Murari Lal has deep wrinkles, unkempt hair and dirty cloth bandages wrapped on some wounds on his fingers and leg, even as he tends to customers at his tea stall under a tree adjacent to the entrance of Honda Motorcycle and Scooter India in Manesar. “Ghani raunaq hua karti thi, truckon ki line lagi rehti thi, ab toh sab khatam h gaya aur agar ye hi haal raha toh 6 mahine mein company hi band ho jayegi (There used to be big hustle bustle here, with a long line of trucks; now everything has finished and if this trend continues even the company will close in next six months),” he says.
“A few truck drivers and cleaners still visit the stall to drink tea and smoke hookahs, but their numbers are shrinking by the day,” he says, attributing it to a fall in sales in the auto sector.
“This shop is just for time pass, I usually don’t even come here; I give it to some truck driver or cleaner who give me Rs 5000-6000 at the end of the month. They also have time and now I also have time,” says Murali Lal.
Some Honda employees and truck drivers hanging around the area, with whom National Herald interacted, expressed anger and disappointment with Prime Minister Modi. “Everything has gone after Modi took over, there is no business and people do not have money after Demonetisation,” one of them remarked.
Before visiting Manesar, NH witnessed a protest by workers of several organisations of the auto industry at Kamla Nehru Park in Gurgaon. They wanted to hand over a list of their demands to officials at the Mini Secretariat.
When around forty people had gathered at the site, they sat down in the park where some elderly people were passing their time playing cards. The moment the protestors sensed media presence, they started shouting slogans like “Inquilab zindabad, Mazdoor ekta zindabad”, which one doesn’t hear very often nowadays.
A worker participating in the protest said on the condition of anonymity, “No doubt there is a slowdown, but the management is using this slowdown to remove workers from the job and most of the affected are the daily wagers”.
The workers are evidently feeling the heat of the slowdown, which has seen the worst car sales figures in the last 20 years, which have fallen by 41 per cent. Sales of two wheelers too have come down drastically.
Samuel, an employee of Hero Motor Corp, says, “Normally our production was 35,000 motor bikes per day and in peak team it used to touch even 40,000 units, but now it has come down to 25,000 units per day.” He says such massive slowdown had left thousands of workers and their families feeling insecure about their jobs.
He also expressed disquiet at Finance Minister Nirmala Sitharaman’s remarks on the economy. “Instead of addressing the issues, she is compounding the situation. By saying that the government would review the GST slabs, she has created confusion in the market and the sales have dipped further, which would badly affect the forthcoming festive season to which we were all looking forward to,” he says.
Recently, Union Minister Nitin Gadkari, while speaking at Nagpur in a function marking the 65th foundation day of Vidarbha Industries Association, apparently made an effort to boost the morale of the automobile industry, remarking, “I know industries are going through a tough time. We want to increase the growth rate but the meltdown is a global phenomenon and we are trying to find some solution. So, don’t get disappointed, this time will pass. Kabhi khushi kabhi gham hota hai.”
This was tantamount to a senior member of Modi’s Cabinet admitting that the economic situation was worrisome, but Finance Minister Nirmala Sitharaman’s comments attributing the auto industry crisis to millennials’ preference for ride hailing aggregators like Ola and Uber instead of purchasing their own cars came across as childish.
The reality is that younger generation or millennials are using cabs because they are not financially sound to even buy a small car, coupled with factors like job insecurity and rising fuel prices.
According to some estimates, Uber and Ola cabs facilitate some 3.65 million daily rides across the country. The key reason for the dip in vehicle sales, then, is totally economic as consumer confidence is at an all-time low.
Germany used to be the fourth biggest car market of the world but after clocking 7 per cent growth for several years, India displaced it from that position in 2018. But now things have changed. It is not only that sales of cars and two wheelers have tumbled; sales of trucks have also dipped.
Recently, Ashok Leyland closed its unit for two days in Chennai. The sales of trucks have dipped because of the problems in financing, besides the government increasing the axle load limit for all trucks last year. The latter resulted in the increase in the freight capacity of the entire population of trucks operational in India by 20-25 per cent.
Maruti Suzuki and Tata Motors too have gradually increased the number of non-working days at their plants due to the dip in sales.
The reduction of number of working days directly affect the daily wagers working in the company. Some of these daily wagers earn Rs 5000-8000 per month, and if the working days are reduced, it affects their monthly earning.
Auto sector companies have a valid reason for this. Due to the dip in sales, they have excess inventory, which means they can’t keep producing vehicles which would only add to the existing inventory. “With sales going down, the inventory is piling, and this is directly affecting the future of the workers,” points out Kuldeep Jhangu, president of Maruti Suzuki Workers Union.
Auto sales in August have dipped to their lowest level since 1997-98 and the contraction of demand has impacted several major auto manufacturers in the country. The sector has already lost over three lakh jobs and it could lose up to a million jobs if the government fails to take measures to revive it, according to two industry bodies.
There is a liquidity crunch in the banks due to which the real estate and auto sectors are badly affected. 70 per cent of two-wheeler sales and 30 per cent of car sales are financed by non-banking financial companies. The major issues that the auto sector is facing are the high GST slab of 28 per cent, insurance and the government’s plan to introduce BS VI vehicles.
Cars are now becoming unaffordable with so many taxes. The fact is that if one buys a car in India, at least 40 per cent of the cost goes in taxes and registration. The insurance regulator has increased the mandatory third-party cover to three years for cars and five years for two-wheelers, thereby pushing up the upfront cost in buying a vehicle.
Demonetisation, rising fuel prices, job insecurity, agrarian crisis and badly implemented GST has not only ruined the economy but badly affected the chances of early revival of the Indian economy.
Last month Niti Aayog Vice-Chairman Rajiv Kumar went on record that the ongoing financial crisis in India is “unprecedented”. Rajiv Kumar said that the entire economic situation had changed after implementation of moves such as Demonetisation, Goods and Service Tax and the Insolvency and Bankruptcy Code.
While addressing the Hero Mindmine Summit in August, Kumar said: “This is an unprecedented situation for the Government of India. In the last 70 years nobody had faced this sort of situation where the entire financial system is under threat and nobody is trusting anybody else. Within the private sector nobody is ready to lend, everyone is sitting on cash.”
This came from straight from the horse’s mouth, but the government of the day is still not ready to accept the truth that it is the faulty economic policies of the government — particularly Demonetisation — which are responsible for this economic meltdown.