People's Democracy

(Weekly Organ of the Communist Party of India (Marxist)


No. 5

February 15, 2009



Glimpses Of The Impact  Of Economic Slowdown

K Hemalata

The impact of the economic crisis is being felt by the working class in several sectors in Andhra Pradesh. Both the workers employed directly in the export related sectors as well as those who are indirectly associated with these sectors are losing their jobs in thousands. The following account is based on the various reports placed in the recent meeting of the AP state committee of CPI(M).



Nizamabad district – The price of one sq yard of land which was earlier in the range of Rs 6000 – 10,000 has now fallen to Rs 2000, but there are no buyers even at this price. Brokers are seeking other sources of income. As the already constructed apartments do not find buyers, construction of new apartments has been stopped.

Khammam district – The cost of one acre of land in the outskirts of Khammam town has fallen from Rs 24 lakh to around Rs 18 lakh. Here also the sale of apartments has slowed down considerably as a result of which construction of new apartments has been stopped. Building construction workers are losing employment in large numbers.

Warangal district – Around 1200 – 1500 apartments under construction saw a drastic reduction of buyers to the extent of 70 – 80 per cent. Most of those purchasing apartments in the town are software employees and NRIs. Builders have abandoned the work without completing. The sale of land has also come down drastically. The price of land around the city has dropped by 30 – 40 per cent. The job of construction workers is under threat. Around 2000 workers are directly affected by this; many more would be affected indirectly.

Visakhapatnam district – The Greater Visakha Corporation used to receive around 25 - 30 applications for approval for construction of apartments. But in the last two months no fresh construction of apartments has started. Around 40,000 workers usually get employment in the building construction in the district. Their employment has been affected by the crisis. While they used to get work for 25 days in a month earlier, now they find it difficult to get work even for 15 days. The competition among the work is resulting in lower wages. Around 20,000 working women face the threat of losing employment.


The work in the quarries, which is related to the construction activities, is also affected by the ongoing crisis. Concrete crushed from the stone quarries is lying in large quantities. While around 80 units of concrete were produced in a day in one stone quarry earlier, now only 20 units are being produced. Stone quarry workers have lost around half their work.

In the Bhimili mandal in Visakhapatnam district, quarry workers are getting work for only three days in a week. Their income has come down from Rs 100 per day to Rs 60. In many quarries, crushed stone worth crores of rupees is lying unsold. This has also affected the employment in the transport sector. Truck drivers, cleaners, loading and unloading workers etc are severely impacted.

In Warangal district, granite stone quarrying, mainly Sapphire Blue, Sapphire Green, Surf Green, AP Red and Black Granite varieties, is undertaken in an area of around 1000 acres. There are 20 quarry companies where around 2000 workers are employed. Around 1500 cubic metres of colour granite and 800 cubic metres of black granite are exported every month to the US and China from the district. Because of the global crisis, these exports have completely stopped and the 20 companies have shut down. Around 2,000 workers have lost their employment. The owners of these 20 quarries purchased machinery worth around Rs 40 crore by taking loans from financiers and banks. They are being pressurised to repay the loans.

The granite industry in Srikakulam district is mainly dependent on exports. Hundreds of granite blocks are lying unsold in the district. In Prakasam district only a few units exporting granite to Australia are working; out of the 3000 workers employed in the granite industry in the district, only 1000 are working at present. The granite company employers used to provide good quality food to the workers. In one quarry, the employers proposed payment of Rs 10 in lieu of food but the CITU union did not agree for that.

In Kurnool district around 20,000 workers are employed in the 1200 stone polishing units either directly or indirectly. The polished stones were being exported to Europe, Australia, and China; because of the reduction in exports the production has been reduced by 40 per cent and consequently around 3000 workers in the units, engaged in loading and unloading, transport etc, have lost their work.



The production of steel in Visakha Steel Plant has been reduced considerably. Only 9500 tonnes of hot metal is produced per day now, instead of 11,500 tonnes per day earlier. The production target for this year is brought down to 2.27 million tonnes from the previous 2.45 million tonnes. Only two converters are functioning in the steel metal shop in place of three previously. A total of 6.5 lakh tonnes of steel is lying unsold in the godowns. Twenty five workers engaged in loading and unloading have completely lost their work; 27 workers engaged in loading of coal are having work for only 5 days in a month; 500 workers in the refractory have work for only 15 days in a month. The management has laid off 35 workers in the quality testing department. The payment of wages of the contract workers is getting delayed as the bills of the contractors are not being paid in time.

Four hundred tonnes of pig iron pivots were being produced every day in Cancast Ferro Incorporated in Dusi in Srikakulam district. Because of the fall in orders, the production has now been reduced to 180 tonnes. The management has declared four days lay off in a month. As a result, 1600 workdays have been reduced in a month.



Medak district Two big orders from outside the country, worth Rs 55 crore with the ASA Mission Tools Company near Sanga Reddy have been cancelled. One was from Jindal Steels with French collaboration and the other was from Universal Cables Company. The annual turnover of this company is Rs 10 crore. The company has not paid the employees wages for October and is asking the union to agree for wage reduction and reduction of paid leaves and holidays.

The export orders of Sandwik Company (formerly Widia) have been cancelled. The company has reduced production and started four days week in some departments. At present they are giving two day paid holidays in a week. In Vijay Electricals, the management is in a dilemma whether to accept or not a big order worth Rs 425 crore due to the problems created by the falling exchange rate. The management expects steep rise in the cost of raw materials. In Fenner India Ltd, (Belting company) production has been reduced because of the reduction in the demand from the automobile industry and a five day week is being implemented. The management is bargaining with the unions for cut of one day’s wages. The expansion plan worth Rs 200 crore by MRF has been stopped. Because of reduction in production, 100 contract workers have been removed. The management says that the workers recruited in view of the expansion plan would be removed if the situation continued to be the same for another three months. As the demand from Tata and Ashok Leyland, who mainly purchase MRF tyres has come down, the management is resorting to open selling in the market. Production in Mahindra and Mahindra has come down. They have reduced the investment by 40 per cent. They have removed 110 contract workers and the management says that some more would be removed in the next three months. Sales have come down. In several factories including Charminar Breweries, expansion work has been put in abeyance; recruitment of both permanent and contract workers has come to a stand still.

Vizianagaram district The Ferro Alloys industry in Garividi has been seriously impacted by the crisis. The price of Ferro Chrome has come down from Rs 1 lakh per tonne to Rs 40,000. Only four out of the five furnaces are functioning now. As they have to pay for the 35 mw of low priced power being supplied by NTPC, whether it is used or not, they have surrendered 15 mw to the government. Workers are on the verge of being laid off. The company which used to pay 20 per cent bonus along with 15 days’ bonus earlier has now informed that they are not able to pay anything before November 2009. Work in four factories has been stopped in the construction stage itself. Around 3000 workers in Hindustan Batteries Limited, which supplies batteries for aeroplanes, ships etc for export, have been removed from service as there were no orders. Stock worth around Rs 60 crore is lying in the factory.

Warangal district – In Warangal town there are around 300 traders who deal with scrap iron and around 5000 scrap collectors work for them. These traders have incurred huge losses of around Rs 1 crore as the steel prices have fallen from Rs 22 per kg to Rs 11 per kg. The 5000 scrap collectors have lost their employment.

Around 7 lakh bales of cotton is grown in the district every year. Last year 50,000 bales were exported. This year there has been no exports. Our banks are not accepting foreign letter of credits now. Cotton is not being purchased. Half of the 94 ginning mills in the district are not working. Around 10,000 workers out of the total 20,000 workers employed in the cotton ginning mills are not having work at present. The situation may become serious in the coming period when more cotton comes into the market, affecting the farmers.

Duffer paper raw material and rayon products are manufactured in the Rayon’ Factory in Kamalapuram in Warangal district. As the Birla Graphic Paper Products, Kumar Padma and Baroda companies stopped their orders, production of rayon products was stopped in the factory four months ago. Graphic paper production has been stopped since November 2008 due to the crisis in the US. A total of 840 permanent and 740 contract workers were employed in the factory which used to produce 9000 tonnes of graphic paper, which was being exported to Ballarpur Industries and their subsidiaries. Because of the slump of the paper industry in the international markets, the orders from Ballarpur Industries and its subsidiaries have completely stopped. The price of graphic paper has come down from Rs 30,000 per tonne to Rs 25,000 per tonne. The company is now closed. While only 300 permanent and contract workers are being utilised for some other work, 440 contract workers have lost their jobs. The company was using 100 truck loads of subabul, eucalyptus and other wood for paper manufacture. The transport workers and peasants are also affected.

Khammam districtAround 50,000 tonnes of Ferro Alloy stocks have accumulated in Navbharat company which employs 155 permanent and 1200 contract workers. Three out of the four units have been closed resulting in 600 contract workers losing their jobs.

Lakhs of tonnes of paper is lying in BPL factory, which has a capacity to manufacture three lakh tonnes of paper and employs 1600 permanent and 6000 contract workers. There are no export orders even after bringing down the rate of paper to Rs 3000 per tonne. The management has issued a leaflet addressed to the public and the workers explaining the need to reduce the work from three to two shifts, reduce the production and take up cost saving measures.

There are 550 granite units in the district employing around 50,000 contract workers. Production has been stopped due to lack of export orders. Several small units have closed down and some others are on the verge of closure.

In Dolomite factory, which supplies the raw material to the Visakhapatnam Steel Plant, 208 permanent and 50 contract workers are engaged. This factory is also severely affected due to the crisis in steel industry.

Kadapa district – The mining of Barium Sulphate and Barium Carbonate in Mangampalli has completely been stopped leading to the loss of work for many daily wage workers in the mines. Textile mills which were not supplying cloth on credit to the whole sellers and retailers, are now supplying it on credit.

Prakasam district – Around 8000 workers are engaged on 220 machines in the slate industry in the district. Work on 20 machines has stopped and 500 workers have lost their jobs. Earlier, trade worth Rs 45 lakh used to take place per day. Now it has come down to Rs 5 lakh only. Work has been reduced from two to one shift every day.

Srikakulam districtThe Sam Pistons factory in the district produces piston rings for motor bikes and scooters and also exports them to other countries. While 15 lakh rings were dispatched in October, in November it has come down to 13 lakh. The management says that it would increase the days off from one in a week to two.

The fine jute yarn produced in the jute factories was being exported to New Zealand. These have dropped in November this year.

The crisis in the US has affected the exports of handloom products in the state. Usually 55 per cent of the sales of the season used to be completed by December and the remaining 45 per cent used to be sold by the end of February. This year sales by December have not even reached 15 per cent!

Because of the reduction in the leather exports, the demand for skins has fallen resulting in the reduction in the price of skins. The sheep breeders are losing around Rs 150 for each sheep because of the fall in skin prices.


There has been considerable drop in visitors to tourist areas in the state due to the ongoing economic crisis. The worst-hit has been the most popular destination, Visakhapatnam district. In November, which is the peak season for tourism here, only 43,945 tourists visited Araku valley. While last year in the same period the figure was 69,055. While last year 100 foreign tourists visited, this year only 50 tourists visited the valley.


The production of prawns by ‘Jasper Aqua’, in Anandapur mandal adjoining Visakhapatnam city, which used to produce 800 tonnes of prawns per year and export them to the USA on behalf of the ITC fell by half this year. While 75 per cent of the production was exported to the USA last year, it has come down to around 37 per cent this year. The US has reduced the rates of prawn from $11 to $6 for 2 kg. As a result, half of the 500 workers working in this company have lost their jobs. Similarly, in the Suvarnarekha Exports, the number of workers has been reduced from 450 to 120.

In Priya Foods in Vijayawada, 160 workers have been retrenched as the production of ready mixes has come down.


Around 2500 trucks were engaged in Kurnool district for the transport of iron ore from the neighbouring iron ore rich areas. As a result of the reduction in production of steel in Chhattisgarh, Maharashtra and Visakhapatnam, only 1200 trucks are being utilised to some extent. Truck drivers, cleaners and workers in mechanic workshops have lost their work. In Betamcherla mandal in Kurnool district five persons had 100 trucks and were entirely dependent on iron ore transport. They have lost their work and the trucks, which were purchased through credit from finance companies like Sri Ram, Sundaram Finance, Tata etc, have been taken away by these companies.

In Kushalava International producing automobile spare parts in Krishna district 280 contract workers and 23 apprentices were removed. Many units in the Autonagar and in the Industrial Estate areas have closed down. Production has come to a halt in all the steel rolling mills in Visakhapatnam district.


Some software employees from the districts who were working in Hyderabad have returned to the respective districts after losing employment there. Around 300 such software employees from only one mandal – Armoor in Visakhapatnam – have returned to their native places after losing employment in the city.

In Hyderabad, the benefits provided to the software employees are being reduced. Earlier, they were being picked up from their residences by office transport. Now it is done only from some collection points and instead of cars, buses are being used. While transport was available every hour from the office to their houses, now a cab is provided only once in four hours. Several firms have stopped providing snacks etc.

In Anantapur, 50 per cent of the students who got campus selection were not given placements.