Mumbai rains, VAT wash away rakhi sales

VAT in state has forced the customers to migrate to other markets such as Ambala, Delhi & Kolkata

With the festival of Raksha Bandhan just round the bend, rakhi sellers in Mumbai are finding the business a loss making proposition.

In fact, the market is so depressed that retailers expect the prices to dip further in the run up to the festival. If the floods of last month was the main culprit, then value added tax (VAT) is turning out to be other sore point.

Retailers complain that customers never give the full price. "We are just trying to liquidate our stocks, managing with a marginal profit. This year, we did not get customers from Mumbra, Kalyan or Thane. Even on a holiday such as Sunday, we do not see significant sales," said a retailer from Bhuleshwar.

The price range in the wholesale market is Rs 3-48 per dozen and in the retail market it is between Rs 24-120 a dozen.

"Last year, we had long queues of customers in our shop, but things are quite different this time," said a retailer from Masjid Bunder.

Another one in Dadar said, "There is no chance of an increase in the prices with just four days left for the festival. Rather there is a strong indication that prices will fall as no one wants to retain the stock through the year."

Rakhi making is a cottage industry, the work commences almost 2-3 months before the festival, with the finished product being transported to the markets only a month before the festival. However, the devastating rains last month put paid to this year's plans.

Areas such as Nashik, Satara, Nagpur, Pune and Ratnagiri are good markets for Mumbai's wholesalers. But they have different story to tell this year. "Customers from Gujarat, Madhya Pradesh and Maharashtra did not turn up because of the trains being irregular and we are paying the price for the floods now," said a wholesaler in Bhuleshwar.

VAT in Maharashtra is another reason for migration of customers to other markets such as Ambala, Delhi and Kolkata. The tax is pegged at 12.5 per cent, which in turn has raised the prices. An association of the industry held talks with state finance minister Jayant Patil but the minister has shown no signs of relenting on VAT so far.

"No state in the country, except Maharashtra, imposes VAT on rakhi. Because of that prices have already gone up, and because of the last month deluge the purchasing power of the customers have gone down," said a wholesaler in Bhuleshwar."We have suffered a loss of 40-50 per cent this year. It is the local sales which indeed saved us from a complete wash out," he added.

Because of the rains, small shopkeepers who normally do not keep stock worth more than Rs 5,000, could not manage to buy from the wholesalers which has added further to the losses.