Consider the following statements regarding economic survey 2022-23: 1.    Reserve Bank of India publishes two Housing Price Indices with FY18 as the base year. 2.    All of the eight major metros of the country recorded increases in the index on an annual basis. 3.    It is calculated for 50 cities across India using the population of the cities as weights. Which of the statements given above is/are correct?

Solution

Housing Prices: Recovering Housing Sector After the Pandemic Housing prices provide helpful information on the state of the economy via booms and busts in asset markets, which give rise to economic imbalances. Monitoring housing prices is essential for achieving the objectives of price stability, financial stability, and growth. Movements in these prices affect consumption spending through its effects on household wealth and consumer confidence. The National Housing Bank (NHB) publishes two Housing Price Indices (HPI), namely ‘HPI assessment price’ and ‘HPI market price quarterly’, with FY18 as the base year. Hence, statement 1 is not correct. HPI assessment price is based on the valuation prices of residential units collected from primary lending institutions. In contrast, the HPI market price is based on the market prices for unsold inventories collected from developers.  A composite index is calculated for 50 cities across India using the population of the cities as weights. Out of the 50 cities, 43 saw an increase in the index, whereas 7 cities showed a decline annually. All of the eight major metros of the country, viz., Ahmedabad, Bengaluru, Chennai, Delhi, Hyderabad, Kolkata, Mumbai and Pune, recorded increases in the index on an annual basis. Hence, statement 2 is correct.