Cash crunch: Workers head home leaving building sites abandoned
Lakhs of construction workers have returned home since abolition of high-denomination banknotes, leaving some building sites across the country facing costly delays.
At a construction site in Gurugram, a satellite city near Delhi, worker numbers have halved to 100. The site manager received a government circular on November 25 saying every worker’s wage should be paid into a bank, a message relayed to each contractor.
Biseshwar Yadav, a 36-year-old migrant labourer from Bihar, worries about arranging documents to open an account and the cost of making regular trips to the bank.
Standing in the largely deserted worker housing colony opposite the unfinished 20-storey blocks of flats he had been building, Yadav said that with no salary, he was surviving on Rs 5,000 borrowed from a local shopkeeper to pay for food.
Some labourers back in their villages are reluctant to return. Duryodhan Majhi, 38, travelled to Odisha after his employer in Secunderabad ran out of cash to pay his Rs 350 daily wage.
“We keep moving from city to city in search of work. This new order would mean opening a new bank account every time we change cities. How and when will we work then?” he said, adding he would seek farm work.
Work at SARE Homes’ residential projects, spanning six cities, has slowed dramatically as migrant workers, who are out of cash and have no bank accounts to draw from, have little choice but to return to their villages. “Construction work at all projects has slowed down in a big way,” managing director Vineet Relia said.
Road developers have also reported a slowdown as they struggle to find sufficient labour.
The exodus shows little sign of reversing, risking damage to construction activity and the wider economy into 2017.
One objective of the demonetisation move was that the majority of workers will be compelled to open a bank account as sub-contractors refuse to pay in cash, bringing them into the formal economy and expanding the country’s low tax base.
That may happen eventually, but for now, millions of workers who depend on daily wages for food and shelter are struggling. Many have never held a bank account, and even if they wanted one, some do not have the necessary documents to do so.
Getamber Anand, president of Indian builders’ association CREDAI, said projects nationwide had been hit, and estimated that roughly half of the migrant workforce, numbering in the low millions, had left for home.
Anand predicts activity on construction sites will not return to normal until April, and only once labourers are able to open accounts at banks still struggling to serve long queues of people desperate for cash.