Unemployment in Jaipur's real estate sector: Demonetisation and GST among factors behind job crisis

In Rajasthan, the shock of demonetisation and GST, along with the lingering effects of RERA Act, have contributed to a slowdown in the real estate sector.

Editor's Note: A network of 60 reporters set off across India to test the idea of development as it is experienced on the ground. Their brief: Use your mobile phone to record the impact of 120 key policy decisions on everyday life; what works, what doesn't and why; what can be done better and what should be done differently. Their findings — straight and raw from the ground — will be combined in this series, Elections on the Go, over a course of 100 days.

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Jaipur: In Rajasthan, the shock of demonetisation and GST, along with the lingering effects of the enactment of Real Estate Regulatory Authority (RERA) Act and the ban on illegal sand mining, have all contributed to a slowdown in the real estate sector, traditionally one of the bigger employment providers.

RERA is meant to regulate the real estate market and protect homeowners from dubious dealers. While the industry has welcomed regulation, teething troubles with RERA have exasperated the larger slowdown. Apart from the unorganised sector, which has taken a hit across the country, the working class associated with the sector is also bearing the brunt of these upheavals.

"Investors have stopped putting money in real estate since 2017 as they do not see any returns," said Surendra Shah, a city-based Chartered Accountant. “Banks have reduced funding for builders by over 50 percent due to unsold inventories and less cash flow. The recession in the real estate sector is causing acute rural distress because most of the labour was engaged in construction and are now out of work.”

“There is a huge crisis in real estate in Rajasthan,” said Preetosh Kumawat, a city-based civil engineer. “The industry was mostly cash-based. Now with demonetisation and GST, builders cannot take cash from buyers, so less construction is happening. Nearly 80 percent of new civil engineers are looking for government jobs or have shifted to other fields in the last three years. Their salaries are also not as per expectations,” Preetosh added.

Unemployment in Jaipur's real estate sector has risen. Image courtesy: 101Reporters

Unemployment in Jaipur's real estate sector has risen. Image courtesy: 101Reporters

With educated civil engineers facing unemployment, the plight of unskilled daily wage workers can be imagined. Jai Prakash Ramawat, a city-based contractor, pointed out that not only has hiring dropped, the labourers’ wages have also taken a hit. “A year back, I used to hire about 2,000 labourers every day for 10-12 projects running simultaneously across the city. Now I hire just 1,000-1,200 labourers per day.”

A group of severe cost-cutting measures is another factor adding to unemployment. “Where earlier, we used to hire three people, we hire one now,” said Mohit Jain, a Jaipur-based builder. "The industry is now forced to optimise its use of resources. We can no longer afford to keep a worker when there is no work, earlier we could."

Auctions for projects by the Jaipur Development Authority are also down. “Auctions have not taken place as there is no liquidity,” said Umang Sawalka, managing director, Shivgyan Group. “Sales have also slowed leading to unused inventory.”

One ban on top of another

The Government of India enacted the Real Estate (Regulation and Development) Act, 2016 with the aim to bring more transparency in the existing system and protect the interests of home buyers. All the provisions of the Act came into force in Rajasthan in May 2017, only the third state at the time to have implemented it after Maharashtra and Madhya Pradesh.

A month later, the then Chief Minister Vasundhara Raje launched the website and it became mandatory for all the builders and real estate agents to register on the website and upload details of all ongoing projects. Consumers wishing to register their complaints against a real estate company/project can do so with the regulatory authority, even if the company has not registered on the portal.

The implementation of RERA led to the dissolution of several small and unregulated builders who were solely working on cash. Such builders would sometimes announce project but stall them past several deadlines but now, under RERA, they have to deliver the project on the date they have promised. This had an impact on the number of new projects. While the industry has welcomed RERA, it has perhaps come at a bad time, compounding other major disturbances to the ecosystem.

Like, with bajri ban in place (the Supreme Court had banned sand mining in 41 blocks across Rajasthan in November 2017 as they were being run without adequate environmental clearances), builders are using stone dust as an alternative. “Stone dust is a common source in metro-cities but is now being used in Rajasthan,” said Sawalka. “But skilled labour that knows how to use stone dust is not easily available. And no one wants to hire unskilled labour for this.”

Every builder and contractor says the number of projects, big and small, has come down. Even the number of personal homes being built is down. Also, “individuals want their homes to be built using sand, the mining of which is now banned. So, workers who used to work in sand mining are now unemployed,” Ramawat added.

Labour and manpower issues, like stringent labour laws, are leading to mechanisation, which is further denting the labour market “Construction is one of the largest employers after agriculture and there is a recession in construction,” said Anand Mishra, managing director, Trimurty Builders, a Jaipur-based building company. “Though post RERA, things are improving, many developers have left the market,” Mishra added.

For Mukesh Saini, 19, who arrives at the Ajmer Road flyover in Jaipur at 8.30 every morning looking for casual labour, this means he now has to wait in vain. About 200 labourers gather every day at such spots, called chauktis, waiting to be hired by contractors for Rs 350-400 a day. Saini, an eighth-class pass, hasn’t found work for the past 10 days but remains hopeful as he arrives there without fail every morning. Hailing from Karauli district, he came to Jaipur after his father passed away. “I have been a daily wage labourer for the last three years,” said Saini. “Earlier, I would get work 25 days a month. But now, it is barely 15 days a month. It has become difficult to pay my room rent of Rs 2,000 per month.”

Youth arrive at Ajmer Road flyover in Jaipur every morning, looking for work. Image courtesy: 101Reporters

Youth arrive at Ajmer Road flyover in Jaipur every morning, looking for work. Image courtesy: 101Reporters

The one bigha of land his family owns in the village provides no income. “There is no water, how can I grow crops?” asks Saini, who has a mentally ill mother to support. “Now, here also, there is no money. I do not know where to go.”

“We sit here at the labour hub all day most of the time, and sometimes go at half the rate if we get work in the second half of the day,” said Monu Rao, 20. Some labourers come from nearby villages and towns every morning while many others have chosen to live in the city, four to five labourers to a room, hoping to get enough work to support the families they left behind in their village.

Rajasthan loves ‘job talk’ before elections

Unemployment is reaching alarming proportions in the state. Real estate and construction, gems and stone and sand quarrying used to be the biggest employers in the informal sector. But all sectors have been hit equally hard, causing high unemployment. A February 2019 report by the Ministry of Labour and Employment indicates overall unemployment of 75.79 lakh such workers across the country out of which eight percent, or 6.03 lakh workers, are in Rajasthan.

Job creation and self-employment have been a major promise during elections for the last two terms. Prime Minister Narendra Modi, during his election campaigns in 2014, had promised one crore job creation every year for the next five years. In addition to this, Rajasthan's former chief minister, Vasundhara Raje, during state elections in 2018, claimed to have created 15 lakh jobs in the state.


This was, however, heavily countered by PCC chief, Sachin Pilot, who called the claim 'a white lie'. Furthermore, Congress had promised to work on job creation and farmer issues during the first 100 days of its rule in Rajasthan. "The policies by NDA government were such that employment generation did not happen. The GDP has also been low, and they manipulated the debt series to showcase that the GDP has grown. Further, policies like demonetisation and GST resulted in layoffs. There has been job destruction in place of job creation. About 10 million youth, who were earlier working, is currently unemployed. Employment generation and the boost to MSMEs will be part of the manifesto on Congress this election," said Archana Sharma, state vice president, Congress.

Several months down the line, labourers like Kamal, 36 — who works on installing sewage pipes — continue to earn far less than the bare minimum of Rs 50,000 per year which families like his need to survive, he says. “Yesterday, my child asked me for ten rupees to buy a packet of biscuits as there was less food. I have been unemployed for the last five days. I could not give him ten rupees and milk is also expensive,” said a tearful Kamal. Kamal’s work continues to be dangerous but now, more people are available to do it for less. “I go down 20-25 feet with a person holding me from the surface,” he says. “Digging one khadda takes 1-2 days, and I have two children. Tell me, what will they get if anything happens to me?"

Sadly, the labourers’ woes don’t end there. Even if someone hires them at the chauktis, there is no guarantee that they will get paid at the end of the day. “There are some areas from where employers who are not willing to pay come to hire us,” said Girraj Mali, a 28-year-old labourer from Lalitpura. “We mostly avoid going to those areas but sometimes do if there is no other work. The police do not help us at such times, saying ‘we did not ask you to go and work for this person’ or ask for a bribe.”

(The author is a Jaipur-based freelance writer and a member of 101Reporters)

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