COVID blow: Will Telangana’s economy survive the meltdown?

By Yunus Y. Lasania  Published on  7 Sep 2020 6:27 AM GMT
COVID blow: Will Telangana’s economy survive the meltdown?

Hyderabad: Azmath Baig, 55, was one of the many businessmen who were eager to restart their businesses after the state government relaxed the COVID-19 lockdown restrictions in May.

Three months on, there is hardly any customer at his kidswear store. “I am lucky if I sell even a few pieces of clothes in a day. It is nearly 4 p.m. and I haven’t even sold one,” said Azmath, who has been in the business for nearly a decade.

Like others in the Palika Bazar area near Secunderabad station, he is also struggling to pay rent.

In fact, the situation has become so bad that shop owners held a meeting recently to come up with a solution as many of their tenants were unable to pay rent.

“We decided to collect only about 50% of the rent for now. We are literally sitting idle in our shops every day. There is hardly a customer walking in as buses are not running and trains are only ferrying limited passengers,” said another businessman, who did not want to be quoted.

What has complicated the problem is the shortage of laborers. Most of the migrant laborers left for homes soon after the lockdown. Despite unlock 4.0, they have not returned.

“Our business is completely dependent on them. Without them, we can’t run at full capacity. Since there is an economic slowdown, we are managing somehow,” said Sai Kumar, who runs a local eatery at Secunderabad.

Falling revenues and lack of customers have also resulted in layoffs and salary cuts. In fact, a few businesses, which employed daily-wage workers had to ask their remaining staff to come to work on alternate days. One store owner had to witness his staff fighting over who should come to work as none wanted to stay at home.

“We have 6 to 8 workers, who are all, paid about Rs.500-600 at least a day. With sales plummeting to Rs.3000 a day, how will I bear other expenses? So we had to ask them to come on alternate days. This step was taken to save our business,” said the store owner.

He even pointed out that a few cloth stores have closed down as they cannot pay huge rents anymore.

With few exceptions, all traders seem to be facing a tough situation due to the ongoing economic slowdown, which has hit across the sectors. Telangana has been claiming to have GSDP growth of 9.25%, which is higher than the country’s Gross Domestic Product 6.97%.

According to the state government, the nominal and real growth rates for the state are 12.6% and 8.2% respectively, as against 7.5% and 5.0% at an all-India level in 2019-20. According to the ‘Socio-Economic Outlook 2020’, the state has outperformed the national average in terms of economic growth since its formation in 2014. Moreover, the fact India’s GDP declined by 23.9% in the first quarter of 2020-21 means that even a state which boasts of a high growth-rate will not remain insulated.

For 2019-20, the primary, secondary, and tertiary sectors are expected to grow at 10.7%, 1.7%, and 9.6% respectively at constant prices. “The state’s per-capita income is growing faster than that of the country. Between 2018-19 and 2019-20, Telangana grew at 11.6% at current prices, whereas the national per-capita income grew only at 6.3%,” added the report.

With unprecedented lockdown impacting the state’s economy like never before, how Telangana, a top performer, will survive remains to be seen.

Telangana Rashtra Samithi (TRS) government has been trying its best to attract more investments in the state. IT and industries minister K. T. Rama Rao has been at the forefront to persuade the people to invest in the state.

According to a government official, after restrictions were eased, the state has drawn investments of Rs.5, 000 crore from the Welspun group, Ester Industries, Medtronic, and other companies. “If you notice, even from the day the lockdown was implemented, Telangana had been talking to the Centre on how to improve business. The IT minister also held several online meetings with investors. He had said then the adversity would bring us opportunities,” he added.

More importantly, the state government is also looking to leverage its chances with regard to bring out the COVID-19 vaccine from Hyderabad, which is home to huge Pharma and Life Science companies. “In fact, he had also asked medical tech companies to explore innovation, apart from manufacturing masks and face shields here,” the official said.

Hyderabad, with its 429-year-old history, is a place that attracts several tourists all year round. And with public buses still not running and trains being run in limited numbers, it means that even the tourism sector has been hit hard and is yet to recover.

Nimrah Cafe and Bakers is one place outside the historic Charminar, which best captures the once-bustling scenario of the monument. No matter what time of the day, the cafe would be buzzing with customers.

Like every other place, the COVID-19 lockdown has also hit Nimrah Cafe. “We opened our café on July 18 and the business was only 10%. However, since then it has improved to 30-40%. I met tourists from Haryana, Bombay, and others as well a few days ago. There are tourists, local travelers, daily customers, etc, who come here every day,” said Aslam, who runs Nimrah’s day-to-day affairs.

Aslam, whose father Abood Bin Aslam al Katheri started the cafe in 1993, said the business will be down till the historic Charminar and Chowmahalla palace remain closed. “Also, public transport like buses and trains are closed, so business will remain hit,” he said.

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