Mercury Rising

                                                                                         

The Central Statistical Organisation announced that the Indian economy is set to grow by 9.2% in the current year, its highest in the last 18 years. Experts openly mentioned that India could raise around $12 billion in the next year after the upgrading of India’s rating by Standard & Poor’s.

In the same week, the finance minister literally directed housing finance companies and banks to not raise rates. However, ICICI Bank, the country’s largest private sector
bank, went right ahead and raised rates on home loans. They are now around 11%, the highest in the past two years. To top it all, inflation hit a five-year high at 6.58%.

Economists call these growth pangs. And as India’s growing economy cuts its teeth into the high growth zone, these pangs are expected to last for a while. In India, the case is more pronounced with a rising demand and restrictive supply and poor infrastructure expected to last for some time and inflation expected to remain a concern.

And rising inflation has the ability to induce regulators to look at managing money supply through tools like repo rate adjustments. This, among other structural factors, causes a rise in interest rates. A parameter that influences the way people invest and spend.

“We expect interest rates to rise by a further 75 basis points this year,” says a Lehman Brothers report on the Indian economy. The estimation on rising rates seems unanimous, albeit the extent varies. The report further adds, “We also expect demand to continue to exceed supply, causing rising inflation, financial imbalances and, possibly, asset price bubbles.”

With the mercury rising, it’s time for investors and spenders to pause for a moment, rework some investing and spending strategies.

About the author:
Acquire information on Real Estate at www.propertyvertical.com

For information on Real Estate Property in Delhi, Gurgaon and surrounding areas Visit
www.propertyvertical.com/delhi


Article Source: http://www.Free-Articles-Zone.com