Rising costs threaten the fledgling revival in India’s silk saree capital

According to residents, sales of the elaborately brocaded silk sarees manufactured in the historic city on the Ganges are presently down 70% from pre-pandemic levels.

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Rising costs threaten the fledgling revival in India's silk saree capital

There is little evidence of the fledgling economic recovery trumpeted by India’s politicians in the small alleyways of the Hindu shrine city of Varanasi, the centre of a famous silk-weaving industry.

According to residents, sales of the elaborately brocaded silk sarees manufactured in the historic city on the Ganges are presently down 70% from pre-pandemic levels. Many weavers have stopped weaving, others have sold their looms, and other employees have pulled their children out of school because they cannot pay the tuition.“Prices are sky-rocketing and I am unable to get even one-third of what I used to earn before the pandemic,” said Mohammad Kasim, a weaver who has sold two of his 16 looms.

A rise in global prices for fuel, diesel, cooking gas, and other commodities like steel and copper are causing hardship for millions of Indian homes and companies that are already suffering from the epidemic.

India imports 80 percent of its oil, and the government taxes fuel products like gasoline and diesel at more than 100 percent. When compared to other rising economies, consumers and companies wind up paying more for fuel and transportation.

Furthermore, the drop in consumer earnings following the pandemic’s breakout early last year is affecting demand for price-elastic items.

The thick Banarasi silk sarees manufactured in Varanasi, also known as Benaras, are brocaded with gold, silver, and copper and marketed across India and worldwide for ladies to wear at weddings and other events.

Weavers claim they are suffering from declining demand as costly sarees are replaced with cheaper variants, as well as high raw silk and brocade prices.

Raw silk prices have risen to 4,500 rupees ($61) per kg from 3,500 rupees in the previous four months, according to Kasim, while brocade materials such as copper and silver have increased by 40%, reducing profit margins in saree production to less than 10%.

Retail inflation has exceeded the central bank’s upper limit of 6% year on year a couple of times this year, albeit it dropped to 5.3 percent in August.

This endangers Asia’s third-largest economy’s embryonic recovery, which suffered its worst-ever decline of 7.3 percent in the fiscal year ended in March.

The GDP expanded by 20.1 percent year on year in the April-June quarter, according to the government’s senior economic advisor, K.V. Subramanian, who stated that “India is set for greater growth.”

Wholesale price-based inflation, a proxy for producer prices, increased in the double digits for the sixth month in a row in August, to 11.4 percent year on year, raising fears that businesses may pass on higher costs to consumers.

In contrast to several industrialized countries, where governments have provided huge stimulus packages, India’s pandemic assistance has concentrated on credit guarantees on bank loans and free food grain to the needy.

The Indian Express

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Rising costs threaten the fledgling revival in India's silk saree capital
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According to residents, sales of the elaborately brocaded silk sarees manufactured in the historic city on the Ganges are presently down 70% from pre-pandemic levels.
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THE POLICY TIMES
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