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CASH CRUNCH Af­ter de­mon­eti­sa­tion, con­struc­tion work in the realty sec­tor hit as builders strug­gle to pay work­ers

Hindustan Times (Chandigarh) - Estates - - ESTATES - ■ mu­niesh­­gar@hin­dus­tan­ Mu­niesh­wer A Sa­gar

Con­struc­tion work has de­creased by 50% since de­mon­eti­sa­tion was an­nounced on Novem­ber 8 – SS Khu­rana, Lud­hi­ana-based real es­tate con­sul­tant

It’s been more than 50 days since the de­mon­eti­sa­tion of higher value cur­rency notes was an­nounced but con­struc­tion work in the re­gion’s realty sec­tor is still strug­gling to get back to nor­mal.

Con­struc­tion work­ers in the sec­tor are paid in cash and in most cases they are daily wa­gers. “Af­ter de­mon­eti­sa­tion, this process stopped be­cause of the paucity of cash. It is tough to fix the quan­tum of con­struc­tion work sus­pended, but most builders are af­fected. The prob­lem is acute for smaller builders in the re­gion who haven’t out­sourced their work to big­ger con­trac­tors,” says SAS Na­gar-based LC Mit­tal, 47, di­rec­tor of Mo­tia Group.

“In our es­ti­mate, con­struc­tion work in Bathinda and its neigh­bour­ing ar­eas fell by half af­ter de­mon­eti­sa­tion was an­nounced,” says Sukhdev Singh Mah­nikhera, 55, the Bathinda Prop­erty Dealer As­so­ci­a­tion pres­i­dent. “We are see­ing mi­grant labour headed back to their na­tive states though their num­ber is not large,” he says.

SSKhu rana ,42, a Lud­hi­an­abased real es­tate con­sul­tant, says :“Con­struc­tion work de­creased by 50% since de­mon­eti­sa­tion was an­nounced.”

Sim­i­larly, in Am­rit­sar, Vikas Mehra, 46, man­ag­ing di­rec­tor, Ud­dhav Realty, says: “Con­struc­tion ac­tiv­ity is down by 30%. It is more in the case of smaller builders and in the un­or­gan­ised sec­tor.”

Pos­ses­sion de­lays

De­mon­eti­sa­tion is also be­com­ing a pre­text for builders to jus­tify pos­ses­sion de­lays. “It is true that builders are fac­ing a cash crunch and strug­gling to pay the labour but some of them are sit­ting on large un­sold in­ven­tory. De­mon­eti­sa­tion and the cash crunch that fol­lowed are \just an ex­cuse to slow down the con­struc­tion work and de­lay pos­ses­sion. The builders are telling cus­tomers that they are help­less as they don’t have cash to pay their work­ers so projects are not be­ing com­pleted in time,” says Khu­rana.

De­mon­eti­sa­tion has forced builders to start pay­ing their work­ers through di­rect trans­fer or cheques. “They have no op­tion now but to open bank ac­counts for work­ers or ask them to do so. But this process is prov­ing to be time con­sum­ing. Mean­while, work­ers are not get­ting paid. This is im­pact­ing the pace of con­struc­tion,” says Mit­tal.

The cur­rent labour prob­lems are ex­pected to be short term. “Af­ter the de­mon­eti­sa­tion an­nounce­ment, the de­mand in the sec­tor plum­meted sharply. There are con­cerns that if the de­mand doesn’t pick up, builders will strug­gle to com­plete projects. This will lead to largescale labour re­trench­ments in the sec­tor,” says Khu­rana.

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