Cosmetic correction will not save the rupee.

According to the International Monetary Fund home prices in India have fallen by 9.1% which is higher than in struggling economies in Europe, such as Greece - 7%, Italy - 6.5%, Spain - 4.9% and Portugal - 3.3%. Is the IMF correct? The National Housing Board Residex index for the first quarter of 2014 says that property prices went up in 13 out of 26 cities in India while it went down in 13 cities. However, adjusted for inflation it went down in 21 cities. There are many reasons why property prices do not fall in India. Land prices are among the highest in the world, builders build only on money borrowed from banks, which do not enforce repayment for fear of default, and mainly because it is where the rich hide their black money and so are in no hurry to book losses. Mumbai Police have attached 150 properties in Punjab, Haryana, Delhi, Mumbai, Ahmedabad, Hyderabad and Orissa worth Rs 40 billion. These were bought by 22 people who had defaulted on loans taken from the National Spot Exchange Ltd, a commodity exchange, for buying commodities and then diverted the money into real estate. Properties bought with stolen money can be left idle for years and sold at a later date when prices have risen. The list of massive scams in the last decade gives an idea of the massive amounts of black money sloshing around in India and why property prices never fall even when there are far more sellers than buyers. If anyone has any doubts about the level of greed in Indians and the level to which they can sink then they should know about Sudipto Sen who paid terrorists in Bangladesh to launder money, looted from poor people in the Saradha chit fund scam. While we are hounded for photographs, address proofs and identity proofs by every service provider the Comptroller and Auditor General reports that the identity of 45.9 million cell phone users is unknown. How many millions are Pakistanis and Bangladeshi infiltrators no one knows. The IMF report says that home prices in China rose by 9.1% but there is speculation that it is a bubble which is about to burst. Home prices in the UK, which rose 3.5%, may also fall as demand falls. However inflation in China is at 2.3 % while in Britain it actually fell to 1.6% in July from 1.9% in June. In India Consumer Price Index is running at 10%. Huge black money means that the RBI cannot control money supply, trillions of rupees given away in handouts and unproductive income from rents has resulted in high inflation. The reverse of that is that property prices merely reflect the falling value of the rupee due to inflation, in which case the rupee should be at Rs 100 to the dollar. Should property prices fall by 80% it will wipe out black money and save the rupee. 9.1% is nothing.