Economy: start with a White Paper

Automobiles

The automobile industry is in a mess with over half a million passenger cars lying unsold with dealers. While the unsold inventory of cars is valued at a whopping Rs 35,000 crore, two-wheeler manufacturers are no better off either. Motorcycles worth over Rs 17,000 crore is gathering dust in the open, for lack of inventory storage space. Most automobile companies and two-wheeler manufacturers have reported slide in sales in the last eight months. And the slump touched 25% in May 2019, the highest in 18 years. Over 300 sales outlets and 205 dealerships across states have reportedly downed shutters in the last two years. Pune, Mumbai and the National Capital Region, including Delhi, top the list of cities where dealerships have been closed. Also, top car manufacturers, including Maruti Suzuki, Tata Motors and Mahindra, have shut down their plants for several days and cut down on production in the last two months. More such shutdowns have been announced for June and July by the likes of Renault Nissan, Skoda, etc. 

If this does not reflect the contraction in manufacturing, what else does. The government must come out of its denial of an economic slowdown and get its act together. Running away from reality, while laying out ambitious targets, does not help anyone’s cause. Given that car and motorcycle sales are reliable indicators of middle-class consumption demand, the lack of it is evident from the figures put out by industry outfits. The inventory of unsold real estate properties, including residential flats, commercial spaces, warehousing and spaces for e-commerce and IT services companies, have been lying around for periods ranging from 33 to 47 months as per industry data. In the top seven cities, including New Delhi, Mumbai, Pune and Bengaluru, the inventory build-up seems to be at its worst. This has singed big and small real estate players alike.

It’s not just the automobile or real estate companies that have faced the brunt of a comprehensive economic slowdown. Banks have felt the heat, too, with consumers and companies unable to pay back loans. Even lucrative leasing deals with no down payment commitment have failed to help perk up demand. Finance Minister Nirmala Sitharaman should consider coming up with a white paper on the state of the economy. She could even utilise her first budget, to be presented on July 5, to roll out measures to reverse the economic slowdown which, in turn, has hit job creation. The industry employs about 24% of the total workforce. If this has to improve and fully exploit the demographic potential, then sector-specific measures must be spelt out.

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