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Old 2nd June 2011, 11:45   #1
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Default Value of 1 L INR 25 years ago

Experts, I would like to know what could be the value of Rs 1 lakh 25 years ago in terms of current market conditions?

This is the scenario. 2 of my relatives A & B exchanged their lands 25 years ago, when they were in good terms. A had 60 cents of land in a village, B had 20 cents of land in the small town. A gave his 60 cents + 1 lakh rs to B 25 years and got the 20 cents land.(Just to note Ė this transfer was made as per Bís request). Now they are not in good terms, and wants their land back. Now after exchanging their lands, what would the money that B owe A for rs.1 Lakh?

What I suggested is, calculate the market value of both the lands, and the difference is the value for 1 lakh. This solution is not feasible as they donít have an idea of the market value of the land in the village.
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Old 2nd June 2011, 11:58   #2
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How about calculating the average interest rate for 25 years and calculating the meturity value for a tenure of 25 years?
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Old 2nd June 2011, 12:42   #3
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Default Re: Value of 1 L INR 25 years ago

Another option is to benchmark the value against the quantity of Gold you could buy with that money then, and now.
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Old 2nd June 2011, 12:57   #4
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Default Re: Value of 1 L INR 25 years ago

^ I agree with above.
Gold is tried and tested Indian standard for investment and value comparison.

Logic is this: If your folks had not purchased land, they would've purchased gold and not some Fixed deposit or Mutual fund or Govt Bonds. (Therefore interest rate, should not really be taken for valuation in this case)

http://goldprice.org/30-year-gold-price-history.html (scroll down for value in rupees)

Last edited by alpha1 : 2nd June 2011 at 13:03.
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Old 2nd June 2011, 13:11   #5
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Default Re: Value of 1 L INR 25 years ago

I don't think that B owes A anything more than rupees 1 Lakh.
There was no prior agreement made for interest if any as being applicable.

The money to me is like the advance we pay when renting a flat. When the term of usage is over. We get the advance back. There is no interest accrued to it.
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Old 2nd June 2011, 14:31   #6
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Default Re: Value of 1 L INR 25 years ago

Quote:
I don't think that B owes A anything more than rupees 1 Lakh.
Second that. But just in case A would have invested in say FD. Just calculate the interest
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Old 2nd June 2011, 14:59   #7
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Default Re: Value of 1 L INR 25 years ago

Thanks for the response, mates.
@roy_libran, thanks, benchmarking against gold is a good idea.
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Old 2nd June 2011, 15:13   #8
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Default Re: Value of 1 L INR 25 years ago

What about value of produce of village land in last 25 years. This also need to be considered.
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Old 2nd June 2011, 15:18   #9
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Default Re: Value of 1 L INR 25 years ago

25 years ago, the land of 60 cents in that particular village + 1 lakh of rupees must have been equivalent of 20 cents of land in the small town. That is the reason deal was done. Now I guess both A and B can evaluate their currently owned property and get the differential paid of to the other one. This will be the easiest option I guess.

The option of
Quote:
Another option is to benchmark the value against the quantity of Gold you could buy with that money then, and now.
would make one party looser as he might not have invested in Gold!
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Old 2nd June 2011, 15:23   #10
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Default Re: Value of 1 L INR 25 years ago

Quote:
Originally Posted by roy_libran View Post
Another option is to benchmark the value against the quantity of Gold you could buy with that money then, and now.
The gold rates have gone high. In 25 years years, the rate would have gone up by 6 - 8 times(Not sure)
It would be a big burden for him to pay 6-8 lakhs for the 1 lakh which he bought 25 years back, unless he has invested it in some business and made a good margin....

Best would be to settle it for bank interest.... But may be, the other person is not ready to agree....
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Old 2nd June 2011, 15:40   #11
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Benchmarking against gold or historical FD rates would be a good idea. However this approach also assumes that the land rates have appreciated similarly for both the lands. Means to say that both have appreciated at x%. However this is rarely the case.

So I would suggest to value the two properties and settle it rather than think about the 1lakh value.
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Old 2nd June 2011, 15:41   #12
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Default Re: Value of 1 L INR 25 years ago

This is the aprrox value of average monthly income required for an average Indian family over the years. So that you can make a mental calculation of value of money in yesteryear, and well as the future.


Name:  Value.jpg
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Quote:
Originally Posted by bblost View Post
I don't think that B owes A anything more than rupees 1 Lakh.
There was no prior agreement made for interest if any as being applicable.

The money to me is like the advance we pay when renting a flat. When the term of usage is over. We get the advance back. There is no interest accrued to it.

In this case however, its a transaction, and the value of 20 cents of land in town and 60 cents of land in village is different. They have to balance it with cash.

Last edited by dhanushs : 2nd June 2011 at 15:48.
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Old 2nd June 2011, 16:59   #13
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Default Re: Value of 1 L INR 25 years ago

The land ownership did not change on paper. The money was not given with a legal agreement.

The best is for them to reverse the situation w/o any changes.
Return possession of each others land on an as is basis.
Return the 1 lakh rupee cash.

The cash to be returned because its a gentlemanly thing to do. There is no legal obligation as such. There is no way to prove the same in a court of law without documentary evidence.
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Old 2nd June 2011, 17:02   #14
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Default Re: Value of 1 L INR 25 years ago

That would be equivalent of 2 M-800s. Add it up using the current price.
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Old 2nd June 2011, 17:48   #15
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Default Re: Value of 1 L INR 25 years ago

Quote:
Originally Posted by esteem_lover View Post
That would be equivalent of 2 M-800s. Add it up using the current price.
this would not give a correct picture as the prices of Cars have come down over the years (Inflation adjusted). I think the most agreeable way is the value of Gold increase over last 25 years.
Rationale - Most indian invest in Gold if they have excess money to put away long term :-).

Last edited by DieselFan : 2nd June 2011 at 17:50.
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