Madan Lal Dudeja wipes sweat from his brow and shouts out over the din of his clanging looms: “This looks like the beginning of the end of recession.” Freefall
That, however, does not mean that happy days are here again.
The 50-year-old proprietor of MG Enterprises, a Panipat-based maker of durries, or rugs, and other loom owners in this city, had borne the brunt of the global recession – especially in the panic-stricken days following the collapse of Lehman Brothers, the iconic 158-year-old US investment bank collapsed on September 15 last year.
Panipat, small town exports mainly rugs, bath mats, cushion covers, towels, sheets and blankets the world over.
Last November, when Hindustan Times had visited Dudeja, only two of his 160 looms had been operational. Reason: Sourcing agents, who buy goods on behalf of large international buyers, had cancelled orders.
Almost broke, and staring at a bleak future, he had been forced to lay off dozens of workers.
Dudeja was not the only one to take a hit. Indian exports, which had been growing at an average of over 25 per cent per annum for the previous three years, nosedived following the Lehman-induced recession.
Since October last year, Indian exports have declined for 10 consecutive months. The country missed its 2008-09 export target of $200 billion (Rs 9.6 lakh crore, or almost seven times the turnover of Reliance Industries, India’s largest private sector company and exporter). The final export figure: $168 billion (Rs 8.06 lakh crore).
Now, all of Dudeja’s 160 looms are operations once again, but he, and others like him, is still not out of the woods.
In an article carried on the International Monetary Fund website on August 18, its chief economist Olivier Blanchard said: “The turnaround will not be simple. The crisis has left deep scars, which will affect both demand and supply for many years to come.”
Most exporters in Panipat have never heard of Blanchard, but their experience bears out his prophecy.
“It will take at least 3-5 years to make up for the losses we have suffered over the last year,” says Yashpal Malik, president of the Panipat Federation of Small Scale Industries Association, the apex business chamber in this industrial town.
A Federation of Indian Chambers of Commerce and Industry (FICCI) survey of 316 large, medium and small exporters on August 17 corroborates this.
“Though orders are not coming in thick and fast, some foreign clients have started placing some new orders or, at least, reduced the pace of order cancellations,” a FICCI release said.
Commerce Minister Anand Sharma is also cautious about the future. “I remain hesitant to hazard a guess on the nature and extent of recovery (in exports),” he said, while announcing the foreign trade policy for 2009-14 on August 27.
“It is at best a small recovery,” says M.S. Kamal, chief quality assurance officer at the Textiles Committee under ministry of textiles. Kamal should know. His office checks each of Panipat’s export consignments for quality.
Perhaps that’s why Panipat's sense of financial security is badly shaken. Nobody here is confident anymore, not the workers, not the manufacturers and not the exporters.
Without easy credit, when will export orders reach pre-meltdown levels?
Nobody knows for sure. Malik says the Rs 2,000-crore Panipat export industry has been halved to Rs 1,000 crore.
And with no jobs, what does life hold for about 200,000 sacked weavers across the country, not to speak of the one million others in industries like textiles, gems and jewellery, leather, petroleum, plantations, etc.?
“Sackings have stopped, because some orders are coming, but very few people have been taken back. Jobless skilled weavers who earned Rs 200 a day are now pulling rickshaws,” says Sunil Dutt, general secretary of Industrial Workers’ Association, Panipat.
So what does a four per cent recovery mean for Panipat?
It means only a few of Panipat’s 700 exporters have work.
The commerce ministry has set an export target of $168 billion for 2009-10, the same level as last year and $200 billion for 2010-11, the level it had been hoping to achieve last year before the global meltdown hit home..
Overall, exporters seem confident of being able to achieve this year’s target. FICCI’s survey findings predicted a recovery in exports by the end of the year.
That means only some of the thousands of exporters, their suppliers and millions of workers will have something to cheer about. For the rest, the wait will continue.