If you have booked a flat better read this

You are likely to get possession long after you have been promised, as study warns of likely delay in projects. Only your agreement can save you from a financial loss, say experts

If you have booked a flat in Mumbai recently, this could be bad news. There is a big chance you may not get possession of your flat on the date you were promised. Worse, you will end up paying more, if your EMI (Equated Monthly Installment) payout has begun. The double whammy is, if you also have to pay rent until you get your dream home.
"About 70 per cent of these upcoming projects are in north Mumbai, from Andheri till Vasai and Virar," said a real estate expert.

The immediate fallout is for those burdened with home loans. "Most people have booked flats and their EMIs have begun. Any delay in a project means they end up paying more," a banking expert said.
"A number of medium-sized and small real estate developers could face a liquidity crunch in the months ahead. Many such developers have stretched themselves operationally, and borrowed heavily, to benefit from the real estate upturn of the past three years," says a report by Credit Rating agency Crisil, released yesterday.
According to the report, there would be delays in many ongoing and planned real estate projects, thereby leading to the possibility of sale of projects or even enterprises. "Large builders are currently insulated from this crunch," Akash Deep Jyoti, head, Corporate and Government Ratings, Crisil, told MiD DAY.
Increasing real estate prices over the last three to four years resulted in a large number of developers acquiring land at high rates in anticipation of a further increase in prices, and scaling up their operations multifold.
The current situation exposes the pitfalls of such a strategy, says the Crisil report. There has been a slowdown in the sale of real estate projects. In particular, residential projects have been severely hit by the slowdown in bookings. Further, the sharp increase in the cost of land and construction materials (primarily steel and cement) has pushed up costs by 20 to 30 per cent over the past two years, hitting developers hard.
How to protect yourself
For those planning to book homes, ensure that your agreement with the builder mandatorily includes a clause, which safeguards your financial interests if there is a delay in the project. "Most buyers do not read the clauses carefully and end up facing mental and financial agony, especially if they are faced with delayed projects," says an expert.
For existing buyers, if this clause does not exist, they may approach the builder and insist on including it in the agreement. Option two is to approach the Consumer Court.

RBI must take immediate steps to control runaway inflation

Inflation at 11.05 per cent for the week ending June 7 on the wholesale price index is a shock in double digits. A higher than two percentage points rise in the inflation rate will push the government further to the wall than it already is on how to handle the raging fire in the economy.

The stock market reacted sharply, falling by over 500 points to end a dismal week of performance. The current inflation is clearly caused by the global spike in oil prices. Indicators point to the fact that fuel prices led much of this rise. If anything, the food index has gone down by 1 per cent and the non-food index is only marginally higher.

We know that the current inflation is essentially imported. But we have to tackle it the best we can at home. There is a need for stringent demand side and monetary measures. It is time for the Reserve Bank to use all possible tools it has at its disposal to douse the fire. As an immediate step, it may be a good idea for the central bank to let the rupee appreciate a bit.

That would ease import prices of crude as well as some other commodities. An appreciation of the rupee could help in containing inflation also by mopping up some excess liquidity in the system, though it is not a solution without attendant risks.

An appreciated rupee can help bring down landed prices of imported items, thus boosting supply at lower prices. But a more expensive rupee will affect exports. Besides, selling dollars to help the rupee rise is a suggestion that the RBI might argue would lead to other negative effects. Nevertheless, we will have to live with the side effects because controlling inflation must be the central bank’s top priority now.

Along with this, other tools should also be used. Interest rates are effectively negative today, given the rate of inflation.

Tightening money supply is now necessary despite the restraints it might cause in the economy’s growth. Inflation at current levels hurts people, creates economic instability and even political disruption, and is therefore a bigger threat than a slowdown in the pace of growth.

Runaway inflation is an unannounced and painful taxation on people. This time around, it may not be the government’s fault. Indeed, most of it is imported and is hurting economies around the world. But our monetary managers must take urgent domestic action to minimise inflation’s nasty aftereffects . Which means that the RBI will soon have to take some hard decisions.

RBI must take immediate steps to control runaway inflation