By Manoj Kumar

VARANASI (India) – There is little evidence of India’s nascent economy recovery in the narrow streets of Varanasi which is a Hindu pilgrimage town and the heart of a famed silk weaving industry.

According to locals, sales of heavy-brocaded silk sarees that were made in ancient Ganges on the River Ganges have dropped 70% since the time before the pandemic. Many weavers have closed down their looms. Others have also sold them. Some workers are pulling their children from school because they cannot afford to pay the fees.

Mohammad Kasim (a weaver) said, “Prices are skyrocketing” and that he is unable to obtain even one-third the amount he earned prior to the pandemic. He has already sold two of his sixteen looms.

The pandemic has already caused a surge in prices for petrol, diesel, and cooking gas around the world, which is now affecting many Indian businesses and households.

India imports 80% of its oil requirements. The government also imposes more that 100% tax on petrol and diesel. Businesses and consumers end up paying higher fuel costs and transportation rates than other emerging countries.

In addition, falling consumer incomes following the pandemic’s outbreak in early 2013 are making it difficult to find price-elastic products.

These heavy Banarasi silk dresses, also known as Benaras, have been brocaded with copper, gold and silver.

According to weavers, they face shrinking sales as their expensive sarees are replaced with lower-priced varieties and the higher prices for raw silk or brocade.

The raw silk price has risen by 4,500 rupees (611) per kg in four months from 3,500 in March, Kasim explained. Meanwhile, brocade material such as copper and silver have become more costly by 40%. That means that profit margins in saree manufacturing are now below 10%.

Kasim is one of millions of Indians working in small-scale manufacturing and service industries, which accounts for 90% of all jobs. They are complaining about high prices and low demand.

Although retail inflation exceeded the limit set by central banks at 6% year on year a few times, it dropped to 5.3% in August.

This poses a threat to Asia’s third-largest economy, after the most severe contraction in history of 7.3% during the March fiscal year.

K.V. Subramanian, chief economist of government, said that India’s economy saw an annual increase of 20.1 per cent in April-June quarter. Subramanian stated that India is on the verge of stronger growth.

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He said, “With high inflation at risk in the near term and large unemployment recent past I do not see any prospects for a complete recovery soon.”

NO CONSUMER DEMAND

Wholesale price-based inflation, a proxy of producers’ prices, rose in double-digits for the fifth month in a row to 11.4% in August year-on-year, stoking concerns companies could pass on rising costs to consumers.

India’s panademic relief was different from other developed economies that offer massive stimulus programs. It focused on credit guarantee on bank loans, and food grain for the poor, rather than any government offering huge amounts of assistance.

Rajan Behal is the general secretary for the Varanasi fabric merchants’ Association, which comprises about 800 wholesalers. He stated that many businesses are reluctant to borrow new money, even though government guarantees have been kept.

He told Reuters that he would happily have mortgaged his properties to get loans if there were consumer demand.

According to him, the hand-loom and powerloom saree making industry employs 1.5 million people in Varanasi. It has an annual revenue of 700 billion rupees.

Mohammad Siraj (45), a power-loom worker said that his family survived on foodgrains provided by the federal government. This was in response to the pandemic. However, household expenses remained high.

Siraj stated, “I took my daughters out school because it was too expensive.”

Varanasi’s traders, also known as a significant Hindu pilgrimage spot, pray for an increase in tourist flows and increased garment demand in the coming festival and wedding season.

Rahul Mehta (president of the Tourism Welfare Association), a trade association of around 100 businesses, stated that “We are taking out our savings and going into debt in order to survive.”

According to him, earnings from approximately 6.5 million tourist inflows per year, which were 50 billion rupees before the pandemic in 2019/20, could be resurrected to 15-20 billion rupees if there is no increase in viral cases.

Any projections that there will be an increase of demand, however, are subject to price increases.

Mehta stated that although we may have survived the coronavirus, it will be difficult for us to bear the weight of increasing prices and falling demand. He added that if there was no revival in tourism and the demand for sarees, then thousands of vendors and sareemakers would need to shut down their shops permanently.