Sales fell sharply after November 2016, jewellers say struggling to pay workers who haven’t been sacked.
New Delhi: The narrow alleys of Old Delhi’s Kucha Mahajani market, a key jewellery and bullion hub of north India, are bustling with activity, or so it seems, with people shoving their way through the crowd.
It’s the busy, festival shopping season and crowds are the norm here. Except that they are not in the jewellery shops, small or big. The slowdown in the Indian economy has hurt businesses in Kucha Mahajani market like elsewhere, and has taken a toll on jobs.
The impact of demonetisation, a rise in the tax rate on gold under the Goods and Services Tax (GST) – from 1.2 per cent to 3 per cent – as well as a general fall in the appetite for gold have caused a slump, leading jewellers to cut jobs of workers and artisans, businessmen said.
India’s economic growth slid to a three-year low of 5.7 per cent in the quarter ended June and economists say the numbers are echoed by rising unemployment rates (See graph). India’s jewellery industry, which employs around 3 million workers, is estimated at Rs 4.15 lakh crore and is sensitive to economic downturns.
Although there are no clear estimates yet on how many jewellery workers have been affected by the latest slowdown, industry experts say that about 15-20 per cent of the workers had lost their jobs during the 2008 economic crisis.
Jewellers in Kucha Mahajani market said sales fell by more than 70 per cent within 10 days of demonetisation, which was announced on 8 November last year. There was not much recovery since and GST only added to the woes.
“Our business and sales have drastically gone down since demonetisation. It’s natural that with business taking such a hit, traders have had to let their workers go,” said Suresh Sharma, owner of GD Jewellers, a 30-year-old business.
“Earlier, we sent 2 kg of gold to artisans to make jewellery, now we send only 500 gm. A good indicator of this loss in livelihood is that room rents in Karol Bagh, where all these artisans — mostly from West Bengal and Bihar — live, have fallen from Rs 10,000 a month to Rs 5,000,” Sharma said, adding that the business community is angry with the BJP government of Prime Minister Narendra Modi for what is seen as ad hoc or poorly thought-out policies.
Sharma claims he has not fired any of his 10 workers and that he is keeping them “only out of a sense of obligation and is barely managing to pay them their salaries”.
But others like Ritesh Vallecha, who owns a manufacturing unit specialising in gold bangles, has had to halve his labour. Vallecha’s small workshop on the fourth floor of a rundown building has only two artisans at work.
“My business is barely 10 per cent of what it used to be. What my turnover was in a month is now the turnover across six months,” he said.
Joginder, an artisan who came from Azamgarh five years ago, says the job loss trend does unnerve him. “Yes, we have seen many people being forced to leave and go back. It does scare me but we have to continue working somehow,” he said.
According to Yogesh Singhal, president of the Bullion & Jewellers Association, the situation looks “gloomy”. “This market was based on liquidity. With that having gone down and a limit of Rs 50,000 imposed on jewellery purchases (without giving KYC details), sales have taken a hit. Most businessmen have been forced to let their workers go,” Singhal said.
These sentiments are echoed through the market. Across the road, in the equally chaotic Moti Bazar known for its textiles, the mood is equally grim.
The owners of Ram Gopal textiles store said a dip in sales had forced them to cut down on their labour as well although they were not willing to discuss numbers.
“It’s nearly 4 pm and we still haven’t done our first sale for today. Earlier, in the weeks before Diwali, our shops were flooded with people,” said Rajesh Verma of Hukumchand Bholanath Textiles shop, which mainly sells shawls. “Look at the situation now. People are walking outside but nobody is coming in to buy anything.”
With inputs from Nayanika Chatterjee