Multiple reports of an economic slowdown in India find strong resonance among traders, cutting across sectors, in the national capital.
Citing a lack of demand spurred by a cash crunch in markets in addition to sector-wise policy concerns, the traders spoke of a deepening crisis that needed immediate attention.
At Sadar Bazar, the largest retail market in Delhi, one such crisis brews. “With sales at the levels we have now, we have stopped going to banks to ask for loans,” said Dev Raj Baweja, general secretary of the trader’s association here.
“They [the banks] take a look at our papers and tell us to go back.”
Without liquidity in the market there is simply no purchasing power to make way for the cycle of buying, stocking and selling, he said.
Credit agreements that might have been made for 60 days are now being made for 120 days as retailers are not able to finish stocks sold to them, he added.
“The festival season has already started but we have not witnessed any positive effect on the sales yet,” said Mr. Baweja, painting a bleak picture. Regarding the effect of demonetisation and GST on the present situation, he said: “The current situation is clearly a consequence of the moves, but they are bitter pills that may hopefully give a positive outcome.”
At present, he said, a policy to extend collateral free loans would be crucial to help small traders.
In the jewellery business, a burgeoning grey market, high import duties and soaring international rates of gold have dealt a severe blow to the traders, said Pankaj Arora, a jeweller and a traders’ representative with the Confederation of All India Traders Association (CAIT).
“Since the announcement of the Union Budget four months ago, sales have been down by nearly 80%,” Mr. Arora said. “Jewellery, after all, is a luxury purchase”, and typically not on the priority list of consumers when compared to other goods, he said.
“Also, unlike earlier, almost no one buys gold as an investment any more. The only purchases we get are during weddings,” he added.
A parallel market where goods are sold without receipts at cheaper rates compared to those sold with GST receipts has left consumers and traders alike confused.
“Apart from reducing import duties, there needs to be a crackdown on gold smuggling and one rate needs to be fixed if things are to get better,” he said.
Transport sector
The Capital’s transport sector is also gradually grinding to a halt due to the lack of demand for goods and ancillary services by consumers.
Goods transporters and taxi operators complained this was one of the slowest business seasons they had encountered in decades which, by pulling the brakes on their usual plans to increase the number of vehicles on their fleets, was also impacting the larger auto industry per se.
“The pre-Diwali period used to be a brisk time for us. Sales would go up by as much as 50% for a few months preceding the festive season on the back of demand from local markets, which we supply wholesale goods to,” said Rajender Kapoor, president of the Delhi Goods Transport Organisation.
“But this time, business has not only stagnated but has dipped by 35%. Traders and shopkeepers are not stocking up because of lack of demand. All we are transporting these days are essential goods,” he said.
Labourers and drivers
The slowdown, he said, has also impacted labourers and drivers who, because of the lesser volume of goods being transported, were being sent on leave by their employers.
Meanwhile, taxi operators, who had been facing stiff competition from app-based cab companies such as Ola and Uber, were forced to shelve their expansion plans due to lack of demand.
“We were already facing problems because of appbased cab companies weaning away our customers and now this,” said Sanjay Samrat, president of the Delhi Taxi Union.
“But we are not alone. The Centre has made so many anti-taxi laws aimed at making our drivers bleed through large cash fines that operators like me have decided to function only with the existing fleet that we have. Why do you think the auto industry is being impacted? It is because transporters like us have been forced to shelve our plans to expand existing businesses,” he added.
Eating patterns
“Typically all other purchases might go down but people do not compromise on eating out,” said Bipin Ahuja, a restaurateurs’ representative. But sales volumes have drastically reduced, especially with ordering patterns having been altered, he said.
“The tables from which we expected a bill of least ₹5,000 earlier, now hand over just ₹2,000,” he said.
All other sectors are affected. People who do not have purchasing power will not spend on eating out, said Mr. Arora, adding that “any sort of lavish orders are hardly going to be placed.”
Apart from this, various regulations from local municipal bodies, to do with sealing of properties, are also posing a threat to businesses.
More than a slowdown, there is a “degrowth” taking place, he said.
Parallel economy
Speaking on condition of anonymity, another traders’ representative argued that the collapse of the parallel economy had severely affected trade. Earlier, even during the 2008 recession, India was protected from the severity of the blow because the parallel economy helped infuse cash into the system, he said.
“There certainly is a slowdown in the market,” said Praveen Khandelwal, president of CAIT, citing the reason as a shortage of liquidity.
“But it has to do with a transformation in trade in India as well,” he claimed.
“There is a change in business formats with e-commerce players like Zomato and Swiggy entering the market,” he said, adding: “But navigating this period of transformation and the steps being taken by the government are crucial in ensuring that the economy recovers.”
