Financial crunch hurting
global financial crisis in Britain is hurting most NRIs but
helping the super rich. The rise in inflation following the
oil price rise of the last few months has increased grocery
bills of most working and middle class Indians, as for everyone
else. Coupled with the rise in fuel costs, resulting in higher
prices for most goods with a high transportation element,
the effect has been devastating.
Shah, an office worker, said that a few months ago his family
spent 20 pounds on groceries every month but now he spends
50 pounds. So, he has had to cut down on certain items. With
the petrol price increase, his monthly budget has become difficult
to balance, he added.
up the income ladder, middle class British Indians have to
think twice about their annual holidays, eating out in restaurants
and on impulsive buying - from garments to home appliances.
Instalments on their big, fancy cars are difficult to manage.
Seeing the large number of big cars on the roads as compared
to just five years ago, it seems that every Indian here is
driving a Mercedes.
mystery was solved when a friend explained that new or old
cars are sold on hire-purchase at zero interest and in some
cases one can start the instalments after one or two years.
So, many youngsters get a big car as soon as they get their
first job to make a statement that they have arrived.
be fooled by these big cars being driven by these young people;
almost all of them are on hire-purchase at zero interest,"
the friend said.
most threatening issue concerns the safety of their savings
in banks. For the last two weeks, anyone with savings in a
bank was very worried about their security. When British Prime
Minister Gordon Brown made an announcement that all savings
up to 35,000 pounds would be secure, they heaved a sigh of
relief. But what happens if one's savings were more?
large amounts of savings have shifted from British banks to
Irish banks in the past few days since the Irish banks guaranteed
all depositors full security for any amount. Some cautious
savers have moved their nest eggs to the Post Office. The
British bankers were not amused and have been pressurising
their government for creating a level playing field with Irish
stocks, investors have lost heavily. A typical case is of
a middle class worker who bought stocks in the company she
worked at just over three pounds a few years ago. At one time,
during the bull run, this stock was valued at over eight pounds
but now it has plummeted to just over one pound. It will be
a long time before the market bounced back to her purchase
price, she sighed.
the rich and super rich Indians, and indeed anyone else, this
is a time to go hunting for stock bargains and also prime
property at rock bottom prices. Mortgages on new homes are
out of question - what with the current global crisis caused
in the first place by home loans. Plenty of homes display
'FOR SALE' signboards due to non-payment of mortgage instalments.
the cash rich can afford to buy stocks during a bear run.
Again, the cash rich can drive rock bottom bargains for top
properties. When a new building with posh flats was announced
in South London, the asking price was a quarter of a million
pounds per flat. Now the same flats have hardly any takers
at 150,000 pounds but those with ready cash can snap them
at even lower prices.
I bought a small property," my friend A. B. Patel confided.
"Since I did not require any mortgage, the price was
very, very reasonable and in four years, when the 2012 Olympics
are held here, the property prices will rocket up."
well-heeled NRI said he was waiting for another three months
when the property prices go down further. "First, the
prices levelled out, now they moving down and will go down
more as we are not out of the crisis as yet."
big fish drive bigger deals at better - read lower - prices.
Prime property in the heart of London is being snapped up
by wealthy Arab investors. As their oil revenues shot up by
four times when the price of an oil barrel touched and crossed
$100, they suddenly had so much cash and their fist reaction
was to snap up property in the West. The financial crisis
had weakened real estate prices and so the big hunters moved
fast and big properties have changed and are changing hands.
Indians here ask the same question: "Is this global crunch
also hurting people in India? Are you better off in India?"
Despite their tough times, their hearts beat for India.
Bhushan can be contacted at firstname.lastname@example.org.)