In the concluding article of a six-part series, Business Standard visits Ludhiana, one of the largest industrial towns in Punjab, to assess the effect of demonetisation.Moolchand Airi sold 15-20 cycles every day a month back; now, he barely sells three.
He is not alone suffering from the low demand, a result of the demonetisation of Rs 500 and Rs 1,000 currency notes by the central government. Nearly a month since Prime Minister Narendra Modi announced the reform on November 8, demand for consumer goods such as apparels and cycles is yet to recover in Ludhiana, one the largest industrial towns in Punjab.
“We sold 15-20 cycles a day before currency ban. Now the average is three cycles a day,” said Airi. The 65-year-old is the owner of one of the oldest cycle retail shops at Gill Chowk, the busy market area in the town.
At present, he employs five people. He doesn’t want to let them go despite the fall in sales, as they are well trained. “How will I replace them if the demand improves?” said Airi. “For now, it’s a wait-and-watch situation,” he added.
While the big retailers can afford to wait and watch, hoping for a recovery later, not everyone can follow suit.
Unskilled workers such as Pachatar Singh, a cart puller, are struggling to make their ends meet. “My daily income from has dropped to Rs 50,” he said. Before demonetisation started, the father of two used to earn about Rs 500 a day, ferrying cycles and auto parts.
Ludhiana, about 100 km northwest of state capital Chandigarh, is home to 38,552 registered micro and small units and 153 registered medium and large units. Among the major manufacturing industries, the leading, in production value, are textiles (Rs 9,328 crore), apparels (Rs 5,256 crore), transport equipment (Rs 11,688 crore) and fabricated metal products (Rs 1,878 crore).
The industrial sector in the town collectively employs around 4.4 million people, according to a 2014-15 report by the Ministry of Micro, Small and Medium Enterprises.
Local industrialists said the number of workers employed in the registered industries is around 10 million, as about half the workers were on company pay rolls and others on contract. This helps the companies save money on account of provident fund and medical expenses.
Similarly, a large number of people were employed in the informal economy and unregistered units. “The industry is forced to do this as 56 per cent of profit goes in various taxes, including excise tax, sales tax and
service tax. The government must reduce the tax to make this demonetisation successful,” said Vijay Goel, one of the biggest exporters of cycle parts in Ludhiana. iv_arti_inline_advt">
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