India’s wedding industry slumps as the country’s economy continues its slowdown.
NEW DELHI, India—At a popular store for traditional womenswear in the heart of India’s capital, workless salesmen kill time shifting piles of unstitched sari cloth from one shelf to another, without any apparent purpose. The store, in Delhi’s Chandni Chowk market, specializes in the lehenga, a style of hand-embroidered skirt worn on special occasions.
The market is the go-to place for shoppers during the festival and wedding season. Besides women’s clothes, one can also buy wholesale accessories and gold and silver jewelry. But these days, few turn up and fewer buy. Business has plummeted in recent months, said Vivek Jain, the owner of the store. In the past three months, Jain has laid off nine of his 13 workers. “Sales are almost negligible. What options do I have?” asked Jain, 36, as three of his remaining salesmen continued to shift neat stacks of dresses.
The season for extravagant Indian weddings has arrived. In previous years, markets such as Chandni Chowk could see millions of dollars’ worth of sales in a year: One luxury wedding can cost hundreds of thousands of dollars, and the entire wedding industry was estimated to have been worth $40 to $50 billion last year. But this year, stores would be lucky to pull in a quarter of last year’s take. And the slowdown has traveled up the supply chain. The number of truckloads of garments procured from hundreds of manufacturing hubs across India has cratered, shop owners said.
According to government data, consumer spending in India fell in 2017-18 for the first time in more than four decades. Fancy shopping malls, a symbol of India’s prosperity, recorded a massive dip in sales. Friends and families looking to hang out visit shopping centers but fewer than normal end up making purchases, traders said. Indian Finance Minister Nirmala Sitharaman recently admitted that the country was in the midst of an economic slowdown, “but it is not a recession.”
For many in India, though, her statement rang false. Isha Iyer, a developmental consultant in southern Indian state of Kerala, is among the Indian brides whose wedding has been pared back. Many families have cut down their guest lists and wedding trousseaux. Even gold jewelry, a staple at weddings, is in low demand. India imported 38 metric tons (42 tons) of gold in October, down 33 percent from a year earlier. The country is the second-largest consumer of gold in the world.
“It is like you have saved for years to fulfill your desires on this day, the dreams you have had, and then your parents tell you that not so good days might be in the offing,” Iyer said. She isn’t the only one feeling the impact of the slowdown. Until last year, India was the world’s fastest-growing economy, posting growth rates of as high of 9.3 percent in the first quarter of 2016. Last quarter, that rate plummeted to 4.5 percent, the lowest in more than six years.
In turn, several important industries are flagging. The automobile sector is in a slump. Consumer demand, driven by voracious buyers in previous years, has fallen. Hundreds of thousands of workers have already lost jobs, and carmakers are warning of 1 million layoffs in coming year. Overall, India’s manufacturing output slowed down by 4.3 percent in September, hitting a seven-year low.
The Indian banking sector is also in a bad shape. The list of nonperforming assets—defined as loans and advances for which borrowers have stopped making interest or principal repayments for more than 90 days—is growing. According to the National Council of Applied Economic Research, a New Delhi-based policy think tank, consumer and investor confidence is at a decade low. In 2018 alone, 5,000 millionaires left India for foreign shores.
Lifting up the economy and accelerating economic growth is one of the foremost challenges facing India’s populist prime minister, Narendra Modi. He rode to power in 2014 on the promise that good days were coming for Indians. By 2025, the economy, he said, would be worth $5 trillion (about double the country’s current GDP).
Needless to say, that isn’t going to happen—both for structural reasons and because of Modi’s own missteps. Economists point out that India’s informal economy has been in decline since Modi banned large currency bills in 2016. Given the country’s huge informal sector, such declines can be devastating. According to India’s Economic Survey of 2018-19, perhaps 93 percent of the total workforce is informally employed. The International Labor Organization has similarly estimated that only 6.5 percent of workers are in the formal sector.
Another issue is that, even as successive governments have failed to bring India’s informal sector into the fold, Modi has lavished the corporate sector with new tax incentive packages that he says will improve the country’s economy and spur growth. It is a costly gamble, and many economists say it will not change anything on ground.
“This is as close the economy could get to a recession,” Amit Kapoor, honorary chairman of the Institute for Competitiveness, a policy think tank, said. Kapoor said it is onl government spending that is driving the economy currently. Government spending, he said, has “grown by 15.6 percent in real terms” in the last quarter. But buying growth in this way has its limits. For one, “government finances are already constrained,” Kapoor said.
It is also inefficient. On Dec. 1, New Delhi said it would invest $1.39 trillion in infrastructure projects to spur growth. But such packages “will not generate as many jobs as similar expenditure in the unorganized sectors,” Arun Kumar, a professor at New Delhi’s Institute of Social Sciences, told me this month. “If this much money had been given to the unorganized sector, by increasing incomes to farmers and expenditures on education, health, and rural infrastructure, it would have led to an increase in demand,” claimed Kumar.
Modi has responded to bad economic news by either ignoring it or trying to whip up Hindu nationalism, and his stint in power has been marred by hate crimes and deepening sectarian divisions. Few in the business community have spoken out, but that may be changing. Last week, Rahul Bajaj, a reputed industrialist, raised concerns about the Modi government’s lack of stomach for criticism and its inaction against mob lynchings of Indian Muslims. Modi’s deputy and the country’s powerful home minister, Amit Shah, was by Bajaj’s side. “Nobody from our industrialist friends will speak,” Bajaj said. “There is fear.”
Supporters of Modi’s Hindu nationalist government soon proved Bajaj right. For his criticism of the government, he was dubbed as an anti-nationalist. It is not just India’s minorities but business leaders, too, who are afraid of government retribution if they speak out.
There is, indeed, plenty of unease to go around. Late in the evening, a potential buyer turned up at Jain’s shop in Chandni Chowk. The workers scrambled to splash dozens of lehengas on a white rug, a trademark of the shopkeepers here, but the women would not buy today.
“I will come back,” she told Jain.
“When there is no demand, I won’t buy from factories. When I won’t buy, how will I pay my staff?” Jain said, juggling calls about a missed payment from a manufacturer in the western Indian state of Gujarat, Modi’s home state, from which Jain procures his stock.