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Saturday, November 28, 2009

Dubai brings down world

Dubai World — the conglomerate that spearheaded the emirate’s breakneck growth — announced a proposal to delay paying back loans worth $59 billion (Rs 276,000 crore), investors read it as a sign of yet another implosion after Iceland and Ireland.

This is almost three-fourths of the country’s total $80 billion (Rs 374,000 crore) debt.

While India’s stock markets remained relatively less affected, the medium-term impact — if Dubai World’s proposal is rejected — would be a crash of the country’s real estate, leading to job losses for Indians there.

A million Indians — a third of Dubai’s population — work there. Most are employed in the speculator-led boom in real estate and construction that according to Realty-Network Association began in 2001, following a rise in public spending on infrastructure and housing.

Of the $52 billion (Rs 243,000 crore) of inward remittances Indians working abroad send their families in India, 10-12 per cent is estimated to originate in Dubai, according to research firm CLSA.

Most of these go to Kerala, Maharashtra, Gujarat and Punjab, according to a senior official in a large public sector bank.

To read more, please, visit Hindustan Times

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1 comment:

  1. Not Surprised. They should have bankrupted sooner. Their real estate was so speculative that their by-laws even allowed a property to be traded multiple times before its construction is complete. Folks too got greedy and you see the results.
    Dubai until late 70s used Indian Rupees as their main currency. All growth came too soon and too much in a speculative way. Now they will look out for a hand out from Abu Dhabi which is much richer in natural resources.