News in Numbers, Feb 13, 2017: Nothing to kill or to die for

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What is it? Number of people killed in a gun-battle in Kashmir on Sunday.

Why is it important? The violence in the state, rekindled in 2016, continues with four terrorists killed in the fight. With two Indian soldiers dead, J&K security forces’ death toll increased. Avalanches had claimed lives earlier this year, which succeeds a year with the highest death count of 82 among the forces since 2008.

Tell me more: A civilian was also killed and three soldiers injured in the incident. In civilian deaths, three road-workers had been killed by militants last month.

 

Rs 385.6 crore

What is it? The first-ever loss reported by India’s third-largest telecom player, Idea Cellular in the third quarter financial year 2017 (Q3 FY17).

Why is it important? While it was expected Idea would report a loss, the amount was more than the forecast. A quarter of free voice and data promotional offers by Reliance Jio has dented financial performance of all the three (including Airtel and Vodafone) major players, with the smallest, Idea, being hit the hardest.

Tell me more: Idea says the sector can hope to recover only when Jio starts charging for its pan-India mobile services. Idea’s income fell from a profit of Rs 764.2 crore in Q3 FY16 and Rs 90 crore in Q2 FY17. The operator waited for the official confirmation of a merger with Vodafone India before sharing its financial results this quarter.

 

~$200 million

What is it? The amount Oil and Natural Gas Corporation’s (ONGC) overseas arm, ONGC Videsh Ltd (OVL), is said to have overpaid in acquiring Videocon Group’s 10% stake for $2.5 billion, in a large natural gas-field in Africa’s Mozambique in 2013.

Why is it important? If proved, this could mean a big lapse in judgement for the public sector company and India’s largest oil and gas explorer by revenue. What was allegedly on the market for $2.3 billion, was acquired for $2.475 billion by it, and since has faced a write-down in asset value as crude energy prices fell. The payment to Videocon is now being investigated by the oil ministry.

Tell me more: OVL later bought stake in the same area from another energy player, the US Anadarko Corp, for $2.64 billion in 2014 that the latter calculated was a gain of over 62% of the purchase price.

 

310 miles

What is it? The distance travelled by a North Korean intermediate-range ballistic missile before it landed in the Sea of Japan on Sunday.

Why is it important? By testing the missile, North Korea has violated United Nation’s restrictions, even as many observers commented that it was to provoke Donald Trump, the newly elected president of United States, a long time ally of Japan. Japan’s prime minister Shinzo Abe, who is on a visit to US, and was with Trump, called it “absolutely intolerable.”

Tell me more: Just a day before the launch, Trump and Abe had urged North Korea not to test ballistic missiles and to drop its nuclear programme. It comes about two weeks ahead of the largest ever joint military exercise between the U.S. and South Korea.

 

43,512

What is it? The number of housing units sold in the quarter ended December 2016 in top nine cities in India, according to a report by PropTiger.

Why is it important? The sales are down 20% from the previous quarter, one of the expected impacts of demonetisation, which took away 96% of currency in circulation. The monthly average sales during November and December when demonetisation was in full flow, dropped by 40% and 49% respectively, PropTiger said in a report.

Tell me more: Gurgaon, Noida and Ahmedabad saw 30-40% decline in sales, while Mumbai, Hyderabad, Bengaluru and Chennai saw 20% drop in sales.

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The common ground between Greater Noida, Gurgaon and Goa

This piece originally appeared on Livemint.com

 

Two of these districts, Greater Noida and Gurgaon, are concrete, practical outgrowths of the National Capital. The third, Goa, is a laidback corner by the western coast. What binds them here is real estate—more specifically, housing as an investment. According to Census 2011, these three are among the 37 urban areas (districts or other civic units) in India where the percentage of vacant houses exceeds 20%—roughly twice the national average in urban areas.

Most such houses have been purchased not with the objective of living in them, but from the standpoint of investment. Such is the volume of investor interest and the nature of Indian real estate that even supply gluts don’t have the effect of hammering down prices. It poses the larger question: as India urbanizes, how will it provide affordable housing to its teeming migrants?

Greater Noida, Gurgaon and Goa are housing-investment hubs

 

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According to Census 2011,more than 20% of houses were lying vacant in the urban part of 37 districts or other, smaller units of urban geography. In order to level the effect of a small sample size in identifying areas that draw above-normal

interest in real estate as an investment, we excluded areas—21 in all—where the number of vacant houses was less than 10,000. The 16 urban areas left with the highest rates of vacancy were led by Greater Noida, where more than half the houses lay empty. North Goa and South Goa were ranked four and six, respectively. In terms of number of vacant houses, Navi Mumbai Panvel Raigarh was the highest, followed by Gurgaon.

Empty houses don’t translate into lower prices

 

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Conventionally, vacant houses in an area should be an indicator of oversupply, and should lower prices there. But that’s not the case in the Indian real estate market, where people who want to invest in a house—as opposed to those who want to live in it—hold greater sway. Thus, it can lead to a peculiar situation like Greater Noida, which has delivered the highest price appreciation in the two-year period to June 2014 despite half its houses lying empty. Comparing price appreciation in 23 cities tracked by the National Housing (NHB) Bank Residex index with their respective vacancy rates shows there’s little correlation between the two variables.

Vacant houses exacerbate India’s housing shortage

 

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High levels of investor and speculator interest in real estate exacts an economic and social cost. It increases housing prices and elbows those who cannot afford it further to the periphery. In 2012, India’s housing shortage in urban India—comprising the homeless and people living in crumbling and congested houses—was estimated at 18.78 million houses. Around the same time, 11.09 million houses—60% of that housing shortage—lay built but unused in urban India, mostly because investors were playing the waiting game for a return.

 

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