On any ordinary day, the area around Sheikh Memon Street in South Mumbai is packed with pedestrians. Almost every shop on the street, which is home to the iconic jeweller’s hub, Zaveri Bazaar, deals with jewellery in some form. Grand ones, mostly with Jain surnames, sell new and expensive gold items. Smaller scale enterprises that fill the gaps between these shops announce that they will exchange old ornaments for new ones. Many simply deal in imitation jewellery. And there are customers galore for all of them.
But on Thursday, the day before Gudi Padwa, which Maharashtrian Hindus celebrate as their new year by buying gold, the street was almost deserted. Many shops were shuttered and few people were passing through at all.
Gold jewellers across the country have been on strike since March 2, when Finance Minister Arun Jaitley announced that gold would be liable for 1% excise duty from this financial year. When the United Progressive Alliance tried to impose a similar excise in 2012, gold associations across India went on a strike for 21 days before the government withdrew the proposal.
While the Bharatiya Janta Party supported that strike then, more than a month into this one, there are no signs of the government bending. And with shops shut and not accepting new orders, the strike has rippled through the lives of the several thousand artisans engaged in the gold trade.
In March, two artisans in Mumbai killed themselves, reportedly because they were unable to meet their expenses after their orders stopped coming in. The Bengali Goldsmith Workers Association estimates that 12 of its members across the country have died since the strike started.
“Only when shops open can we do our work,” said Vikas Ranjan, president of the association. “Though we are sad for these deaths, shopkeepers have promised to support us in our demands after the strike is done so we are supporting them for now.”
Artisans under pressure
With work having come to a complete halt around two weeks after the strike began in March, most artisans have returned to their villages. Only around 20% remain in the city, said artisans who have stayed behind, and these only because their children are enrolled in schools in Mumbai and are yet to complete their exams.
“Usually, this time of the year is full for us,” said Nitin Ghodai, a self-described karigar who rents a room where ten other artisans work to shape gold. “We don’t even have the time to eat because of all the orders. Now, we are not getting even one gram of work, so even if we stay, there won’t be any point.”
Nine of his ten employees have already returned to their villages, though they usually leave in May, Ghodai said. If the strike continues, he said he might have to consider renting a smaller space with fewer workers.
“Though we work with gold, we don’t get the fruit of our own labour,” said Mohammed Salim Malik, another Bengali artisan who has been working at Kanji Street in Zaveri Bazar for 30 years. “If we ask for Rs 200, buyers give us Rs 75. We either have to agree with them or do wrong things.”
Their daily wages ranges from Rs 50 on bad days to Rs 200 on good ones, Malik said. Now it is nothing.
“Even if we wanted to continue working, we would still be stuck because the shops themselves are shut and we won’t get any business,” he said. “We are all under pressure now. Though the Congress government had proposed the excise first, it realised it was wrong and is now supporting us. Now we are realising that there is nothing in this flower [of the BJP’s]. Even people who supported the BJP won’t bring them back.”
Shop owners uncertain
Most shops dealing in gold are either shut entirely or open with half shutters. Shops that do open are allegedly threatened by the trade associations. While gold shops in Borivali were open until last week, even their association eventually came on board the strike, said an artisan, requesting not to be identified. Not everyone is pleased with this development, as it has led to a major loss in business, particularly just before the Gudi Padwa spike in sales.
In one of several dilapidated buildings off Zaveri Bazaar’s arterial Sheikh Memon Street, an entire corridor of gold wholesalers’ shops on the ground floor were shuttered. Despite that, store representatives flitted in and out to check on their goods or simply to kill time.
“Karigars will not be able to take on the duties that come with excise,” said Rakesh Jain, who has been a wholesaler for ten years. Though he began working in a shop, he later set up his own partnership. “How will karigars employ a CA, or make bills? We don’t mind any of the other issues. Take PAN cards, make VAT higher. Just don’t put excise on this.”
All jewellers object to the taxation of the manufacturing process of gold. Instead of excise duty, which applies to that part of the process, they say they would not object to taxation at the point of sale. A value added tax of 1.2% is already applicable to all gold transactions. This, they say, should be increased.
“If they want more income, why don’t they put the tax on bullion when it comes to the market instead?” asked Shripal Jain, another wholesaler who has been in the business for 25 years. “Don’t give that headache to us.”
Gold manufacturing, Rakesh Jain emphasised, was a handicraft that did not use heavy machinery. The production process is also fragmented according to skill, so a single piece of jewellery might pass up to ten hands, from designing, cutting and polishing, before it reaches the customer.
There is no clarity on which part of the process this excise duty will apply to, gold dealers say, which has led to fears that each stage of the process will be taxed – leading to unmanageable paperwork and the threat of bureaucratic harassment.
“If excise duty is implemented, our relationships and reputation that we have built over so many years will suffer because there will be less trust,” said a gold shop owner sitting in a half-shuttered friend’s store down the road from his own. The owner, who asked not to be identified, said he visited his shop despite having no business as a more preferable alternative to sitting at home. “There will be the threat of prison and then all our stock could be seized. They are squeezing our noses to open our mouths.”
A friend of the shop owner said: “Everyone is here to earn money. If we are shut, how will we earn? Just as small people have small expenses, big people also have big expenses. So we are all suffering. We all have our questions, but we are not getting answers from the government or associations.”
Not everyone is very pleased with associations, particularly as they did not manage to broker a deal with the government before Gudi Padwa.
“There are so many people talking about this on Facebook,” Rakesh Jain said. “He [Prime Minister Narendra Modi] tells us all to tell him our mann ki baat, but whom do we tell it to? The government is not even maintaining its own scams, but it is telling us to maintain our business. Which of us is corrupt?”