Letters: Animal spirits

The upturn in the global economy is unmistakable, but it is always good to be cautious (‘The end of fear’, April 4). As the author points out, the troubled sectors in India still look troubled, whether it is textiles or real estate. Yet, it is not only animal spirits, a bullishness that all-is-well, which gets people to start spending and investing all over again, though the importance of confidence cannot be overstated. The economic factor we need to keep in mind is the opportunities that downturns present. In the US, housing prices have collapsed and this, above all, is driving new home sales. If real estate firms in India lift their heads out of the sand they’ll realise the world has changed — Indians cannot, and will not, afford the high-priced houses they were selling; the EMIs took away the income of at least one member of the family and now, with salaries falling and job loses rising, this is no longer affordable. Once real estate firms reduce prices, it is difficult not to see a revival of demand.

Sujoy Gupta, New Delhi