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The octogenarian owner of Avtar Pritam Motors is willing to discuss anything other than his business. He talks at length about Jawaharlal Nehru's relationship with Rafi Ahmed Kidwai, his own association with industrialist Keshub Mahindra and about how he was drawn into the automobile business. At the end of an hour-long interaction, all he says is, "I know you have to go back to Delhi. If you want to write anything about the business scenario in western Uttar Pradesh, come to me with plenty of time at hand. I will give you lots of insight."
He owns three Mahindra tractor showrooms in Uttar Pradesh's sugar belt - one each in Muzaffarnagar, Shamli and Baraut.
Reluctance to talk about business is also evident at a Maruti showroom nearby, Raj Sneh Auto. The standard answer to all queries is: "Sab theek hai (it is business as usual)."
But a few minutes into the conversation, the impression one gets is the situation is anything but usual. Automobile sales have dropped considerably. And, people are postponing deliveries of vehicles booked on the occasion of Dhanteras. Though banks are willing to offer vehicle loans, people are shying away because they cannot arrange the sum required for a down-payment.
Just a few kilometres from Baraut town, an executive at Brahma Brick Field admits his business is going through a rough patch. "Last year, we sold four million bricks. This year, we have sold 30 per cent less, despite reducing prices 20 per cent. We do not know what to plan for the next year and what to do with the 500-odd workers who work for us for four to six months," says Manoj, who looks after operations at the brick field. His company has four brick fields in the Baghpat district; all are faced with an acute slump in demand.
The reason for the slump in demand for vehicles and construction material, among others, is the uncertainty relating to the sugar sector in the area, once touted Uttar Pradesh's sugar bowl. "The fate of all other businesses is linked to the health of the sugar industry in the area. If farmers aren't paid for sugarcane on time, marriages are postponed, there is delay in sending money to children studying in colleges and schools outside this region, and all purchases considered non-essential are postponed," says SS Tyagi, a farmer in Baghpat's Subhanpur village.
The crisis in the sugar sector has also claimed a few lives. In the last week of October, a farmer in the Shahpur Dhamedi village in Bijnor was reported to have committed suicide as he was unable to repay a loan of Rs 1.8 lakh. According to reports, he was the eighth farmer to have committed suicide in western Uttar Pradesh in recent months.
Farmers say increasing sugarcane arrears is just one of the problems they are confronted with. Mills pay arrears in small installments. "What if you get your salary a year later and that, too, just a fraction of what you should have got? Will it serve any purpose?" says Ajab Singh, a farmer in Nangla village. He adds while input costs have risen considerably, the price farmers get for sugarcane has remained constant through the past three years.
According to the Indian Sugar Mills Association, as of November 17, the arrears in Uttar Pradesh was Rs 1,675 crore. Earlier this month, the state government had kept the state advisory price of sugarcane (the normal variety) unchanged at Rs 280 a quintal. It is mandatory for sugar mills to make a payment of Rs 240 a quintal to farmers within the first 14 days; the remaining amount would be payable within three months after the completion of the crushing season.
At the moment, the bigger worry for farmers is the considerable delay in commencement of the new crushing season. There are 95 private and 23 smaller cooperative mills in Uttar Pradesh and most of these are in the western part of the state. While most of cooperative mills have begun crushing, private mills are yet to do so.
"Already, there is a month's delay. I don't know what will happen to our standing sugarcane crop. If there is further delay, there will be a negative impact on the wheat crop," says Ajab Singh. As such, some farmers have started selling sugarcane to local traders at about Rs 170-190 a quintal. Local traders use the commodity to make gur.
"There is a massive liquidity crunch in the region. Banks have almost stopped lending to farmers, who are now forced to go for unsecured loans at abnormally high rates of interest," says Parminder Tewatia, chief executive of Meerut-based A2Z builders. Since the buying power had been reduced considerably, the real estate business, too, has been hit, he adds.
"Now that there is uncertainty about income from the primary source, people have almost withdrawn from the market," says a senior executive with Raj Sneh Auto.
