Global activity has broadly strengthened and is expected to improve further in 2014-15, with much of the impetus coming from advanced economies. Inflation in these economies, however, has undershot projections, reflecting still large output gaps and recent commodity price declines.
The Indian economy weathered the global financial crisis rather well and quickly recovered from the decline in growth rate in 2008-09 to a healthy growth that averaged around 9 per cent annually in 2009-10 and 2010-11. However, Indian economy went through challenging times being part of the global economy with its exports and imports amounting to 43 percent of GDP and two-way external sector transactions amounting to 108 percent of GDP. The GDP went down to 4.5% in 2012-13 and 4.7% in 2013-14 and could be attributed to domestic and external factors such as cyclical down turn with global contractionary headwinds, elevated current account deficit, macroeconomic imbalance, persistent inflation, and the need for a sustainable policy. The economy in 2013-14 has faced rather turbulent times emanating from exchange rate pressures amid capital outflows, persistence of near double digit inflation, fiscal imbalances and a decline in investment.
Keeping in view the prominence of housing and real estate as a major area for creation of both physical and financial assets and its contribution in overall national wealth, a need was felt for setting up of a mechanism, which could track the movement of prices in the residential housing segment.