BANGALORE: With demand being uncertain and average room rates under pressure, Bangalore is expected to add the highest numbers of keys in the luxury segment hotels. This would mean an increase of more than 100% in the total room inventory.
“In terms of market performance, Bangalore initially numbered among the best-performing hotels markets in India, thereby attracting a number of developers to enter the hospitality,” said Jain.
The global recession and addition of new supply led to a steep decline in the market-wide RevPAR levels in 2009-10. However, with the stabilization of domestic and global economies, the market bounced back in 2010-11. “We expect Bengaluru to maintain its position as one of the country’s most dynamic and promising hospitality markets in the future, as well,” he added.
Comment: This is proof that there is an infrastructure bubble in India especially in cities like Bangalore and Mumbai. Over production without any real connection to consumer demand in the market. Cheap credit from banks and raised through infra bonds promoted by the Indian govt have led to a distortion of not only the price system but also production.
Indian economy will not collapse overnight but will decline slowly and painfully to a state of quasi-depression which will include high inflation(double digits well beyond 10%). The malinvestements will have to be wiped out. The greatest debt will come from businesses and the govt which would mean tightening the spending a la austerity.
Mumbai: The fiscal deficit target of 4.6% of the gross domestic product (GDP) in 2011-12 could be missed and this will have serious implications on inflation, reports PTI quoting the Reserve Bank of India (RBI).
“In 2011-12, developments so far indicate that the fiscal deficit target of 4.6% of GDP could be breached which will have implications for domestic inflation.
“The moderation in private demand resulting from anti-inflationary monetary policy stance of the RBI will be partly offset by the expansion in public sector demand in terms of the size of the fiscal deficit,” RBI deputy governor HR Khan said.
“Shrinking value of money because of persistent high inflation explains the importance of anti-inflationary monetary policy,” the RBI deputy governor said.
Mr Khan said inflation within the threshold level would not mean erosion in purchasing power since higher growth would also raise the income levels, resulting in increased net purchasing power.
Comment : The govt is clueless as usual or are they? The RBI and govt are well aware, that a dramatic increase in the money supply leads to expansion of cheap credit, which in turn leads to high prices and NOT higher wages or greater purchasing power.
If a loaf of bread costs 30 bucks and it becomes 50 bucks, without my income increasing by 20 bucks, there is a decline in purchasing power. Even if my income increases my 20 bucks to compensate for the increase in the price of bread it has not led to true prosperity but only a devaluation of the currency.
This is classic Keynesianism at work; print more money to increase prosperity. There could not be a worse approach to economic prosperity to alleviate poverty in India.