mum Wage Will Endear Property in Chennai
The next stage of growth for properties in Chennai along with other Indian cities may depend on upon government attempts to change the growth model for the country. In the past, the far greater emphasis has been placed upon a form of export-driven growth with major domestic exports consisting of software and IT enabled services. The export-driven growth model was pioneered in Asia by Japan nearly half a century ago and has been accommodative towards spurring growth and rapid development at several other East Asian nations, including China, South Korea, and Taiwan. To expect that an export-driven model would be as successful in India as it has been in its East Asian neighbors may be unrealistic and fanciful. Many economists already agree that the era of export-driven growth which brought about rapid industrialization and double-digit growth is over and that nation which seeks to create millions of new jobs every year for a growing workforce must now resort to a different model to create wealth and employment.
As an example, China’s government is gradually trying to pivot its growth model enabling greater domestic consumption to drive demand for goods produced in China as opposed to seeking overseas markets to which to sell goods made in China. The export-driven growth model which was successful in past in creating jobs and great wealth has run out of steam as wealthy countries in Europe, The EU, and North America are no longer able to use debt to cheaply purchase goods produced in poorer nations. If builders in Chennai, Mumbai, and other large Indian metros wish to succeed in the future, they may find it prudent to focus on government initiatives which aim to provide one million new homes within the next few years as government subsidies for such projects are likely to benefit real estate developers in Chennai build homes profitably.
An additional measure which can be taken by the government to enable greater economic equality in the country and promote economic growth is an increase the minimum wages across the nation. While a higher minimum wage will create new consumers who are would be able to purchase goods they could not have bought earlier such as increasing demand for houses for sale in Chennai; the RBI would need to increase interest rates to combat the inflationary impact of a higher minimum wage. A minimum wage introduced following the ratification of the GST shall add an additional layer of sophistication to the Indian economy, similar to that enjoyed in more advanced economies. After the GST permeates commerce across all sectors in the country, subsequent efforts to put in place a minimum wage shall not only create greater wealth but also increase dignity of labor, the lack of which is the reason why tens of thousands of Indians leave for foreign shores every year to do the kind of work in foreign countries they would find disagreeable within India.
With a minimum wage in place, luxury flats in Chennai and indeed property across the country would find a new and higher lower bound price. Efforts by the RBI to increase interest rates at the same time would curtail inflation. Greater sophistication in economic management shall also likely lead to the creation of a larger number of higher quality and go on to create newer standards for luxury homes in Chennai as well. A stable exchange rate, accommodative central bank policies, wise fiscal policy and policies which attract FDI will likely propel growth in the future, which shall and ought to be driven by domestic demand as the export-driven strategy of economic growth has run its course.