With the Union Budget less than a fortnight away, the sense of despondency among businessmen, and even self-employed professionals, is high. None of them is clear what the Budget should offer them but all of them would like the government to intervene and ensure some relief. Some of them spoke to Rahul Gul;
Anuj Vaudeva, Anma Architects, Gurugram
Planning to lay off
I’m a professional architect, running a consulting firm along with my wife who is also an architect. Our business hasn’t been doing so well of late. There has definitely been a slowdown in the economy for the last two-odd years since Demonetisation, which has got more pronounced since the last one year. I was engaged with a large number of projects across the country in the automobile ancillary sector but this has virtually come to a halt. The last project was with Asahi Glass in Ahmedabad, after which we’ve just run dry. I have been consulted only on a few projects in the electronics sector, which isn’t hit so hard.
The situation is so bad that not only have I been unable to give a raise to my employees but am now staring at the prospect of having to let some of them go. For the last 6-7 months, I am virtually in survival mode, digging into my savings to be able to go on.
This crisis has hit me on the personal front too. I wanted to send my son abroad for an engineering course, but that is no longer possible. I’m now forced to have him study in a college in India.
The primary reason behind the slowdown, in my opinion, is that people simply don’t have the spending power they used to have. And the present regime has created an environment which simply doesn’t inspire confidence. Most people can see very clearly now that this government is so busy furthering its own core agenda that it is virtually paying no attention to issues like the economic slowdown.
Sanjeev Khetrapal , Aarambh Realty, Gurugram
Business is bleak
We are authorised dealers for several real estate firms including DLF Ltd, Emaar MGF, Ireo, Tata Housing, Bestech, Conscient, Lotus Greens, Mahindra Lifespaces, Orchid infrastructure, Paras Buildtech, Pioneer Urban, The 3C Company, Umang, Unitech Ltd, Vatika, etc. and have been in this line of business for several years. The situation with the real estate business is definitely not rosy, one of the reasons being that people, especially the younger generation, are hanging on to their money and going in for rental property rather than investing in their own property. And of course, consumer sentiment is quite low, due to three factors: Demonetisation and rollout of GST and RERA. It didn’t help that some major real estate players had to shut shop due to dubious business practices.
The number of Indian real estate companies that tipped into insolvency has doubled in less than a year since the collapse of a key shadow bank, an event often compared to the Lehman crisis that squeezed American funding markets a decade ago.
As many as 421 developers entered bankruptcy court by the end of June last year, up from 209 in September 2018, around the time when the government seized control of Infrastructure Leasing & Financial Services Ltd. The move triggered a credit crunch for smaller financiers and property firms, which depend on funds from shadow lenders.
The only firms doing relatively well are corporates like Godrej and Mahindra which have entered real estate, the reason being the already strong image they have built over the years. Even mammoth projects like Wave Town in Ghaziabad are like ghost towns. There’s a huge inventory pileup in all of Delhi NCR.
AK Motors (Two-wheeler Showroom), Saidulajaib, Delhi
Two-wheeler sales down
We sell two wheelers of almost every brand, including Honda, Hero, TVS, Bajaj, Vespa and Royal Enfield. The showroom was set up about 2-3 years back. Initially, we used to sell 30-40 units a month, but this has now declined to around 20 or less. A telling moment was when we managed to sell only 10-12 units on Dhanteras last year, compared to 40-50 units on earlier occasions.
One reason for low sales is that some manufacturers have hiked the cost steeply, for instance Honda Activa which used to cost around Rs 58,000 earlier but costs almost Rs 75,000 now. But the primary reason is that the spending power of potential buyers is really low. People are unable to procure vehicles even through finance companies on EMIs.
Many of those who visit the showroom are defaulters in finance companies’ records, having been unable to pay EMIs for other commodities they have procured, so their loan applications don’t get approved. And a majority of people don’t have the money for a cash down transaction; EMIs are the only option for them.
Obviously, the sector has been severely hit by this low demand.
We sustain only on the hope that things turn out better in the near future, otherwise things are pretty bad.
VS Chemist, Pharmacist and cosmetics retailer, IGNOU road, Delhi
Moved to a smaller showrooms
Sales of not just cosmetics but even medicine have fallen by 40-50 per cent after Demonetisation. On top of that, they have slapped a cess of 12 per cent on items purchased from outside Delhi.
We were doing pretty well, but last year we were forced to shift from a shop that measured three times the size of the current premises. Being a native of Srinagar, I also used to stock items such as Kashmiri shawls for my customers, but the sales have dropped to zero. People simply don’t have money to spend.
To give you an example, I have a very well-off regular client, who lives in a huge bungalow, who orders a lot of stuff every month on credit. The bill rose to a significant amount, when he suddenly said that he wouldn’t be able to pay it since a property he had given out on rent fell vacant.
VNG Enterprises, Neb Sarai, Delhi
Looking forward to the budget
We are wholesale suppliers of hardware, paint and building material, stocking just about every item required if, for instance, a new flat is being built. But the situation is so bad that if I had rented premises, rather than being its owner, I would have had to shut shop. The basic problem is that the real estate sector is really slow, since virtually nothing new is being due to low spending power of people. So, there are literally no customers. We just spend the day whiling away the time. The economic situation of the country right now is clearly so drastic that I don’t remember things being so bad before.
Even on the personal level, I have had to drastically cut down on day-to-day spending at home, especially with the food inflation levels being so high. Just today, I read in the newspaper that retail inflation rose to a 65-month high in December on the back of soaring vegetable prices as food inflation hit an over six-year high. One can only imagine the plight of poorer families if relatively well-to-do people like us are obliged to cut down on consumption of common food articles like onions.
The government should clearly intervene in some way to improve the situation, whether it’s through the forthcoming Budget or another way.
Jewellery and gemstone dealer
Diversification hasn't helped
Ihail from Kishangarh in Rajasthan, am residing and doing business in Delhi for several years in gold and diamond jewellery. I was a regular supplier of diamonds and gemstones worth crores to jewellery stores located in the Walled City, like Kucha Mahajani etc. However, in the last two years, my business has almost got decimated, with sales down by more than 80 per cent.
My customer base has dwindled down to such an extent that I was forced to look at an alternate business project, and started a small unit in Noida where cloth bags are stitched. But in a double whammy, the government is yet to enforce the ban on polythene bags, with the result that I’m in financial doldrums. It’s difficult to even pay the school fee of my children, and I had to sell off my car and started using a two-wheeler.
I find it most unfortunate that the government is least bothered about the deteriorating financial health of the nation, and the economic distress has been obfuscated by issues such as CAA and NRC, etc.