Solar power tariffs expected to fall to as low as Rs3.50 a unit in 3 years

Fall in solar power tariffs would be a shot in the arm for the government, which has pushed renewable energy to the top of its energy security agenda

Solar power tariffs in India, which have fallen below Rs.5 per unit since November, are expected to fall further as the industry doubles volumes every year and the cost of producing power continues to decline.

At least three industry experts Mint spoke to said that tariffs will fall to as low as Rs.3.5 per unit in three years owing to better use of technology, higher volumes, increased competition and a favourable regulatory environment.

“There is no question about whether they (tariffs) will go down or not. Typically we are seeing a 3-4% increase in efficiency and about 3-4% reduction in costs. So we expect that solar tariffs will continue to go down by 5-8% year-on-year,” said Vikram Kailas, managing director at renewable energy producer Mytrah Energy Ltd.

Solar module prices have already fallen sharply, down by 10% in the first half of 2016 , leading to higher margins and reviving projects which were termed unviable earlier, Mintreported on Monday.

“The cost of production continues to come down. The challenge of course is by how much and whether it becomes unsustainable in specific points in time,” said Vinay Rustagi, managing director, Bridge to India, a consulting firm.

Bridge to India sees tariffs falling by at least 5% annually and calls a sub-Rs.4 per unit tariff a realistic number.

“Other subsectors within power generation do not expect (a) decline in prices. So from grid-parity or competitive aspect, solar is the most attractive source of energy for long-term,” added Rustagi.

A fall in tariffs would be a shot in the arm for the government, which has pushed renewable energy to the top of its energy security agenda and has been looking to provide green power at less than Rs.4.50 a unit. India has targeted 100 gigawatts (GW) of solar and 60GW of wind energy capacity by 2022. It currently has about 8GW of solar capacity and about 27GW of wind power capacity.

Bigger factories and lower cost of manufacturing will ultimately lead to a reduction in tariffs over the next few years, said Pashupathy Gopalan, president, Asia Pacific, SunEdison Inc., which has over 1GW of operational and under-construction solar projects in India.

Indeed, solar tariffs hit a record-low in November last year when SunEdison bid Rs.4.63 per unit in a reverse online auction and fell to Rs.4.34 in Finland-based Fortum’s bid at a January e-auction.

To be sure, many have called the falling tariffs “unviable” and “suicidal”, citing instances of companies unable to find financial closure for their projects.

Power producers argue that they have been able to bid aggressively at government-provided solar parks thanks to ready-to-use infrastructure such as land and transmission facilities. Global firms such as Fortum, SoftBank and SunEdison have also used aggressive bidding as a means to get a foot in the door of this nascent sector.

Between 2010 and 2015, solar capacity addition had doubled annually. It is expected to grow even faster to touch 12GW by the end of this year. India will then become the fourth largest solar market, overtaking the UK, Germany and France.

While lower tariffs will be a positive for consumers and the environment, there are concerns that investors won’t get the returns they want. “This is, end of the day, a commodity industry,” SunEdison’s Gopalan said. Returns in the sector range from 12% to 16% depending on tariffs and other factors.

In India, which holds reverse auctions for tendering solar projects, the role of the buyer and seller is reversed and a business bid is won by quoting prices downwards. “In any other country, bidding is a double-edged sword, so they have a condition that one cannot bid below a certain price or IRR (internal rate of return). But India does not have any such condition. We believe that people will continue to be aggressive,” Mytrah’s Kailas said.

Tariffs will go down only if there will be a decrease in the overall cost of setting up solar projects from Rs.5.5 crore per MW to Rs.3-4 crore and plant load factors increase from the current 15-20%, said Anubhav Gupta, an analyst at Maybank Kim Eng Securities India.

India Weekly Market Updates from 16 July to 22 July 2016

India Market Weekly Economy: Service tax collection by the city zone department in the first quarter has increased by 23 per cent, which has helped it surpass the target by nearly 4 per cent for the period. http://buff.ly/2a4Bta0 Foreign investors have brought in over Rs 9,700 crore into the Indian capital markets in the first two weeks of this month on improving prospects for the economy. http://buff.ly/29Lkvtx Venkaiah Naidu on Sunday said that the tax-rate cap on GST in the Constitution bill sought by the Congress was not feasible but hoped that the GST bill will be passed. http://buff.ly/2a4Cqzn Amid a clamour among bankers for immunity from action by agencies like CBI and CVC, RBI Guv Raghuram Rajan has disapproved of any "blanket sort of relief." http://buff.ly/29VhU4o Labour Minister Bandaru Dattatreya has said the EPFO may invest up to 12 per cent of its investable amount in equities over a period of time. http://buff.ly/29VhJGh IDS: Taxmen to seek info from black money holders. http://buff.ly/29VhMBO Companies will now have to ensure that all statements annexed with the cost audit report are first approved by their board of directors before final submission. http://buff.ly/2a7aL2p Introduction of the much-awaited GST is likely to address issue of cascading and dual taxation impact on Indian media and entertainment industry, a sunrise sector, says report. http://buff.ly/29RTeGv Imports will become easier from the next year as the CBEC is planning to go paperless and move towards a completely integrated Customs system for facilitating documentation and fast-tracking clearances of consignments. http://buff.ly/29QHQQh Banks and financial institutions have sanctioned about Rs 78,830 crore funding for clean energy projects, of which Rs 33,482.83 crore has been released till March end this year, Parliament was informed on Monday. http://buff.ly/2a4nEZl In a bid to shore up cash- strapped public sector banks, the government on Tuesday injected Rs 22,915 crore capital in 13 lenders including SBI and Indian Overseas Bank to revive loan growth that has hit a two-decade low. http://buff.ly/29VpbBn GSMA launches mobile connect in India. At present, around 42 operators in 22 countries around the world are implementing Mobile Connect, making it available to nearly three billion customers. http://buff.ly/2a7QvvX The payments landscape in emerging markets, including India, is expected to transform in the wake of accelerating growth in electronic payments with advent of new and disruptive market players and alternative business models, a PwC report said. http://buff.ly/29SZ3EN The International Monetary Fund on Tuesday slightly trimmed India's growth projections to 7.4 per cent for 2016 and 2017, a drop of 0.1 per cent from its previous forecast, attributing it to a more sluggish investment recovery while declaring Brexit as a "spanner" in the global economic recovery. http://buff.ly/2a7YY2c Boeing Co (BA.N) said on Tuesday it expects Indian airlines to order 1,850 new aircraft worth $265 billion over the next 20 years. http://buff.ly/29NUeuP The National Highways Authority of India (NHAI) on Tuesday said it would issue bids for construction of roads and highways with a total length of 10,000 km by the end of the current fiscal. http://buff.ly/29UHvJG Minister of State for Finance Santosh Kumar Gangwar on Tuesday, quoting the Financial Stability Report of RBI, said bad loans of public sector banks may rise to 10.1 per cent by March 2017. http://buff.ly/29NVaPF Govt against raising FDI cap in newspapers, periodicals. http://buff.ly/29T3FL8 In face of a CAG report drilling holes into subsidy savings made on LPG, the government on Wednesday asserted that over Rs 21,000 crore was indeed saved in two years by directly transferring subsidy to user bank accounts. http://buff.ly/2a0xSuf Tesla motors on Saturday said that India will "definitely" be a market for their next generation low-cost sustainable model-3, with the Union road and transport minister Nitin Gadkari asking the iconic company to outline their proposals for entry into the Indian market. http://buff.ly/2a75FTu Negative global cues, combined with a logjam in parliament and disappointing quarterly results, subdued the Indian equity markets on Friday. http://buff.ly/29RvHW The additional capital infusion of Rs 22,915 crore into 13 weak banks announced recently by the central government is positive for them but the actual capital needs were much more higher, said global credit rating agency Moody's Investors Service. http://buff.ly/29SV89t Corporates:  Fashion apparel brand Spykar, which is expanding its presence in the women''s wear segment, is aiming to double its sales to Rs 700 crore in the next four years. http://buff.ly/2a79rfS In a bonanza to oil producing states like Assam, the government has ordered state-owned ONGC and Oil India to pay royalty to them on the gross price for crude oil and not the net rate they actually realise. http://buff.ly/29RHrrm Bandhan Bank on Monday further eased the micro lending rate by 60 basis points to bring interest rate down to 19.9% with immediate effect. http://buff.ly/29V5FET Homegrown FMCG major Dabur on Monday said it has acquired South Africa-based Discaria Trading (PTY) Ltd, a firm engaged in manufacturing and trading of cosmetics, for an undisclosed amount. http://buff.ly/29V6y0k Shares of Reliance Industries on Monday rose by nearly 3 per cent after the company reported a bigger-than-expected 18 per cent jump in June quarter profit. http://buff.ly/29VlDPn Infosys co-founder and former CII president Kris Gopalakrishnan has said that almost 70% of startups globally will fail and only 5 to 10% will become large and scale up. http://buff.ly/29VryUy? Storage battery major Exide Industries will be investing Rs 1,400 crore over the next two years, of which Rs 700 crore will be at Haldia in West Bengal to introduce high performance automotive batteries with new-age punch-grid technology. http://buff.ly/2a4PxAe Glenmark Pharmaceuticals has received final approval from the US health regulator USFDA for rosuvastatin calcium tablets, used in lowering cholesterol. http://buff.ly/2afSyPE Adani Group flagship Adani Enterprises on Wednesday said it plans to raise up to Rs 6,000 crore via issuance of securities to sustain rapid growth. http://buff.ly/29NjaXz Piramal Enterprises on Thursday said it is looking to raise up to Rs 1,000 crore through issuance of non-convertible debentures (NCDs) on private placement basis. http://buff.ly/29XSH6X Ford Motor Company is in the process of setting up a Research and Development (R&D) centre here, the first such facility to be located outside of the US, Finance Minister O Panneerselvam told the House. http://buff.ly/29Ybh2T ITC Ltd has planned multiple projects with an outlay of Rs 25,000 crore over the next five years, Chairman and Chief Executive Officer Y.C. Deveshwar told shareholders on Friday. http://buff.ly/29YtDAL Global events: The United States and India have agreed to take several key steps in petroleum and energy sector, aimed towards achieving the ambitious goal of energy independence. http://buff.ly/29ThLjN State-owned Saudi Aramco says it has signed a deal for a new gas project that will be worth more than 50 billion Saudi riyals (USD 13.3 billion) when complete in 2019 aimed at meeting the kingdom’s growing domestic demand for energy. http://buff.ly/2a129ZU Politics: American Ports have evinced a keen interest in a comprehensive port-led development, especially the ambitious Sagarmala programme, Indian officials said as the Union Road Transport and Highways Minister Nitin Gadkari concluded his week-long trip in Los Angeles. http://buff.ly/2a5zVvt

Emerging markets, including India, will drive innovation in payments industry: PwC

The payments landscape in emerging markets, including India, is expected to transform in the wake of accelerating growth in electronic payments with advent of new and disruptive market players and alternative business models, a PwC report said.

"The growth of economic power within the emerging markets and their potential to leapfrog developments in mature markets will aid the creation of a state-of-the-art payments ecosystem," multinational accounting firm PricewaterhouseCoopers said in its report.

'Emerging Markets - Driving the Payments Transformation' examines the dynamic nature of emerging markets, especially payments, which creates challenges that have never confronted the developed world, but also opens up opportunities for innovation and growth.

"Given the underlying infrastructural issues in emerging markets, there needs to be a focus on developing the infrastructure both for issuing and acceptance of payments products and instruments. Alternate payment instruments and modes like mobile wallets, virtual cards and accounts, social media and contactless payments are gaining traction for specific use cases, especially the unbanked customer base, driven by technology, customer needs and declining margin," said Vivek Belgavi, FinTech Leader, PwC India.

In India, the new payments banks (who cannot lend but can borrow up to a limit) are expected to start operations in 2016. Since their focus will be solely on transactions, they will look at providing seamless transaction options for payments of utility bills, mobile bills, and school or college fees, either electronically or through the banking touch points they create.

At the core of this change will be technology, which in addition to maintaining current standards of reliability, is expected to also reduce transaction times, improve security, increase acceptance channels (especially physical), and - in the case of merchants - lower transaction costs, it said.

"Given the large unbanked population and the growing regulatory agenda to engage these people into the financial system, emerging markets are in a unique position to drive growth in the payments industry," said Hugh Harley, financial services leader for emerging markets, PwC.

The report said that the payments ecosystem will also be redefined by regulatory interventions, to balance the disruption of alternative payment service providers with the reliability of traditional players.

Noting 85 per cent of the global population resides in emerging markets, it said that customer expectations are driving the change in payments industry in these markets.

"Nearly 90 per cent of people under 30, which account for 75 per cent of the online transactions, reside within the emerging markets. This is favouring the growth of online transactions, which is in turn curtailing the black economy and stimulating economic growth."

It said though literacy rates and urbanisation are on the rise, access to basic financial services poses a major challenge in these emerging markets, and in response, there has been a rapid expansion of new economically viable technologies and innovations like e-banking and mobile money.

With regulators in emerging markets realising the huge costs, risks and inefficiencies associated with cash transactions and recognising importance of electronic payment methods in promoting access to formal credit and savings instruments, drastic measures like introducing differentiated banking licenses, tax benefits on electronic payments, awareness campaigns are being taken to build a sustainable electronic payments ecosystem, it said. Many governments have opened their markets to non-bank players aimed at furthering financial inclusion, it added.

With the proliferation of smartphones and tablets, which are serving as a convenient, cash free and card-free financial transaction medium, emerging markets are driving the growth in e-commerce spending, and there is a rapid development of new payment concepts based on mobile infrastructure initiated by the online retailers.

"Banking on high customer adoption of these models, this has the potential to displace traditional cash with other electronic modes of payments," it said.   --IANS

Almost 70% of start-ups globally will fail: Infosys co-founder Kris Gopalakrishnan

Infosys Co-Founder and former CII President Kris Gopalakrishnan on Monday, said almost seventy per cent of start-ups globally will fail and only five to ten per cent will become large and scale up.

"Almost seventy per cent of start-ups will fail. About 20% will survive but will not grow. They will remain small enterprises, and may be only five to ten per cent will become large and scale up - that is the spastics globally," he told reporters at the announcement of the 12th Innovation Summit 2016 here, of which he is the chairman.

This should not, however, be treated as a concern or a challenge, but it is a part of natural process of evolution, he added.

"The key is what are the learnings, and how do we continue to nurture this," he said.
Asked who has made a mark globally as of now, Gopalakrishnan said Flipkart and Snapdeal have made a mark and may be in three to five years from now, people would start talking about these companies in a big way.

"I would say Flipkart and Snapdeal - these companies have made a mark. Paytm and Freshdesk - there are so many of them actually. They have made a mark and that process will continue. May be three years from now and five years from now, you would start talking about these companies in a big way," he said.

Asked if it is a worrying factor that most of the e-retailers are not making profits, Gopalakrishnan said there will be some consolidation and hoped some Indian-started entity will remain because global domination is possible in the internet field as it is not bound by any borders.

"When you look at transport, hospitality, logistics - these are the companies, which will be the names in future in years to come," he added.

Replying to a query, Gopalakrishnan said both private equity and venture capital funding has slowed down for different reason because the exits are not happening.

"Both private equity and venture funding have slowed down for a different reason because exits are not there. When this happens, money is not recycled," he said.

"Most of the venture funds are waiting for some exits to happen and the exits are happening through mergers and acquisitions - consolidation where you may no be able to get the full value of investment," he said.

Asked if he sees a Google-type company emerging out of India, Gopalakrishnan said, "Yes it is possible, but we also need to remember that, across the world there is one Google."

Renault's medium term strategy for India

Targeted at multiple segments of the market, Renault’s plan includes launching at least five new models between 2017 and 2019

Encouraged by the success of the small car Kwid, Renault India Pvt. Ltd plans to launch a raft of new models over the next three years as it seeks to further strengthen its hold on one of the fastest growing auto markets of the world.

Targeted at multiple segments of the market, the plan includes launching at least five new models between 2017 and 2019, two people familiar with the company’s plan said, requesting anonymity.

In an emailed response, Sumit Sawhney, managing director and chief executive of Renault India, said, “While I cannot divulge too many details on the future product strategy, I can confirm that we have an aggressive product plan for India, clearly demonstrating that India is one of the key markets in Renault’s global expansion plans.”

Sawhney pointed out that from a product perspective for the second half of 2016, one can expect a number of enhancements to the existing range.

It has already announced a 1-litre variant and automated manual transmission (AMT) option on the Kwid that will be launched this year.

Considering the popularity of sport utility vehicles (SUVs) in India, most of Renault’s future models would be targeted at SUV buyers, said the first of the two people cited above. Among others, Renault aims to be a serious rival to SUV market leader Mahindra and Mahindra Ltd. “In another two years or so, they will have at least one model that will be pitted against one in the Mahindra line-up,” he said.

Helped by new model launches, particularly in the utility vehicles segment, passenger vehicles sales in India have expanded for 12 consecutive months. Sales rose 3% to 223,000 units in June, compared with a year ago. Overall sales growth was outpaced by the growth in the utility vehicle segment, which expanded 35.24% to 55,825 units in the same month, according to industry body Society of Indian Automobile Manufacturer, or Siam (Siam). The SUV share in the overall passenger vehicle market rose 25% in the June quarter from 19% a year ago.

The first of the new model pipeline is likely to be a premium sedan based on the Megane hatchback. The model, slated for an India launch in 2017, will replace the Fluence sedan and is positioned between the Honda City and Civic. This is set to be followed by the new generation Koleos, a premium SUV that is expected to go on sale in India sometime in 2017-end or 2018-beginning, said the second of the two people cited above. Based on the Renault Nissan’s common module family (CMF) platform, Renault launched the new-generation Koleos in March 2016 at the Beijing Auto show. The CMF platform is a vehicle architecture developed by Renault SA and Nissan Motor Co. that allows developing multiple body types on a common structure. Considering the poor response of the current generation Koleos, Renault may re-engineer the car heavily as and when it decides to launch it here, he said. It is pitted against the Hyundai Santa Fe among other models, he added.

The Koleos is likely to be followed by the Kaptur, a seven-seater crossover that will compete with the Hyundai Creta, among other models, and is expected to be launched in India by the end of 2017, said the first of the two people. Renault also plans to bring out another model on the CMF platform. Resembling a van and expected in 2018, the model will compete with the Maruti Omni and Eeco. Also in the works is a rival to the Suzuki Vitara Brezza, a compact SUV, which is expected to be launched in India in the beginning of 2019, he said.

Kwid, an SUV-styled hatchback launched in September 2015, has helped the local arm of the French carmaker outsell rival Honda Cars India Ltd and become the fourth largest car maker in the June quarter, according to Siam.

In the three months that ended in June, Renault sold 25,374 units against Honda Cars India Ltd’s 25,064 units in the same period a year ago.

In a market where buyers have a strong preference for models from Maruti Suzuki India Ltd and Hyundai Motor India Ltd, Renault has managed to corner the much-sought-after 5% share for the first time since its entry in the passenger car segment. Renault’s market share during the June quarter was 5.33% against 0.17% over a year ago. Honda’s share slipped to 5.27% from 8.56% a year ago in the same period as sales of its flagship City and other car models, including Amaze and Brio, plummeted amid a change in buyer preference for petrol models and heightening competition. Since its launch in September 2015, Renault has sold over 65,000 units of the Kwid and received over 125,000 bookings, said Sawhney. A fast-paced expansion of sales outlets has also helped. Albeit still smaller compared with bigger rivals, Renault’s sales and service network went up to 250 at the end of 2015 from 157 a year ago. It plans to add another 20 by the end of the current calendar year.

“The success in the small car has given them (Renault) immense confidence. Considering that it constitutes a close to 86% of the market, no global car maker can succeed in India without cracking it,” said Abdul Majeed, auto practice leader at Price Waterhouse and Co., a consulting firm. He however, cautioned that Renault will need to constantly beef up its distribution and retain a sharp focus on the after-sales service to continue the momentum.

NCR Realty sector woes: How buying a flat became a nightmare in NCR

India’s biggest property market by volume has numerous projects stuck for years. What has led to this dismal situation?

On a blazing hot Saturday afternoon in June, a group of people assembled in a small room in an under-construction building at Today Ridge Residency, Sector-135, Noida, a part of the National Capital Region (NCR) centred around Delhi.

The motley group, with people ranging from senior citizens to software engineers, had one thing in common. Each one of them has parted with a huge chunk of their savings to buy a home, which had not been delivered to them.

Most of them booked an apartment in the project owned by Today Homes and Infrastructure Pvt. Ltd in 2010.

The buyers were assured of delivery in about two-and-a-half years; it has been six years now and most are yet to get possession.

At some other projects by builders such as Unitech Ltd, Amrapali Group, The 3C Company, Gardenia Group and Jaypee Group, the wait for possession has lasted more than eight years.

Rajiv Kumar Goel, who works for a private firm, said he commutes every Saturday for five hours to and from Faridabad to join the group.

“I have to take leave every Saturday to come here and my company cuts that amount from my salary,” he said.

Today Homes, The 3C company, Gardenia Group, Amrapali Group and Jaypee Group did not respond to a Mintquestionnaire sent a day earlier.

The NCR, India’s biggest property market in terms of volume, has numerous projects such as Today Ridge Residency that have been stuck for years, with just concrete structures and minimal work on the ground.

A combination of lack of funds, rising debt, unsold inventory, a trust deficit among customers and incessant litigation have brought the sector to a standstill, with no takers for the flats under construction.

A Knight Frank India report released on 4 July said that new launches in the NCR have been in a decline since 2010 and have dropped by more than half over the last six years.

Property consultant Liases Foras said NCR has witnessed a rise in unsold inventory by almost 14% to hit a high of 267,000 units by the end of March 2016 and it will take around six years to sell them.

The rot began to set in during the early part of the decade. The residential property market touched a high in early 2010 with firms raising loans to enter real estate in pursuit of what looked like an unstoppable boom.

“In the last 4-5 years we saw everyone from every industry come to real estate. Shoemakers and milk packagers, Godrej, Tata and the who’s who of the world entered the business. But many of them are stuck now,” Omaxe Ltd chief executive Mohit Goel said in an interview.

The sector went from boom to bust in the face of a spate of farm protests and resulting litigation.

Puneet Parashar is a buyer in Amrapali Group’s Heartbeat City project in Sector 107, Noida, which has been stuck in litigation after farmers challenged the land acquisition by New Okhla Industrial Development Authority. The Supreme Court, in an August 2013 order, quashed the acquisition of about 547 acres of land, which included two other projects by the 3C Company and Great Value Projects India Ltd, encompassing a total of about 5,000 flats.

While the apex court passed its order in August 2013, the New Okhla Industrial Development Authority, builders and the lenders didn’t inform the buyers, who kept paying their dues for a whole year without knowing that projects had actually been declared illegal.

Great Value Projects India Ltd and New Okhla Industrial Development Authority didn’t respond to a questionnaire sent to them.

“With the project stuck and the weight of rent already weighing me down, I wasn’t able to shell out EMIs (equated monthly instalments) to my bank. Taking the situation into account, I asked my bank for a restructuring of my loan, but they instead sent me a notice. I had to finally sell my property to pay the loan amount,” said Parashar of the loan taken from Axis Bank.

Axis Bank didn’t respond to a questionnaire sent by Mint.

Low investor interest and lack of cash flow have resulted in ballooning debt at all the major real estate companies, with Jaiprakash Associates Ltd (Jaypee) having a consolidated debt of Rs.58,250 crore as of 31 March. DLF Ltd is saddled with a debt of Rs.22,202 crore and Unitech weighed down byRs.7,165.7 crore.

“The customer cell here clearly says that they don’t have money to finish the project,” said Ashish Srivastava, who booked a flat in Noida’s Jaypee Kassia project in May 2011 and is still waiting for possession.

Jaiprakash Associates did not respond to a Mintquestionnaire.

Many buyers have also accused banks of lack of monitoring while disbursing loans to the builders even when they didn’t have clearances and of looking other way when those funds were diverted.

“Unitech has taken Rs.180-200 crore from buyers. Later, they told us that they spent only Rs.20 crore on the project, which was shocking,” said a buyer who didn’t want to be identified.

The buyers filed a first information report (FIR) against Unitech for fraud and also named ICICI Bank Ltd in the FIR for lack of monitoring and colluding with the builder in cheating the buyers.

“As per the agreement for the housing loan between ICICI Bank and the customer, the bank has in no way any control over the delivery of the property by the developer. Consequently, the bank cannot be held responsible for any delays. However, the bank is engaging with the builder to explore options to resolve the current situation,” an ICICI Bank spokesperson told Mint.

Unitech did not respond to a Mint questionnaire sent on 5 July.

Reserve Bank of India guidelines stipulate that disbursal of housing loans sanctioned to individuals should be closely linked to the stages of construction of the housing project and upfront disbursal should not be made in cases of incomplete, under-construction or new housing projects.

The delay in executing the project has also resulted in large volume of litigation with buyers organizing themselves into associations and approaching the National Consumer Disputes Redressal Commission for better compensation or refund of their money.

“In the last three years, the filings at national commissions have risen three times. People are becoming aware of their rights, they are also exerting their rights,” said Sudhir Mahajan, a property lawyer.

The buyers have also staged protests against builders.

“We asked Jaypee to meet us on 11 June but they refused to address the group and insisted on meeting individuals only. When 1,000 buyers gathered together on the set day to demand action, they blocked us from the office and even welded the gates. We blocked the expressway for 40 minutes and finally they agreed to talk,” said Nrip Kumar Mehta, one of the organizers of the protest.

The gates of the Jaypee office in Sector 128 today resemble a military outpost, protected by barriers, large gates, barbed wires and a posse of guards to prevent protests on the premises.

“What these builders have been doing is a matter of fraud. They have been raising money on one project and then siphoning it off to another project. Everything is getting stacked up and now it has resulted in this domino effect,” said Vivek Chib, a lawyer who has filed several cases against Unitech on behalf of buyers.

While questions about the conduct of banks remain, they have already started the process of recovering their dues from the defaulters. ICICI Bank and Axis Bank have taken over several properties from Jaypee to recover their dues.

The Gardenia project in Sector 46, which is being operated by Gardenia Aims Developers Pvt. Ltd, is an example of the domino effect on the real estate industry.

According to documents seen by Mint, the developer took a loan of about Rs.134 crore from a consortium of three banks— Bank of India, Oriental Bank of Commerce and Corporation Bank—but couldn’t pay back as the project got stuck due to regulatory issues.

The developer still owes about Rs.86 crore to the bank consortium and about Rs.250 crore to the New Okhla Industrial Development Authority in land dues.

Gardenia did not respond to a Mint questionnaire.

With loan repayment elusive, Oriental Bank of Commerce, on behalf of the consortium, issued a public notice against the Gardenia project, declaring its intent to take over the asset to recover dues.

The consortium of banks didn’t respond to a Mintquestionnaire.

This has led to a plunge in the project’s value with the existing buyers panicking and attempting to cancel their bookings.

“Clearly the project appraisal mechanism could have been better,” said Rajeev Bairathi, head of capital markets, Knight Frank India, adding that around the time banks started to lend, the projects seemed to be doing well.

Some buyers, by staging protests and through constant persuasion, have been able to get the developers to give them possession of their flats, but they have only encountered new problems.

“Jaypee has used very low quality material and has done cost cutting wherever possible. We paid more than a lakh for the club, but nothing is ready and still they are charging us for common area utilization. They have not given us occupancy certificate as well,” said Sanjeev Kumar Aggarwal, a software engineer who finally got possession of his flat in Jaypee Klassic, Noida, after a three-year delay.

There are no signs of recovery in the near term. According to the 4 July report by Knight Frank India, residential unit prices in NCR fell 4% in the first half of 2016 and are expected to keep falling for the rest of the year.

This will further increase the financial strain on developers struggling with a cash crunch.

Some buyers, however, want to take matters into their own hands and finish projects by pooling money.

“Banks should let us build ourselves because Unitech doesn’t have either the willingness or the capability to complete the project. We are ready to help ourselves if administration allows us to do that,” said Vibha Bhatra, a buyer of a flat in Unitech E-space, Gurgaon, which has been under construction since 2011.

The future of our economy

A smaller labour force is required to meet extant demand, leading to a vicious cycle of lower demand and employment

The economy has not behaved the way economic textbooks prescribe ever since the global financial crisis broke over a decade ago. Economic policies are proving to be singularly ineffective in reviving the global economy. Governments have been running levels of fiscal deficits and public debt that most economists baulk at. Central banks have been experimenting with unorthodox policies such as quantitative easing, zero interest rate and now negative interest rate policy. But all the king’s men and horses have been unable to put Humpty Dumpty back together again.

Is this a temporary phenomenon or an indicator of structural transformation underway? If so, transforming into what exactly? What does our economic future look like? Where can we turn to get a glimpse of this?

Science fiction is perhaps our only source. Past experience indicates that human ingenuity is only limited by imagination. After all, several fanciful science fiction constructs have eventually come about, such as submarines, tanks, spaceships, robots and recently, 3D printers. Many more may do so in the future. We should never stop imagining this future.

Star Trek has long been acknowledged as one of the more thoughtful works of science fiction. Although originally set in the 21st century where the crew profile of USS Enterprisemirrored that of the ill-fated Columbia space shuttle, the subsequent Next Generation series is set in the 24th. In a new book, Trekonomics, Manu Saadia has gleaned the kind of economy expected far into the future.

There is no such thing as money, the universal store of value and exchange, as this is a society of plenty rather than of scarcity. There is, consequently, no need for trade and markets. All these have been around since the dawn of human civilization. This revolutionary development is made possible by the replicator, some kind of hardware that uses advanced computing power to materialize anything we can imagine in any quantity by rearranging atoms and molecules. The implication is that current economic theory, based on scarce resources, no longer holds. There would be no need to measure the rate of economic growth as a measure of well-being. The economic textbooks and Adam Smiths of the future remain part of the future for now.

Sounds utopian? But consider this: The global economy has for some time now been afflicted by demand rather than supply constraints. Consumer price inflation has been tamed, and central banks are currently finding it difficult to raise it to targeted levels. It was not long ago that they were struggling with just the obverse problem, of lowering inflation. How has this come about?

Part of the reason for subdued demand is technological advancement, leading productivity levels to reach a tipping point. A diminishing percentage of the labour force is required to meet extant demand. This has led to a vicious cycle of lower demand and lower employment. As competition increases, there is enhanced pressure to improve productivity, with information technology, automation, robots and artificial intelligence replacing human labour more and more.

At the current breathtaking pace of technological progress, an avalanche of resources is being made available. Consider energy. It was only a short while ago that oil prices had touched $150 per barrel. With renewables increasingly available, the prognosis for oil prices is not bright. What happens if and when humans tap directly into the sun’s energy, and atoms and molecules, the building blocks of all matter, are used directly in the production process? Surely the replicator cannot be more than a couple of centuries away?

With the replicator comes a new mentalité and new forms of social organization. To begin with, there is no need for humans to work to make a living. There would be no need to steal or to possess things. This does not, however, turn humans into sloths as they nevertheless desire to work as a form of self-actualization and to win the admiration of peers by endeavouring to improve the overall lot of humanity. With everybody attaining the higher echelons of Abraham Maslow’s needs hierarchy, the proportion of those in a position to contribute to advancing knowledge would rise dramatically, accelerating the rate of human progress. Global integration, a trend long underway, is assured—and with extraterrestrial contact, interplanetary cooperation is also eminently likely, on the lines of the united federation of planets in Star Trek. This is made possible by the invention of the warp drive (enabling intergalactic travel by beating the time barrier) and tele-transportation (that takes care of irritating last-mile connectivity).

Where Star Trek stands out from most other science fiction is in its vision of man as ultimately cooperative and altruistic rather than dystopian. This is in keeping with the spirit of the European Enlightenment that underscored the perfectibility of man. It is easy to lose sight of this with talk of Brexit, nationalist resurgences and violence unleashed by small, marginal groups leveraging advanced destructive technologies—all of it seemingly escalating all around us. But while history has a pattern and direction, discernible retrospectively, this direction is never linear. Despite the current doom and gloom, humans are materially better off than when they started, and their future looks even brighter.

All these may seem notions on the fringes of our imaginative abilities. But if the past is any guide, as it should be—and if current economic anomalies are indicative of structural transition to something else—looking so far ahead may be no idle fancy. Neither the author nor the reader will be around to see these ideas come to fruition. But come they will.