MoneyVedam

The foundation of economics lies on 4 pillars - Land, Labor, Capital and Enterprise. Land being nation, labor being workers exchanging their work for wages, capital being money from investors and Enterprise being a combination of all factors to create a business. In the farming age, wages were directly correlated to the number of hours of work. Industrial age followed similar norms with an additional measure to quantify volume of goods produced. Income gap In the industrial era, the pay ratio between a rank-and-file worker and CEO was 1:42 (1980) while it is now at 1:1800 or more. In the current knowledge era, which is based more on services & infocomm, work is no longer measured by number of hours of work or goods produced per day. But wages are based on a complex combination of metrics such as qualification, experience, network & expertise. The income gap between a worker (Senior Engineer) and his management (VP) has grown widely and now stands at 5-20x. At the "C...

These days many complain that their wages are not commensurate with their work, experience, qualification, expertise etc. Here is a reality check (all data based on first hand information and quoted in Indian rupees). Organized sector ( starting scale per month ..) Software Engineer: Rs.10-15k BPO officer: Rs.7-12k Retail assistant (@supermarket): Rs.8-10k Doctor: Rs.15-25k Teacher: Rs.8-15k Government Employee: Rs.20k Informal sector Plumber: Rs.500-Rs.700 per day Electrician: Rs.700 - Rs.2500 per job Mason: Rs.25-40k per week's job Nurse: Rs.7-10k p.m (full time) / Rs.200-500 per 12-hour shift (home care) Private tutor (tuitions): Rs.30-40k p.m The gap between the two sectors is closing in and in some cases, the skilled worker earns better than a university degree holder. Even if you look at the mid-level (Rs.20 Lacs) or senior level pay scale (Rs.50 Lacs - Rs.1 crore) in the organized sector, they are outdone by the informal sector professionals like real estat...

Every business, be it small or big, domestic or foreign, retail or corporate, bank or hedge fund - are all raving about the emergence of India's rising middle class and are very interested in getting a pie of the new well-to-do Indian market. Lets get down to the numbers to see what India's income pyramid looks like. Based on the data from NSS (National Sample Survey) and NCAER (National Center for Advanced Economic Research), there are about 70-90 million (7-9 crore) households with an income range of Rs.75,000 to several crores. Upto Rs.3 Lacs income       - Mass Market           - 4.8 crore households Rs.3-15 Lacs income           - Emerging Affluent  - 1.6 crore households Rs.15 Lacs - Rs.1.25 crore  - Affluent                   - 2.4 Lac households Rs.1.25 -...

That'd be an apt term to describe the current generation of investors. Every conversation hinges on high returns from an investment - be it the traditional gold or the contemporary derivative products. While it is only natural to look for returns from any investment, the point that investors are increasingly ignoring these days are that high returns are inherently highly risky as well. How do we chase returns? It is alright to take high risk as many people do so (small cap stocks) Capital will be safe since land never loses its value (real estate) It is brilliant to venture new (unknown) domains as returns from all known investment avenues are unattractive (EMU farms) Not many people are aware of this investment, so it pays big to be an early investor (MLM schemes) My agent told me this investment is absolutely risk-safe (Ulip policies) My broker said this is a capital protected safe bet scheme with high potential returns (NSEL commodity futures) Why do we chase return...

The last decade (2003-2013) has been a one-off property boom era fueled by a high growth economy, excessive leveraging and rising income levels. However recent economic indicators are proving that growth is on the decline - Rupee is on a 20-year decline, inflation is not reigning in, manufacturing index (PMI) has been declining, FIIs exiting from stocks & debt markets and employees are being fired (but as a huge relief, agriculture is expected to produce better results this year!). Given this doom & gloom situation, one would expect property prices to decline as well - surprisingly they have not budged in, we are told that Realtors have deep pockets, so prices would not correct. But a quick check on the listed realty companies shows they are sitting on a mountain of debt & their stocks have lost up to 80% of their peak value. So, what is keeping the property prices up? Lets answer by looking at some of the key underlying factors. How is the real estate sector funded? ...

For a decade Indian real estate has boomed as a high profit business for builders, land-owners, land bankers/hoarders, real estate companies, foreign investors, property agents, speculative retail buyers, NRIs and numerous supporting businesses in the informal sector. This has led to a new breed of real estate millionaires and tycoons who profited largely from the property boom with very little capital in a short span of time taking away 100s if not 1000s of crores in profits. What happens on the ground? Property story in India is similar to its onion story. In the case of onions, the farmer gets a fixed price for his produce of Rs.8/Kg (includes Rs.3.6/Kg profit), which the middlemen and traders hoard, inflate and sell @Rs.70 to the average consumer in the vegetable market. Similarly, the original land owners (mostly agriculturalists) sell their land for a pittance to land bankers, who hoard and sell them to developers at anywhere between 10-60x depending on the time of their sale...

Gone are the days when rising realty prices were the topic of any gathering (social/official). Today's topic is all about (un)affordability of homes and how owning a home has become a distant dream for a good majority of Indian urbanites. As for those who could still afford it, it comes with a 20-25 year EMI tag, enslaving them for the rest of their working life to pay up a huge liability. This was not the case even prior to 2007, so what has changed in the recent past to make homes so unaffordable? Let us look at the details. What is affordable? In economic terms, one practical way of measuring affordability is the income-to-property price ratio. A look at annual wage-to-land ratio and annual wage-to-apartment price ratio reveals the underlying problem of unaffordability.                         Wage-to-Land Ratio   Wage-to-Apartment Ratio Prior to 2000...