Tourism and local industries at a standstill, will infrastructure revive Himachal’s urban economy?

Himachal Pradesh has seen nearly 80 per cent loss of livelihoods, both rural and urban. The government is now pinning hopes on opening up construction and other infrastructure projects.

“Despite best efforts to facilitate the state’s economic revival, the success rate is not beyond 50 per cent,” said Rajinder Guleria, advisor, Baddi-Brotiwala-Nalagarh (BBN) Industries Association, “There are issues of logistics, mobility, manpower and enhancing liquidity.”

For a hill state mainly dependent on its farm economy, tourism and export oriented pharmaceutical clusters, Himachal Pradesh currently stares at nearly 80 per cent loss of livelihoods, both rural and urban, especially as its mainstay, the tourism industry, is under total lockdown.

The Baddi-Brotiwala-Nalagarh industrial belt, Himachal’s largest industrial belt, has an annual turnover worth Rs 45,000 to 50,000 crore, and employs three lakh people, both locals and migrants. Located on the Punjab-Haryana border, this belt houses one pf the country’s largest pharma manufacturing hubs producing more than 220 bulk drugs (including the anti-malarial drug Hydroxychoroquine, much in demand today for COVID treatment), which they export to countries like the US, UK , Germany, Italy, Japan and Australia.

But with the government allowing these units to function with only 50 per cent of  its normal worker strength, they are facing a labour shortage, especially as many of the labourers from other states like Bihar, UP, Jharkhand, Chhattisgarh and Madhya Pradesh are now opting to go back home. Even local workers have returned to their villages, especially after a COVID-related death was reported from the area, which is now in the red zone.

“A majority of workers and managerial rank staff are shuttling between BBN and places like Chandigarh, Pinjore, Mohali and Parwanoo,” said Guleria. “The government has restricted movement with those entering the state having to undergo 14-day quarantine.”

Industry demands

Recently, the Industries Association sent a three-page memorandum to the state government, asking for easing of restrictions on inter-state movement of workers. They also want certain dues like those on power to be waived off, freezing of power tariff, deferral or waiver of delayed payments of industrial plots and release of pending payments to encourage industrial revival and sustainability.

The crisis gripping the state’s hospitality sector, which has been totally closed since March 20th, is another major cause for worry. Most tourist destinations and towns, which usually attract thousands of holiday makers around this time of the year, are deserted and look like ghost towns. Many of the new hotels were built in the past 3 to 5 years, and quite a few had invested in renovation earlier in February. Now all that investment is standing idle.

“I don’t see a chance of the hotel business opening up even by October 2020,” said Dinesh Sood, a Manali hotelier and one of Shimla’s leading businessmen. “And by then the tourist season will be over. Foreign travellers, who used to generate foreign exchange for us, are also unlikely to step out of their countries.” The state cabinet, as a relief to this segment, has waived off electricity charges for six months and also granted relief in excise licence fee. But hoteliers feel that with no liquidity, paying wages to the staff and clearing EMIs on their loans will leave them with no option but to shut down.

Anil Kant, a local hotelier at Manali, who said he spent Rs 10 to 12 lakhs on upgrading facilities at his hotel, appointed new staff and invested in promoting his business in February, has no hope of seeing even a single tourist. “We are totally ruined,” he said.

Jobless labourers line the road in Shimla during lockdown.

Weavers’ woes

The pandemic has also severely hit the state’s cottage industry, mainly its handloom sector. “There are around 1000  weavers directly engaged by our society,” said Satya Prakash Thakur, chairman of the Bhutti Weavers Society, which is a pioneer in making woollen shawls, Himachali caps, stoles, mufflers, woollen jackets and other accessories for men and women. These had a global market and were among the tourists’ favourite purchases.

“Our sales are down by Rs 2 to 3 crore because of the lockdown. It will take two to three years to revive the sector, as tourists, who are the biggest buyers, are unlikely to visit Himachal Pradesh any time soon. The weavers have resumed work after the government lifted restrictions in Kullu, which is in the green zone. But the long term effects on their livelihoods will be severe.”

Hit to agriculture

The farm sector’s woes are more serious. Though the state’s famed apple crop still has time, as marketing begins only in July-August, other fruits like cherry and stone fruits which are ready are unable to reach the market due to lack of adequate infrastructure. Asia’s biggest fruit and vegetable market at Azadpur, New Delhi is under lockdown and Himachal’s farmers are not finding buyers.

An acute shortage of packaging material, which comes from other states, has also hurt the farmers badly. Rohit Thakur, a former Jubbal-Kotkhai MLA and orchardist has asked Chief Minister Jai Ram Thakur to take urgent steps to save the state’s Rs 5000-crore fruit economy by extending facilities like minimum support price, making arrangements for labour (as 90 percent of Nepali laborers have gone back), packaging material, trucks for transportation and loan waivers to help the farmers.

Baby steps

A task force under Additional Chief Secretary (Power) Ram Subhag Singh has given its report on economic revival, which is now with a cabinet committee headed by Jal Shakti Minister Mohinder Singh Thakur. “We are looking at each sector,” said Thakur. “About Rs 10,000 cr is available with the Deputy Commissioners. This will help to start major infrastructure activities like roads, bridges, other construction work, MNREGA work, Irrigation and water supply schemes, forestry, and hydro-power projects. Once the money starts going into the pockets of labourers, other activities will gradually start.”

The government claims that nearly 1.85 lakh workers who were jobless during the lockdown have now been engaged in different works started by government departments like public works, irrigation, MNREGA  and infrastructure projects in the past 15 to 20 days.

Transport is another distressed sector asking for bailouts. Private bus and taxi operators are asking for at least limited opening of the state’s borders, for which the government is not yet ready given that fresh cases have emerged among those returning from other states.

The Chief Minister has said that the state government has started a special scheme to create assured job opportunities for 120 days, for unskilled workers in urban centres. It was pointed out that the state government has suffered a loss of Rs 16,000 crore due to the lockdown through loss of excise duty and GST and VAT collections.

“Efforts are underway to revive industrial activities, both essential and non-essential including mining activities, while following health guidelines,” assured Industries Minister Bikram Singh.

Though with nearly 60,000 workers from UP, Bihar, Jharkhand and MP having already left, and the those remaining not inclined to stay back, labour shortage will adversely affect recovery efforts.

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