Construction slowdown hits PM Modi's jobs promise
Aug 28, 2015
Source : Toi

NOIDA: After a decade labouring on building sites around New Delhi Akhilesh Kumar lost his scaffolding job last month when his employer halted work on an array of 30 residential towers.

He joins more than half a million workers let go from sites around India's capital in the last 18 months, in a stark sign that the ground reality in Asia's third-largest economy is far from as rosy as official data suggests.

"If I don't get another job, I have no other choice but to go back to my village and work as a farm labourer," said Kumar, who is in his twenties.

The lack of jobs is already being felt in the poor northern state of Bihar, source of many of the labourers toiling near Delhi.

In Patna, the state capital, eight out of 20 labourers contacted by Reuters had this year made the 1,000 kilometre (600 mile) trip back from Delhi because they could not find work - pressuring salaries in a region where wages are already low.

According to brokerage Ambit Capital, rural wages may now be falling after growing 4 percent in the year to March - a far cry from the double-digit annual rises between 2010 and 2014.

"Labourers are starving and are ready to work even at lower wages as there are fewer or just no jobs in the construction markets," said Navendu Kumar Thakur, Patna chairman of the Builders Association of India.

The squeeze comes at a bad time for Modi.

Bihar heads to the polls this year, in an election his Hindu nationalist Bharatiya Janata Party (BJP) must win to gain seats in the upper house of parliament where he lacks a majority to pass economic reforms.

Economists say that lower interest rates and a government splurge on infrastructure should eventually help revive construction, which contributes a tenth of Indian GDP.

Modi's party also wants to regulate property markets and tie investor money to specific projects to stop developers diverting cash elsewhere.

The slowdown around Delhi, where unsold inventory is highest, shows no sign of abating, however.

Noida, a city of 640,000, has grown rapidly in the last decade, expanding to a point where its middle-class housing complexes now meld into Delhi's urban sprawl on one side and rustic villages on the other.

Around the site where Kumar worked, half-built high-rises now dot the skyline. Cranes and diggers stand idle. His former employer, The 3C Company, has cut staff on the 3,000-unit "Lotus Boulevard" by more than half, employing some elsewhere.

Sales staff at two nearby sites reported a 30 to 50 percent decline in bookings in the last year.

Real estate association CREDAI's Rohit Raj Modi estimates construction in Noida employed more than a million labourers at its peak in 2013, at least double today's number.

Even when the market recovers, a shift to mechanisation on larger sites would limit demand for new workers.

"From a labour point of view, the peak is over," he said.

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