Once thriving, Bihar’s real estate, auto sectors grapple with economic distress

Rain or shine, for Manjay, it has been a daily routine to reach his shop on Guddaud road in Patna early in the morning and shut it sharp at 8 in the evening, for years. The entire day at the shop is usually spent attending to customers and catering to their various demands. But the buzz of customers has eerily subsided over the past few months. These days Manjay sits all day long in his shop ‘Maa Thawe Traders’ – his only source of livelihood – awaiting prospective clients, but doesn’t get many visitors.

“The business has been completely destroyed this year. Last year, I had customers making a beeline before my shop to purchase sand. Then, we used to sell a trailer of sand for almost ₹5,000. This year, there are not many buyers although the rate of sand has come down to ₹3,200,” rues Kumar.

“My capital of ₹500,000 has got stuck in the business. I had arranged a stock of sand at my shop when the government banned mining after the start of the rainy season. But there are no buyers for it this year, although I had roaring business last year. Also, at least 40 per cent of my vehicles engaged in supplying construction materials are stranded owing sharp fall in their demand,” he says.

The economic slowdown that has slumped demand and production in many sectors, leading to job cuts, has severely affected the livelihood of lakhs of workers in Bihar.

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Real estate reels from distress

Among the most affected is the real estate sector, say industry experts. According to a report by the Builders Association, around 4, 75,000 workers — 300,000 unskilled labourers, 100,000 skilled labourers (such as electricians, plumbers and computer operators) and 75,000 semi-skilled labourers—are directly or indirectly dependent on this sector. An estimate says, nearly half of them may now lose their job, due to the slowdown.

“The prevailing situation is very critical. In between 2015 and 2012, the construction sector contributed significantly to pushing up the state’s growth rate to 13 per cent. Its contribution was a robust 5 per cent earlier, but today its share has come down to 3 per cent and it is likely to decrease further in coming days. This shows the slowdown,” explained Bhavesh Kumar, chairman of the Patna chapter of Builders’ Association of India.

Sellers of construction materials like Manjay attribute the sharp fall in demand, to the slump in demand for flats. Kumar says, as there are no takers for many well-furnished apartment complexes, the construction work has nearly stopped.  “This has blocked the money of several builders. Construction works have virtually come to a standstill,” he says.

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Vijay Yadav, a mason, is equally anxious about the fate of his family. In fact, the crisis in the market is a double whammy for Yadav. A resident of Jamui district of Bihar, Yadav, had migrated to Patna in search of an alternative livelihood, after the drought destroyed his standing paddy crops last year. But, after working in Patna for some time, he realised that the situation wasn’t better there either. “Sometimes I get job, sometimes I don’t,” says Yadav, who is currently doing plastering work at a construction site in the Gola Road locality of Patna.

Builders say, it takes almost 365 varieties of products to complete a real estate project, but the poor demand for these products have affected the industry. Industry experts say, while the number of people buying flats has gone down, a number of labourers working in the state have migrated elsewhere in search of work, creating a labour crisis.

According to Manish Kumar, vice-president of Patna centre of Builders’ Association of India, 680 projects have been approved by the Bihar Real Estate Regulatory Authority, upon which about ₹2,000 crore are to be spent. “But the builders have been facing fund crunch as now most of the buyers want ready flats,” he revealed.

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 No bohnai in auto sector

The automobile sector too has borne the brunt of the economic slowdown. Although there are some 25 showrooms of various car companies located in Patna, majority of them have been witnessing low footfalls of customers. For many, even the customary ‘bohnai’ (first sale of the day) is hard to come by these days.

“We are facing the worst time in two decades. Our business has suffered 25 percent loss in the past four months and if the situation doesn’t improve in the coming days, we will be compelled to fire the salesmen,” said Mahindra and Mahindra dealer and director of Kiran Automobiles Nitin Kumar.

Raising similar concerns, Ajay, a dealer of Tata Motors said his outlet has registered almost 20 per cent fall in sale of cars this year. “Only a few buyers have turned up although we are have introduced many attractive offers. It is quite distressing,” Kumar said.

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Textile traders blame GST, note ban

The textile sector in the state has registered a loss of 40 per cent. Although there are around 400 branded showrooms of readymade clothes in Patna, a sizeable number of them have been affected by the economic slowdown. Many traders say, the main triggers for the economic crisis have been demonetisation and imposition of GST, which have broken the backbone of the industry.

“We are finding it hard to recover our invested money as consumers are not buying as much as they used to. The situation is distressful, although the festival season, which witnesses high sales, has already arrived,” said Raman Kedia, president of the Rambagh Businessmen Association.

Cell phone market stares at job cuts

The low sales and threat to jobs has permeated the cell phone market. According to reports, the market saw a 40 per cent drop in sale, just in the recent weeks. The fall in sales threaten the jobs of the 3,000-odd salesmen employed in the 500 multi-brand and 10 high-end mobile stores in Patna.

“The cell phone market is going through a rough phase. You could understand the prevailing situation from the fact that exclusive stores of many companies have shut down in Patna. The condition of multi-brand stores is even more critical,” said Sujeet Kumar, state president of the All India Mobile Retailer Association.