The Dissection of an Economy

It is no secret that everyone loves to invest in land. Over the centuries, kingdoms have fought great battles to amass land. While today no one is claiming land by sticking a flag into the ground! The demand for prime real estate still exists. The years from 2004 to 2014 mark the Golden Era of Real Estate in India. Annual growth rates peaked at 20% while rental yield maxed out at 8% in 2008. This period of unprecedented growth in the real estate sector was a part of the dream run that the entire country witnessed from the early 2000s until the financial crisis of 2008. Multiple studies show that the correlation between real estate and the stock market as a whole is extremely weak. Hence real estate functions as an independent asset class and to understand the key economic factors which drive this asset, we will first dissect the Golden Era. The Golden Era The Golden Era of the real estate market can be divided into two distinct phases - one, from 2004-2008 and two, 2008-2...

With the liberalisation of the Telecom sector in 1994, private companies were invited to set up shop in India. In exchange, the government wanted a fixed licence fee. This was not favourable for companies as back then, the extent of mobile phone usage was not as widespread as it is today. With fewer consumers, generating revenue was difficult. In light of this, the government in 1999, offered a revenue-sharing model wherein after certain applicable deductions on revenue, companies were to pay a percentage of their AGR as an annual licence fee and spectrum usage charges. Trouble began when the distinction among which revenue heads comprised of the AGR was challenged. The companies claimed that AGR should comprise off revenue earned only from core operating activities and not from other heads like Sale of Asset, Capital Gains, Interest Income, etc. The DoT believed all revenue from telecom and non-telecom services should be considered. In October 2019, the Supreme Court ov...