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Whether black money produced by the Indian economy for 78+ years and huge remittances sent by Indian migrants are responsible for the price escalation of real estate to 8000 times while consumer articles increased 100 times and wages increased 200 times? AI Overview: Yes, black money generated within the Indian economy over the past 78+ years and massive remittances from Indian migrants are primary factors behind the dramatic, disproportionate escalation of real estate prices compared to consumer goods and wages. Real estate has traditionally acted as a primary parking space for unaccounted wealth, artificially inflating property values. Here is a breakdown of the factors causing this disparity: 1. The Role of Black Money (Parallel Economy) Safe Haven Asset: Real estate has historically been the preferred sector for parking "black money" in India because property transactions offer opportunities to manage high "cash-to-white" ratios, allowing buyers/sellers to evade taxes. Artificially High Demand: Because this cash is not documented, it creates an insatiable demand for land and luxury housing, inflating prices far above their actual value. Speculation: Large amounts of black money are used for speculation in urban land, causing massive price surges, especially in metropolitan areas. Impact of Remittances (NRI Money) Investment Flows: With India being the world's largest recipient of remittances—record $135.46 billion in FY25—a significant portion of this money is invested in Indian real estate, particularly in luxury and mid-segment properties. High Purchasing Power: NRIs with high earnings have higher purchasing power compared to local wage earners, allowing them to purchase properties at premium prices, which pushes up the local market rate. 3. Disproportionate Rise vs. Wages and Goods Real Estate Surge: Urban real estate has seen exponential growth. For example, a house in a major city that might have cost Rs. 10,000 in the 1960s can now cost over Rs. 1 crore, a 1000x to 8000x increase in specific urban hotspots. Wages and Commodities: While basic commodities and salaries have increased significantly, they have not kept pace with the 8000x rise seen in prime real estate, leading to a severe decline in housing affordability for the middle class. 4. Other Contributing Factors Regulatory Bottlenecks: Low circle rates and lack of transparency in the past created fertile ground for black money dealings. Urbanization and Shortage: High urbanization rates and inadequate supply of affordable housing in major cities compound the price rise. While digital reforms and the Real Estate (Regulation and Development) Act (RERA) are helping formalize the sector, the influence of black money, particularly in resale markets and smaller cities, remains significant, ensuring that real estate continues to be more expensive than general inflation rate
Another AI Overview: The escalation of Indian real estate prices—often cited as far outstripping the Consumer Price Index (CPI)—is heavily attributed by experts to the influx of black money and NRI remittances, which distort market values and drive speculative bubbles. Role of Black Money in Price Escalation Black money acts as a "sink" and "safe storehouse" for unaccounted wealth in India, leading to inflated property valuations. Distortionary Effects: An estimated 10% to 15% of real estate transactions are conducted using black money, with some reports suggesting up to 30% of the sector's funding comes from illicit sources. Tax Evasion and Speculation: Buyers often use cash to bridge the gap between "circle rates" (government-set values) and actual market prices to evade taxes, which fuels further price hikes. Impact on Affordability: This concentration of illicit funds in high-income segments denies a vast majority of the population access to affordable housing. Impact of NRI Remittances India remains the world's largest recipient of remittances, receiving a record $135.46 billion in FY25. Demand Driver: Non-Resident Indians (NRIs) account for 15–20% of housing demand, primarily in premium and luxury segments. Currency Advantage: A weakening Rupee makes Indian real estate significantly cheaper for NRIs earning in stronger currencies (USD, GBP, AED), increasing their purchasing power and further driving up prices in major metros like Mumbai and Bengaluru. Investment Shift: NRIs increasingly view Indian property as a stable, high-ROI long-term asset, shifting capital from bank deposits to residential and commercial real estate. Historical Price Context (1947–2020s) The scale of price increases described is reflected in the historical shift of housing costs since independence: 1947–1960s: Basic urban homes cost between ₹5,000 and ₹15,000. 1990s: Prices for the same segment rose to ₹2 lakh – ₹10 lakh. 2020s: Affordable housing in metros now ranges from ₹50 lakh to ₹1 crore, while luxury properties can exceed ₹100 crore. CPI vs. Real Estate: While CPI has grown significantly, it does not fully capture the asset price inflation seen in real estate, which is propped up by hoarding and unaccounted cash. Would you like to see a comparison of rental yields versus capital appreciation across different Indian cities to see where this money is most active?
A huge percentage of living retirees/In-service of financial sector might have raised housing loans at concessional rate of interest from their employees are benefitted much. That may be the reason why their TU mentors collaborated with corrupt UPA regimes without getting pension upgradation as their members are already in the top 20% decile of income/ assets. Even an entry grade Assistant retiring as life long grade without promotions like officers are grateful to their TU mentors for the on set of black economy are anti--Modi and promote Indi-alliance. One hopes Modi may reverse the trend so that everyone gets decent shelter. Already only 20% households pay rent that too in cities and not in villages and others live in their own indecent ones or in slums. So no one cares about their own betrayals of their own seniors in the past as well as in present and not upset by one senior counsel raised the " MANIPUR" to make the present two member bench at the time of finishing the case quickly irrespective of legalities involved to hand over the responsibility to a three member bench shortly or their 85% strong TUs having crores not interested to spend anything all these decades to end the case.
3 comments:
Whether black money produced by the Indian economy for 78+ years and huge remittances sent by Indian migrants are responsible for the price escalation of real estate to 8000 times while consumer articles increased 100 times and wages increased 200 times? AI Overview:
Yes, black money generated within the Indian economy over the past 78+ years and massive remittances from Indian migrants are primary factors behind the dramatic, disproportionate escalation of real estate prices compared to consumer goods and wages. Real estate has traditionally acted as a primary parking space for unaccounted wealth, artificially inflating property values.
Here is a breakdown of the factors causing this disparity:
1. The Role of Black Money (Parallel Economy)
Safe Haven Asset: Real estate has historically been the preferred sector for parking "black money" in India because property transactions offer opportunities to manage high "cash-to-white" ratios, allowing buyers/sellers to evade taxes.
Artificially High Demand: Because this cash is not documented, it creates an insatiable demand for land and luxury housing, inflating prices far above their actual value.
Speculation: Large amounts of black money are used for speculation in urban land, causing massive price surges, especially in metropolitan areas. Impact of Remittances (NRI Money)
Investment Flows: With India being the world's largest recipient of remittances—record $135.46 billion in FY25—a significant portion of this money is invested in Indian real estate, particularly in luxury and mid-segment properties.
High Purchasing Power: NRIs with high earnings have higher purchasing power compared to local wage earners, allowing them to purchase properties at premium prices, which pushes up the local market rate.
3. Disproportionate Rise vs. Wages and Goods
Real Estate Surge: Urban real estate has seen exponential growth. For example, a house in a major city that might have cost Rs. 10,000 in the 1960s can now cost over Rs. 1 crore, a 1000x to 8000x increase in specific urban hotspots.
Wages and Commodities: While basic commodities and salaries have increased significantly, they have not kept pace with the 8000x rise seen in prime real estate, leading to a severe decline in housing affordability for the middle class.
4. Other Contributing Factors
Regulatory Bottlenecks: Low circle rates and lack of transparency in the past created fertile ground for black money dealings.
Urbanization and Shortage: High urbanization rates and inadequate supply of affordable housing in major cities compound the price rise.
While digital reforms and the Real Estate (Regulation and Development) Act (RERA) are helping formalize the sector, the influence of black money, particularly in resale markets and smaller cities, remains significant, ensuring that real estate continues to be more expensive than general inflation rate
Another AI Overview: The escalation of Indian real estate prices—often cited as far outstripping the Consumer Price Index (CPI)—is heavily attributed by experts to the influx of black money and NRI remittances, which distort market values and drive speculative bubbles.
Role of Black Money in Price Escalation
Black money acts as a "sink" and "safe storehouse" for unaccounted wealth in India, leading to inflated property valuations.
Distortionary Effects: An estimated 10% to 15% of real estate transactions are conducted using black money, with some reports suggesting up to 30% of the sector's funding comes from illicit sources.
Tax Evasion and Speculation: Buyers often use cash to bridge the gap between "circle rates" (government-set values) and actual market prices to evade taxes, which fuels further price hikes.
Impact on Affordability: This concentration of illicit funds in high-income segments denies a vast majority of the population access to affordable housing. Impact of NRI Remittances
India remains the world's largest recipient of remittances, receiving a record $135.46 billion in FY25.
Demand Driver: Non-Resident Indians (NRIs) account for 15–20% of housing demand, primarily in premium and luxury segments.
Currency Advantage: A weakening Rupee makes Indian real estate significantly cheaper for NRIs earning in stronger currencies (USD, GBP, AED), increasing their purchasing power and further driving up prices in major metros like Mumbai and Bengaluru.
Investment Shift: NRIs increasingly view Indian property as a stable, high-ROI long-term asset, shifting capital from bank deposits to residential and commercial real estate.
Historical Price Context (1947–2020s)
The scale of price increases described is reflected in the historical shift of housing costs since independence:
1947–1960s: Basic urban homes cost between ₹5,000 and ₹15,000.
1990s: Prices for the same segment rose to ₹2 lakh – ₹10 lakh.
2020s: Affordable housing in metros now ranges from ₹50 lakh to ₹1 crore, while luxury properties can exceed ₹100 crore.
CPI vs. Real Estate: While CPI has grown significantly, it does not fully capture the asset price inflation seen in real estate, which is propped up by hoarding and unaccounted cash.
Would you like to see a comparison of rental yields versus capital appreciation across different Indian cities to see where this money is most active?
A huge percentage of living retirees/In-service of financial sector might have raised housing loans at concessional rate of interest from their employees are benefitted much. That may be the reason why their TU mentors collaborated with corrupt UPA regimes without getting pension upgradation as their members are already in the top 20% decile of income/ assets. Even an entry grade Assistant retiring as life long grade without promotions like officers are grateful to their TU mentors for the on set of black economy are anti--Modi and promote Indi-alliance. One hopes Modi may reverse the trend so that everyone gets decent shelter. Already only 20% households pay rent that too in cities and not in villages and others live in their own indecent ones or in slums. So no one cares about their own betrayals of their own seniors in the past as well as in present and not upset by one senior counsel raised the " MANIPUR" to make the present two member bench at the time of finishing the case quickly irrespective of legalities involved to hand over the responsibility to a three member bench shortly or their 85% strong TUs having crores not interested to spend anything all these decades to end the case.
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