Indian Economy - News & Discussion 27 May 2012

[Bade]

Pretty much I think. I have known our night patrol gurkha in the small village since I was in high school. He settled down there with a local wife, though he has claimed he has his own in Nepal. He does not look Nepali and speaks good Hindi. I think he is Bihari/UP close to the border areas. Now his nephews also are in different neighborhoods doing the rounds keeping watch over gulf wealth and getting paid decently.

[member_20317]

Just take a look at the chart posted by gakkad - where does that show overspending in luxury items and what not? Luxury items are still a niche item. And what the heck, why should "big city folks" after paying tons in TDS be subjected to such ridiculous diktats? You are asking for a return to the days of license raj!

See this post

we are spending $3.5 Billion + on importing cars? Over 10 years ignoring inflation this is a capital expense of $35 Billion.
This amount by itself would be enough to build a world class metro in our top 10 cities in 10 years or so.

Acharya ji with all due respect that logic and number presumes that we have been importing at current levels in the past. The cause for concern is in the future when the India-EU FTA gets passed in parliament, not in the past.

Past imports were very reasonable.

Also the only real metro in India that is comparable for this logic is the DMRC and that till last FY was surviving only because of its consultancies. Not because of ridership. And even that may become doubtful from this FY as DMRC has taken over the Airport line. Reliance has already indicated its inability to run it. This is the situation despite the several freebies and Govt supports. So making 10 DMRCs in next 10 years is just plain wrong idea. It militates against basic financial conservatism. At the most we can justify 3 more metros in Chennai, Banglore, Mumbai. And they are going to face the exact same situation as the DMRC.

[SaiK]

Pretty much I think. ..Now his nephews also are in different neighborhoods doing the rounds keeping watch over gulf wealth and getting paid decently.

different data bank then he belongs to.. remember your gelf money should make him more hygienic and capable than the down trodden worker kind on the construction and roads.

didn't chindu article highlight some of these NE problems in KL? their living conditions are pathetic etc..?

[Bade]

Dilli as a measure of profitability or utility of a metro is debatable. The right one to compare with is Mumbai. Limited routes for the next 10 bigger cities would pay off surely in due course. Most tier-II cities are congested with limited road surface. Filling them up with cars, two-wheelers or even buses is not a solution. We have had buses for dog years in most such places, with hardly any improvement in quality of the ride for passengers. We are largely still stuck in the 70s era for public transport.

[Supratik]

Folks here are ignoring one major fact - sentiment. Currencies moves along sentiments as much as real hard economic data. The slide in exchange rate started in 2011 when one after the other scams started to come out and entitlement programs got expanded. That shattered confidence in the economy.

[SaiK]

yup.. they are the ground realities that mms and pc will not talk., and the reason i said don't ignore those. everything plays in.

[gakakkad]

--Now that roads are getting talked about.--

Thank god , Congress did not get the idea of using funds of NREGA to dig up National highways of Golden Quad as part of 100 days employment gaurentee.

well they did the reverse. they used the funds meant for golden quad for narega..

[Austin]

Do we have any updated data on the total FDI we have received till date , Wiki has updated till 2010 and it is $191 Billion

http://en.wikipedia.org/wiki/List_of_co ... ceived_FDI

Found Updated list till 2012 and it puts it as $229 Billion

https://www.cia.gov/library/publication ... 8rank.html

[Suraj]

The first post of every economy thread has a bunch of links, including the one reporting official FDI stats:

Commerce Ministry/DIPP FDI Statistics

The answer to your question is $300 billion as of June 2013.

[gakakkad]

a sizeable portion of FDI is perhaps undeclared Indian wealth re-invested in India via the Mauritius route. 38% of the FDI we have received from the year 2000 is from/via Mauritius..

[Theo_Fidel]

ravig,

That is hardly a fair comparison. One is a capital investment the other is a consumer driven consumption. It is like comparing the new road to your house vs the pattu saree your wife just bought.

We save a lot of money, but not enough for both.

WRT the delhi metro most folks were hoping for a break even. But turns out it is running at least an operational profit. This is a cool thing.

http://www.thehindubusinessline.com/new ... 900573.ece

[Suraj]

Roundtripping FDI in that manner is a common phenomenon both in India and PRC, where it uses Macau or other East Asian avenues. It's still money coming back in, and therefore good for us.

[Austin]

The first post of every economy thread has a bunch of links, including the one reporting official FDI stats:

Commerce Ministry/DIPP FDI Statistics

The answer to your question is $300 billion as of June 2013.

Thanks.

If you look at the CIA link , it seems among BRICS nation , China and Brazil gets most FDI followed by Russia , India and South Africa.

[Suraj]

We can get more FDI by ensuring that the Mauritius FDI money laundering route is hassle free, just as the FII route is. So what if it is of questionable legal basis ? It's still money coming back into India *and* being invested in sticky assets as FDI, not just hot FII money. The end result is undeclared wealth returning to the nation and being invested in real assets. A significant fraction of PRC's FDI (and quite likely Brazil's as well) would be the same kind.

Following Deng Xiaoping's maxim here: who cares if the cat is black or white as long as it catches mice.

[Austin]

Could also be D company and Netas black money coming in via FDI , though I doubt one can find that out easily if they invest in genuine legal business in India.

[gakakkad]

The storm is coming - brace yourselves people. Either pack up and leave if you can or find a rock and hide under it. I hope UPA wins again, I'd rather have them deal with this mess because if NM comes, he will implement things that will be anti-people like removing some of the freebies. This will cause anti-incumbancy. Why should NM face the wrath for the deeds of UPA?? If NM wins, I fear a repeat of 2004

Modi winning the elections per se would trigger a massive rally of stock exchange. If Modi wins the elections, the first thing I ll do next morning is buys Indian stocks. It would trigger a positive investment outlook . Indian stocks being hot again means more FII. And eventually FDI even. This would have an almost immediate effect.

In surgery there is something called a release incision. there is a type of infection on limbs called cellulitis in which there is tissue edema. sometimes so much fluid gets collected that the pressure built up threatens the existence of the limb by compressing the blood vessels. we put an incision and and the toxic fluid drains out instantly restoring the vascularity of the limb.

Modi's election as a PM would be the release incision for Indian economy with almost instantaneous effect.

it ll not be a piece of cake for him of course. but it is doable.

[Suraj]

Could be, and it's still a good thing for us. The main point is it is invested in fixed assets, and is not hot money coming in via the FII portfolio route. The surest way to have influence over someone is have their money sunk into assets they cannot easily liquidate in India. FII money gives others influence in excess of what we have over them; FDI reverses the balance in our favor.

[Austin]

I think any money is good as long as its a legal money coming from genuine source , letting black money in via FDI route which leave the country via hawala would only make these wheely dealy people more powerful and legalise their crime , good in short term like a cocaine spike but would hurt the Indians in this country in long one.

I would be very surprised if Modi wins the election and even if he does would be far more surprised if he does well with Economy , its like burdening a man for sins of many and when you have such high expectation from a single individual you generally end up getting dissapointed.

[Abhijeet]

All this talk of "overspending", "splurging on luxury items" etc is far removed from reality. Spending on luxury items like CBU cars is such a minuscule part of the economy that it is not worth talking about. On a per-capita basis, Indians consume at Sub-Saharan Africa levels. We need to consume more, not less.

Rather than focus on cutting down demand, we should focus single-mindedly on the supply side. Forget about making consumption seem like a sin -- just make sure that people who have the money to buy have high quality domestic choices available. Invest in infrastructure, education and making Indian industry competitive, and imports will come down automatically. Unfortunately, building the country takes years or decades to pay dividends, while taxing imports shows results now, so we will always do the latter.

All that happens in the short term is that Indian consumers get cut off from affordable products, and it does nothing to boost domestic industry. The net result is that Indians become even more deprived than before.

[Bade]

^^^ Good idea at 100% tax, that is a clean $3.5 billion each year to fund infrastructure in specific areas like new metros, but all that is subsidized elsewhere.

[Suraj]

"Inclusive growth"
"Priority social sector spending"
"Rural employment guarantee scheme"
<insert more>

Take your pick. GoI lacks the competence to accomplish things either way. For all their focus on inclusive growth, India has fallen slightly on the HDI ranking scale, instead of rising strongly, as the volume of press on the subject would suggest. It's no surprise folks vehemently push for greater consumerism. Without a concurrent push or policymaking supporting domestic infrastructure and capacity building, there will be no cheap Accords and Samsung TVs for people.

Never mind luxury trinklets; we import a significant part of our power equipment to the tune of ~$40 billion a year, and a significant amount of the fuel driving that equipment. We even import $25 billion of iron/steel and fertilizers. This insistence on growing consumerism at this juncture will not work out well, and calling people socialist or some that they're arguing some 'consumption is a sin' sock puppet is pointless.

Of course we need to improve the supply side. Where do folks think the capital for that comes from ? It comes from the bank accounts where you save the money instead of overspending it on an existing scarce supply. You overpay for an already scarce source of consumables and food, the demand push and near-total GoI policymaking paralysis generating enough inflation to not make it worth the while for companies to expand - they're making enough nominal gains and the cost of money is too high to bother investing much in increasing supply.

Gakakkad makes good points - the markets and analysts are progressively pricing in the value of a Modi PMship. Clearly that will be a substantial upside to both the equity markets and the economy as a whole.

[Prasad]

Just to add on the integration thing, we used to have nepalis as security guards in our college in madras. These guys used to send money back home and were willing to work here, learn tamizh and visit their villages once in maybe 3 years. They had little opportunity back home to earn anything if they didnt want to herd sheep etc.

On the SME front, a dear friend of my mum manufactures components for ze german automakers. He said that while he wanted to expand and that ze germans are fine with their work, they couldn't due to the poor electricity situation in TN. These are the kind of things we need to promote. Value-add, making profit all appear to be bad words when it comes to this populist govt. Anyone getting rich? Tax them some more and give free food to the masses.

[disha]

On the SME front, a dear friend of my mum manufactures components for ze german automakers. He said that while he wanted to expand and that ze germans are fine with their work, they couldn't due to the poor electricity situation in TN. These are the kind of things we need to promote. Value-add, making profit all appear to be bad words when it comes to this populist govt. Anyone getting rich? Tax them some more and give free food to the masses.

He can relocate to Gujarat. 24x7 electricity and the ports will be developed - someway or other. And of course, right near NaNo plant.

Do you know common business men are considered as "profit makers" "usurious" ( in other words "leeches") in several parts of India. Atleast that you will not have in Guj.

[SaiK]

^^^ Good idea at 100% tax, that is a clean $3.5 billion each year to fund infrastructure in specific areas like new metros, but all that is subsidized elsewhere.

they will buy more of the mahindras and tatas then.. in the end, more vehicles.. less funds for roads.

[Abhijeet]

Never mind luxury trinklets; we import a significant part of our power equipment to the tune of ~$40 billion a year, and a significant amount of the fuel driving that equipment. We even import $25 billion of iron/steel and fertilizers.

Exactly. None of these are "luxury trinkets" -- they are all essentials that are needed to do real work. People are not buying power equipment and fuel on a lark -- they need them to produce other output. If you tax these imports more highly, do you think they will instantly start being supplied by domestic companies? What happens in the interim between making these items more expensive and when cheaper local alternatives start becoming available?

The items that really are "luxury trinkets" are inconsequential in the bigger scheme of things. The rest of the imports are essentials that are imported because viable domestic alternatives do not exist. Taxing them more heavily is shooting ourselves in the foot. This is something that the GOI can be relied on to do, but I would hope people here would see through such things.

[Suraj]

I'm not aware of anyone advocating higher taxation of core sector equipment and capital goods. We placed duties on ore exports, which isn't such a bad thing. On the other hand, there's never been a significant policy framework encouraging the development of heavy engineering firms. China has them. Korea and Japan's growth were characterized around their respective heavy engineering firms. India lacks enough companies of such scale. BHEL, L&T and the Tatas (their heavy engineering side) are all small fry compared to Mitsubishi, Fuji, Kawasaki, Hyundai, Daewoo and the like.

The heavy industrial base in the city of Ulsan - home of Hyundai Heavy Industries - is probably comparable to that of several major states in India combined. The sole comparable large heavy industrial zone in India would be the Jamnagar region, where Reliance and Essar together create by far the largest petroleum refining region in the world. As a piece of trivia, the first city Ulsan twinned with was Ahmedabad, way back in 1965, when Ahmedabad was probably much more prosperous

There's a grand GoI scheme called the National Investment and Manufacturing Zone policy, which should have gotten 100x the publicity and political backing of NREGA, but instead it's the latter who gets that much more attention. NIMZs and SEZs together would serve as a significant economic driver; exports from SEZs last fiscal were Rs.4.76 lakh crore, up from 3.65 lakh crore the year before, and 0.66 lakh crore 5 years ago.

GoI's actions are lame, but there's still a $50billion plus import component in the form of precious metals, gems and jewelry, which falls in the luxury item basket, and they see it fix to impose duties on it, or even ban imports. It's a good temporary measure in principle, IMHO, but it will not work because GoI no longer has a mandate to tax and make the population suffer, while they show no willingness to suffer real pain and risk their electoral prospects themselves.

[Vipul]

Food Security Bill will eat into finances, growing subsidies to hurt investments: RBI

[Abhijeet]

GoI's actions are lame, but there's still a $50billion plus import component in the form of precious metals, gems and jewelry, which falls in the luxury item basket, and they see it fix to impose duties on it, or even ban imports.

The $50 billion import of luxury items includes items that are processed and re-exported, so it's not a full $50 billion of luxury consumption. Let's say even $30 billion of that is pure domestic consumption, useless luxury for the fatcats. So what? There are far more important things to focus on.

Attention is a zero-sum game, so the more prominence you give to curbing such "splurging", the less attention there is on all the other things that need fixing. You can see how little government talk there is in response to the crisis about making it easier do business, building infrastructure, and so on. Instead the talk is all about reducing gold imports and making things more expensive. The public discourse is filled with this garbage, leaving no space for discussion of the fundamental changes needed.

Railing against the rich who are bringing the country down with their sinful spending is a favorite theme from the bad old days of the 70s. Let's not go there again.

[Suraj]

GoI's actions are lame, but there's still a $50billion plus import component in the form of precious metals, gems and jewelry, which falls in the luxury item basket, and they see it fix to impose duties on it, or even ban imports.

The $50 billion import of luxury items includes items that are processed and re-exported, so it's not a full $50 billion of luxury consumption. Let's say even $30 billion of that is pure domestic consumption, useless luxury for the fatcats. So what? There are far more important things to focus on.

No. That's the net import figure, most of which is gold imports. Read my previous post. $91 billion in imports, $40 billion in exports of gems and jewelry. We run a $175B merchandise trade deficit, where $50 billion is net gold/gems/jewelry imports and $110-120 billion is net oil imports.

Attention is a zero-sum game, so the more prominence you give to curbing such "splurging", the less attention there is on all the other things that need fixing. You can see how little government talk there is in response to the crisis about making it easier do business, building infrastructure, and so on. Instead the talk is all about reducing gold imports and making things more expensive. The public discourse is filled with this garbage, leaving no space for discussion of the fundamental changes needed.

Of course. It's not very different here on BRF either. In an ideal world threads like the economy, public policy, health, education, sanitation and similar threads would be the stars of the forum. But no, the out-of-India theory, Mughal rule etc gain much more attention. Why blame the public ?

Railing against the rich who are bringing the country down with their sinful spending is a favorite theme from the bad old days of the 70s. Let's not go there again.

I prefer not to hold such dogmatic views. There's enough example of that in US politics - one side is dogmatically pro 'small government', 'pro life' etc and the other 'pro choice' etc. There's no need for similar dogma here, waving hands about screaming 'socialism!', 'license raj!' etc.

There's no point in vehemently advocating the right to consume more, when the current structural state of the economy means that it cannot fulfil demand except through imports - whether it's an LV bag or a ton of steel. Investing in capacity means forgoing consumptions so that the saved capital is freed for investment. Every industrializing nation imposed consumption curbs of the sort - the Chinese still confiscate the savings of their population through a distorted banking system that enables cheap capital availability at the cost of poor returns on capital to the savers who are compelled to hold deposits in those banks.

Fact is that we import $50 billion in gold and jewelry at a moment when we are running a crippling deficit. I support an attempt to clamp down on that temporarily, even if GoI apparently has neither has the smarts nor the mandate to clearly accomplish the larger goal of stabilizing the economy fast. Still, at least temporarily, I cannot complain about a duty or import restriction meant to stabilize the exchange rate and current account situation.

A substantial part of the currency crisis of the moment is sentiment-driven. If you look at fundamentals, there's nothing substantial. If anything, the best monsoons in a decade should mean huge economic upside for the next 2-3 quarters. After previous strong monsoons, the economic press was salivating at the prospect of a strong festival season. Ideally, GoI would act temporarily to halt the Re slide in a decisive manner, but Surjit Bhalla's recent article suggests, they seem to be more in the 'lets pass a bunch of diktats and see if anything works' scattergun mode. Since that much expertise is what we can hope for, I'd rather see what sticks as well...

[habal]

they will never ban stuff like swiss luxury watches, a lot of boutique operators have set up shop selling watches for 40,00,000 to 200,00,000. It has become the favorite means to pay bribes and transact black money. A small, easily concealed object with a lot of worth. Some racketeer must have stumbled upon this and it has become a rage amongst all shady characters.

Azhar used to take his cut from his fixer, in form of such boutique watches.

Most of the folks who buy luxury cars like Lamborghini, ferrari, Rolls etc in India are industrialists who are in web of BIFR, or stock brokers indicted by SEBI for fraud, IPO con artists, stocks manipulators and so on. When you want to go soft on this group at the expense of the majority, it throws light on the govt's order of priorities.

[gakakkad]

it makes sense to stimulate consumption ,only when we have adequate production capacity.. it makes sense to impose high import duty , say 100% on luxury watches, luxury cars etc. not that it ll have much of an impact .but yes it is sensible to do so.

Modi did nothing to stimulate consumption in Gujarat. He built a power generation capacity. But did not make it free. And put a service tax on it too. But he ensured a 24*7 supply.. the economic benefits from 24*7 electricity were in itself sufficient to increase consumption.

If the next PM concentrates on basic infra , and sound macro-economic policy ,he ll never have to worry about consumption.

the present government (along with the RBI) in fact accelerated the flow of liquidity in market. (I posted a graph of M2 money). So you can't really accuse it of clamping down consumption. Unlike US ,consumption is not an absolute indicator economic growth.

Suraj mentioned Hyundai. I want to add some background about Chung Ju-Yung the founder of Hyundai.

He is one of fathers of SoKo growth .In 1960 he built SoKos first trans-national expressway ,against the advice of IMF. He built a massive shipping industry,which was dismissed initially. Hyundai cars were a butt of jokes in the 60s . Yet he had the guts to attempt exporting them the US. Modi mentioned SoKo Olympics in his Sriram commerce college speech . Chung Ju -Yung was instrumental in getting the bid successful. As Modi said, the Olympics changed the way, people look a SoKo..

The Koreans got where they are by discipline ,hard work ,austerity ,planning and vision..

Here is an excerpt from a book about SoKo economy . It deals with the construction of its first expressway .. It essentially highlights the characteristics that got SoKo to where it is today.

It is a lesson on nation building ,I hope every Indian learns.

fact that the U.S. Marines could travel in boats from America to Busan faster than the North Koreans could get there by land (today it’s a five hour drive, if you can somehow avoid the traffic jams) tells you all you need to know about South Korea’s road system in 1950: There wasn’t one. Outside of a few dirt paths and one railroad line, Korea simply didn’t have paved roads. Ask any U.S. veteran of the Korean War what it was like to be transported by vehicle and he’ll surely tell you some colorful stories of the mobile infantryman’s nemesis: mud.

According to development economists, the quickest way to pull an undeveloped, rural society out of poverty is to build roads. And that was President Park’s biggest goal in the early 1970s. He wanted
roads, and he wanted them built quickly. The crown jewel of that plan was the Busan- Seoul highway, an eight- lane, 266- mile- long expressway that he envisioned after visiting West Germany and traveling the autobahn. It was to be called, officially, the Kyungbu Expressway, and by cutting a diagonal line across the peninsula, it would be the spine for all the other roads that were still to be built.

The problem was that a couple of mountain ranges stood in the way. Park’s initial vision was a dauntingly difficult engineering challenge. He wanted long tunnels through the mountains in some places. In other places, he wanted mountainsides blasted away by dynamite. When Korean and Japanese companies placed bids on the project, they were as high as $1.4 billion in today’s money.Except for one bid. Chung Ju- yung offered to do it for only $649 million, but with an altered route. The war years and the decade afterwards had been good to Chung. He had launched a construction
company that soon was building bases for the U.S. Eighth Army. He transformed the enterprise into an international engineering firm, building roads, factories, and hospitals throughout the world.
When Chung and his executives decided to bid on the Kyungbu project, they spent weeks surveying the route. Since they were one of the only Korean companies that had road- building experience,
they knew how important the route design was. Chung knew that if he could make the road much more serpentine, enabling him to reduce the difficulties of mountain- crossing points, he could drastically cut the cost of the project.Hyundai won the contract and began construction in February 1968. In other countries, a project of this magnitude would typically take five years, maybe three at the least. Hyundai got two years and two months to complete the task.

The building of the Kyungbu Expressway is now a piece of nation- building lore in South Korea. Engineers worked triple shifts, the amount of construction equipment in South Korea more than doubled, and the entire country breathlessly awaited and read reports about the previous day’s progress in the morning newspapers.It wasn’t all smooth and steady for Hyundai. The mountains still had to be crossed, and one tunnel, called the Tangjae tunnel, proved to be a monster. Repeated cave- ins delayed progress and injured andkilled some workers. At one point, crews became convinced that ancient spirits were being disturbed and were causing the accidents. Absenteeism—nearly unheard of in Korean workplaces then and now—became a signifi cant problem.Chung persevered. He threw more machinery and more crews at the Tangjae tunnel. He doubled wages for those workers who did show up at the site. And it worked.

In June 1970, the tunnel and Highway 1 were complete.At the opening ceremony for the road, Chung Ju- yung stood next to President Park and his wife as they cut the ribbon to open the road.
Afterward, Park gazed silently out at the long, black, empty expanse roadway with Chung at his side. All of the cars in Korea, both men knew, would barely fill up a portion of this new highway. Park turned to Chung, the probably apocryphal story goes, and asked: “What do you know about making cars?”With visions of his youthful days spent in the auto repair shop probably running through his mind, Chung is said to have simply replied: “I can do it.

[Prasad]

O/t.could you let us know the name of he book too please?

[gakakkad]

THE NEW KOREAAN INSIDE LOOK AT SOUTH KOREA’S ECONOMIC RISE.

it is an AMA book .

[Austin]

Oil Prices are rising , Not a good sign for us. Indian Basket at $106

http://oil-price.net/

[vera_k]

The import of cars and fuel is higher than it should be because it is supported by subsidized fuel. This government has been much too incremental in taking any decisions. The 1991 decisions were not incremental.

[Suraj]

Thanks for that excerpt, gakakkad! Glad to see I'm not the only person who's read about SoKo, Chung joo young and the gyeongbu expressway!

[kmkraoind]

National Interest: Current accountability deficit - By Shekhar Gupta in Indian Express

Postscript: Here is a conversation not long ago with a well-informed global tycoon with large business interests in China and India. What is the difference between doing business in the two, I asked. In China, he said, once they decide to do something, they do it, no second thoughts, no retreats. Deng, he said, said 30 years ago, that within 25 years China should control 90 per cent of the world's rare metals and minerals (gadolinite, cerium, plus scandium and yttrium, etc) without which no modern electronic or telecom gadget can be produced. By now, they control at least 80 per cent of these. And when the Japanese "misbehaved", the Chinese squeezed these supplies and all of them, from Panasonic to Sony, went down on their knees. "And you know what," he said, "of the remaining 20 per cent in the entire world, India has more than half. And if you cannot access most of it, because of people you call as Maoists or Naxalites or their intellectual backers, and you think the Chinese have nothing to do with it, you know where you live. On cloud cuckooland."

[Pratyush]

But the UPA is secular. With Rahul having European looks.

[SwamyG]

People do not exist for consuming and keeping the economy running, they live to fulfill their desires. And in that process they consume and move the economy. It is 101 that everybody understands, but just forgets now and then.

[SwamyG]

In June 1970, the tunnel and Highway 1 were complete.At the opening ceremony for the road, Chung Ju- yung stood next to President Park and his wife as they cut the ribbon to open the road.
Afterward, Park gazed silently out at the long, black, empty expanse roadway with Chung at his side. All of the cars in Korea, both men knew, would barely fill up a portion of this new highway. Park turned to Chung, the probably apocryphal story goes, and asked: “What do you know about making cars?”With visions of his youthful days spent in the auto repair shop probably running through his mind, Chung is said to have simply replied: “I can do it.

It is the reverse in desh, no? They build all the buildings and then try to build roads between the houses. Even in new development areas, the plots are created with far less road space. They build cars, then they build roads and parking lots.