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Changes in GST firm up BJP base in Gujarat’s ceramic hub, but some cracks still visible

Businessmen say the industry here accounts for 80 per cent of the total ceramic production in India, which is now second only to China in the sector.

Written by Liz Mathew , Gopal B Kateshiya | Morbi | Updated: November 27, 2017 3:19:14 pm
At a ceramic factory in Morbi. (Express photo)

Last year this time, hundreds of daily-wage labourers, traders and industrialists in the ceramic hub of Morbi in Gujarat were struggling to come to terms with Prime Minister Narendra Modi’s surprise announcement of currency withdrawals, and the cash crunch that followed. Then came the GST rollout, under which building materials were initially placed in the higher tax bracket.

Today, there’s a palpable sense of relief in Morbi. Among businessmen, after the GST Council moved building material from the 28 per cent category to the 18 per cent slab. And among local BJP leaders, who had come under fire from traders for “destroying the industry and ditching their loyal supporters”.

Still, a section of traders who have long stood by the BJP are unhappy with the ruling party — of the four Assembly constituencies of Morbi, Tankara some cracks and Dhrangadhra have been with the BJP for the last two decades while Wankaner has had a Congress MLA since 2007.

”It’s not easy for the BJP this time. The Patidar agitation, crop insurance issues, irrigation worries and low price for produce have put the voters in two minds. However, the question remains whether the Congress will be able to take advantage of the situation,” said K G Kundariya, president, Vitrified Tiles Division, Morbi Ceramic Associations.

Demonetisation, he says, pushed this hub into a three-month dip when 30 per cent of the industry shut down — at least 10 per cent of those has since resumed business. “But not many big businesses were affected. We are more into exports and people like us did not have to stand in queues. But sales had gone down considerably,” he said, adding that ceramic tiles and other building materials from Morbi are exported to 140 countries.

Jignesh Patel, director of Win-Tel, a tile manufacturer, does not agree with Kundariya. “There was discontent among ceramic industrialists over demonetisation and GST. But now, things have come under control. We faced issues, but protected our workers by providing them grocery from provision stores. Now all the labourers have bank accounts… and the government has moved the industry out of the 28 per cent tax category,” said Patel.

Businessmen say the industry here accounts for 80 per cent of the total ceramic production in India, which is now second only to China in the sector. According to Kundariya, the turnover of this ceramic hub last year was Rs 28,500 crore, of which Rs 6,200 crore were from exports. In the 2017-18 financial year, the turnover is estimated to reach Rs 32,000 crore mainly due to an expected increase in exports, he said.

A number of traders here say they have received all pending payments from clients during demonetisation. “All those who did not have illegal money faced no major issues. People like me are happy because there is transparency in all dealings. It’s easier to do business when transactions are online. Things have been streamlined,” said Ghansyam Tulsiyani, a ceramic tiles trader in Morbi town.

But Hitesh Thakker, a worker at Jignesh Patel’s unit, says he and his colleagues faced “a lot of trouble”. “We didn’t get salaries for three months. Many of us have not recovered from the debts,” he said.

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And, although Modi continues to be the face of “vikas” here, questions are being raised about his model of development, especially on health facilities and farmers’ problems.

”Everyone says Gujarat is the role model for development because it has roads. But people like us want the government to support us in starting new businesses. We want good health facilities for the poor. Even for constructing toilets, the government wants us to spend a bigger share than what is granted to us,” said Thakker.

The industrialists have some grievances, too.

Win-Tel’s Jignesh Patel wants the government to upgrade roads inside the industrial area, make Narmada water available so that drinking water costs less and install street lights.

Another industrialist, who did not wish to be named, said the BJP alone cannot claim credit for Gujarat’s development. “It’s also because of the entrepreneur mindset of Gujarat’s businessmen. Modiji was smart, he would just tickle you but not give you food. But he knows how to bowl you over,” the industrialist said.

On the bright side, Kundariya said, the state-run Gujarat Gas Limited has started providing gas at a lower rate, reducing the cost of production — earlier gas prices used to account for 40 per cent of the cost but has since come down to 25 per cent.

The Saurashtra region, of which Morbi is a part, accounts for 54 of the 182 seats in Gujarat. The BJP had enjoyed a clear dominance in the Saurashtra-Kutch area in the 2007 and 2012 elections. In 2012, the party won 45 seats.

Now, political observers say, the ongoing agitation by Patidars, Thakores and Dalits appears to have created cracks in the BJP’s coalition of caste and communities, including a sizeable Rajput community.

However, BJP leaders say, the decision to nominate Ram Nath Kovind as President could shore up a large chunk of votes from the Koli caste, which is a socially backward but politically influential group constituting 20 per cent of the state’s population.

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