The industry doesn't die by creating surpluses. It means that inefficient people in that industry will fade out and efficient one will survive, which is in benefit of the industry. So there will be new builders who will cater to different segments.
Not necessarily. Theoretically, it seems plausible but in reality, India is so big that there will be plenty of builders - more than required.
A. They say they will infuse Rs 30,000-40,000 crore for the NBFCs. But you need Rs 2 lakh crore. My viewpoint is much stronger. Others are talking from the top. The reality is worse. The government has to take a very strong view. If they don't, then the whole machinery is going to get clogged. It already is getting clogged. Those companies, which should not otherwise fail, will fail. The second part of this is that consolidation is definitely taking place in all the businesses worldwide and is not limited to real estate. This is because our country is becoming mature. In aviation, low-cost carriers are making money but Jet Airways died. Thus, a big builder can die and smaller ones can survive and vice-versa. It all depends on the business model.
Lot of things have happened. Now we have to think new. The concept of rental housing has not come fully. Look at America, where at least 50% of houses are rental. In India, that is not the thing. The government said they want Housing for All, but they have presumed that it will be on ownership basis. It's not needed. No country in the world has everything on ownership. At least 50% of housing in the future has to be on rent. So we need to create a rental housing policy quickly. The government is going to come up with that. My prediction is that in the next 10 years, at least 50% of all housing created in the future will be on rental basis.
For how long do our mobile phones last? Nothing lasts forever. Change is inevitable and those who embrace it will survive and succeed.
We sold $1 billion of assets. We are looking at investments. We are starting an industrial and warehousing platform, a new database centre and three new township projects.
What is wrong with that? You wanted surpluses, we have created it. And now you are crying. Today you want to buy a shirt. Do you have to book it and pay by instalment? No, because there is a surplus.
They are not used to the idea. Whatever business you do, you must be efficient in your segment. The creation of surpluses should not be an issue. In a surplus economy, if you can't make money, you would be out. I'm going to make surpluses. I'm going to make buildings ready and then sell. I'm going to rent out buildings also. We started renting out long back, but the numbers were less before. But I am increasing the numbers. Now, we have around 200-300 flats.
SEBI's first reaction on Gautam Adani bribery case, begins inquiry into...
Meet Hyderabad girl who began NEET preparation in class 7, scored 99.9 percentile, secured AIR...
Badshah breaks his silence on dating rumours with Pakistani star Hania Aamir: ‘We have a lot of…’
Delhi pollution: Air quality deteriorates to 'severe' category in Delhi-NCR; AQI at 419
'I think bro is her EX': Man performs risky bike stunt with burqa-clad woman in Bangladesh, watch
Viral video: Little girl's power-packed dance to 'beer song' melts hearts online, watch
Explained: Why India must win the 1st Test against Australia in Perth
Raima Sen mourns Bharat Dev Varma's demise, pens emotional note for 'great father, great husband'
DNA TV Show: Ahead of Maharashtra poll results, MVA, Mahayuti engage in resort politics
Maharashtra: Stage set for assembly poll results; Mahayuti, MVA confident of their victories
All set for vote counting in Jharkhand tomorrow; NDA, JMM-led alliances confident of winning
Watch: Australia star inquires Rishabh Pant about his next IPL team, gets 2-word reply
Shah Rukh Khan’s house Mannat was first offered to his industry rival…, but he refused because...
The Visionary Who Promises a Blue Sky for India: Holger Thorsten Schubart’s G20 Climate Speech
The Surge of High-End Living: Luxury Residential Market to Outpace Other Segments
FeFCon 2024 to be Held in Bangalore: A Premier Event on Fever Management
'That’s wild': Noida man turns cigarette butts into teddy bears in viral video, watch
London Airport evacuates passengers over security threat, thousands stranded
The World’s First Innovative Iron Supplement to Combat Iron Deficiency and Anaemia
Meet grandmother who became fashion icon after trying on her granddaughter’s clothes
IND vs AUS: Rishabh Pant joins Virat Kohli, Rohit Sharma in elite WTC list, becomes 3rd Indian to...
'All scripted drama...': Puneet Superstar allegedly assaulted by influencers in viral video, watch
Actress Ana de Armas caught kissing Cuban President Miguel Díaz-Canel’s son in viral photos
Oreshnik's Shadow: Will Russia's hypersonic missile force west to back down?
‘You’re So Beautiful’: World’s tallest woman meets world’s shortest woman over tea, pics go viral
Delhi-NCR Air Pollution: Consequences of GRAP-4 are drastic, may have adverse effects, says SC
Delhi-NCR Air Pollution: Schools likely to stay closed till..., check city-wise update
Maharashtra: 3 killed, 9 hospitalised after gas leak at fertiliser plant in Sangli
THIS farm is selling a cup of coffee for Rs 28000, but there's a twist, it is...
Chhattisgarh: 10 Maoists killed after encounter with security personnel in Sukma
Mukesh Ambani's SUPERHIT plan for Jio users, offers unlimited 5G access for 1 year for just Rs...
IND vs AUS 1st Test: KL Rahul's dismissal sparks DRS controversy in Perth Test
Dense fog, heavy rain predicted in these states till November 25; check here
Oreshnik Hypersonic Missile: Which nations are within its range?
Bihar teacher, principal reach school in drunken state; know what happened next
'I have faced a lot of...': Arjun Kapoor REVEALS his biggest fear amid break up with Malaika Arora
How millions of Indians may get affected due to US indictment of Gautam Adani in bribery case
Amid divorce rumours with Aishwarya Rai, Abhishek Bachchan says 'missing someone is okay but...'
After Bibles, watches and sneakers, Donald Trump is now selling autographed guitars, price is...
Delhi pollution: Air quality improves to ‘very poor’ category, AQI at...
Vladimir Putin's BIG threat, warns he could strike UK with new ballistic missile if...
Shillong Teer Results TODAY November 22, 2024 Live Updates: Check winning numbers here