India’s top biscuit maker, Parle, is expected to cut almost 10,000 jobs in the country. The layoffs appear to be tied to an overall slowdown in India, which had for a time been regarded as the world’s fastest-growing large economy.
The leading biscuit maker is planning on cutting jobs due to falling demand. According to Mayank Shah, category head at Parle, demand has fallen for their biscuit products due to a nationwide goods and services tax (GST) rolled out in 2017. Shah expressed concerns that if the government does not provide some sort of stimulus, the mass layoffs may be unavoidable.
Sales of many consumer goods in India are seeing a decline. The ayurvedic consumer goods brand Patanjali, which has benefitted from growing Hindu nationalism and support from the Narendra Modi government, is also seeing its sales drop in both urban and rural areas.
Vehicle sales are also falling in India. According to a LiveMint report, during the April to June 2019 quarter, car sales fell by 23.3 percent when compared to the same period in 2018. Two-wheeler sales also fell by 11.7 percent. And tractor sales witnessed their highest drop in four years as they fell by 14.1 percent.
Vehicle makers attribute the decline in sales to “low demand owing to the credit squeeze, rising insurance costs and economic uncertainties.”
As per Liases Foras, a real estate research company, property sales are also in decline. The country’s top 30 cities had 1.28 million unsold housing units as of March 2019. This is a jump of seven percent from March 2018 where the number was at 1.2 million.
And as LiveMint’s Vivek Kaul notes, “the real estate sector has forward and backward linkages with 250 ancillary industries. So, when the real estate sector does well, many other sectors, right from steel and cement to furnishings, paints do well too. This is something which isn’t happening currently.”
According to a Nielsen India report, India’s richest state Maharashtra and its most populous state Uttar Pradesh are among those leading the economic slowdown. The fast-moving consumer goods (FMCG) sector is expected to face a slow down in 2019 and the country’s north and west zones will drive the deceleration, the report states.
“The rural downturn in these markets is reaffirmed in key macro-economic indicators comprising deceleration in rural output, reduced government spending and ill-timed rainfall affecting crops in most North Indian markets,” the report adds.
Experts Call on Government to Take on Reforms to Reverse Economic Slide
The former governor of the Reserve Bank of India Raghuram Rajan has also raised concerns regarding the “worrisome” slowdown in the economy. Rajan has called on the government to bring reforms to energize investment from the private sector.
“We need a fresh set of reforms informed by views on what we want India to be and I would love for that view to be articulated at the very top (that) here is the kind of economy that we want. One-off programs here and there don’t amount to a comprehensive reform agenda for the economy,” he says.
Analyst Shankkar Aiyar states that the government must not deny the very real economic slowdown. “To argue that the slowdown is temporary is to live in denial. There is much that needs to be done,” he says.
Aiyar adds that the government should not “waste this crisis” and suggests that they should “invest in governance and dismantle the hurdles haunting the economy” which will enable employment and generate income. He also stresses the need to solve the day-to-day problems citizens are facing.
While the government hasn’t taken any concrete measures yet, it is clear policies are needed to drag India out of the economic slump.