Indian industry finds itself in a tight spot as authorities relax Covid-19 restrictions to help restart the economy. Multiple problems after a 70-day lockdown could delay any economic recovery by up to three months.
Companies are grappling with how to restart factories, restore raw material supply chains, get working capital, and most critically, get workers back on the shop floor. Ironically in a country with high unemployment, factories are finding it tough to get staffing back to pre-lockdown levels.
The problem started with the draconian lockdown from March 25 to contain the spread of the virus. Prime Minister Narendra Modi gave less than four hours’ notice to shut down the entire country, including shutting factories.
This trapped millions of workers who would typically live in accommodation shared with others working different shifts.
“Workers should have been permitted to go back to their villages around the time of the lockdown,’’ said Mayank Parikh, an Ahmedabad-based businessman, who makes resin for paint.
“It is simply impossible to hold back workers now coming out frustrated and angry from the lockdown. “
More than nine million workers have deserted industrial towns such as Mumbai, Pune, Hyderabad, Bangalore, Ahmedabad, Coimbatore and Surat in western and southern India.
They have gone to states including Uttar Pradesh, Bihar, West Bengal, Jharkhand and Odisha in northern and eastern India where families depend on the land and have higher levels of disguised unemployment.
The lockdown initially created panic, prompting hundreds of thousands of workers to defy police and walk or hitch-hike up to 1,500 kilometers away. Sensing the rising tide, the government started special trains to transport them in May.
Even after transporting more than five million workers in 4,200 trains, the railways are still running packed services with workers who have exhausted their savings to eat or pay rent in large towns.
Industries across western and southern India are now facing an acute shortage of employees as they plan to restart work.
Mumbai-based Rishabh Mohta runs a business sorting non-ferrous metals from scrap to sell to metallurgical companies. He is struggling to scale back work with just 30 out of his previous 120 workers.
Like many others, he is trying to lure back workers from villages with promises of better salaries and job guarantees. But the absence of adequate road transport and trains from villages to larger towns is holding back many who are staying with family and friends.
Adding to the problems for industry is the oncoming four-month monsoon, which will make mass movement back to cities and relocating new shanties cumbersome. It’s also the time when workers help their families sow rice, corn, cotton, peanuts, soybean and sugar cane.
Anurag Sheth, who makes machine parts for the chemicals and oil industry in Ahmedabad, said the work chain could take up to October to get back on track.
Parikh, who fed all his 100 workers and paid their full salaries through the lockdown, has been able to retain half the workers for now. Yet, he expects full attendance by October.
The textile and diamond polishing town of Surat, with two-thirds of the workforce made up of migrants, is among the worst places affected by the migration.
So why don’t entrepreneurs employ locals?
That is an option the entrepreneurs say they don’t wish to exercise. In the past, local politicians battled to get these jobs for local people. Workers from outside states taking away local jobs is a long-standing political hot potato.
The issue has also caused riots in Mumbai. Political parties were formed with a promise to drive out the outsiders.
Sensing opportunity, Maharashtra chief minister Uddhav Thackeray appealed to locals to take up jobs vacated by those from outside the state. But that’s where reality kicks in.
“Replacing these workers with local workers is simply not an option,’’ said an industrialist from a Mumbai suburb. “Migrants work 12 hours a day, charge reasonably and don’t want an off day since they want to earn as much as possible to send money home.’’
The situation in Gujarat is no different. Local workers don’t want to sweat and prefer lighter work, even if it pays slightly less. Businessmen say most local workers are not the prime bread earners, live with parents, are part of local political groups, create nuisances and demand much higher wages for fewer hours. Some go to bars.
Most industrial firms are operating at less than half capacity, partly because of missing workers and because the economy has slowed down and demand shrunk.
Most small entrepreneurs agree it could take up to another quarter for operations to get back close to normal. The consensus is that workers may return around the main Hindu festival of Diwali in October-November.
But there is a twist in the tale. Northern Uttar Pradesh state, with most workers, plans to set up a Migration Commission to start rationing out workers to other states. But experts say the move may be illegal because India’s constitution guarantees the right to free movement and occupation across the country. The state also plans to help re-skill workers. That may help.