With more than 30,000 people still stranded in flood-ravaged Uttarakhand, life and business in the state is looking at an arduous recovery. Given the number of industries located in the state and its position as a key religious and adventure tourism centre, the calamity could pose several challenges for the state’s business sector.
Uttarakhand is one of India’s top 10 states in terms of domestic tourist visits. It had a 3 per cent market share in the domestic tourism pie in 2011 (last available figures) with more than 25 million tourists and had begun emerging as an enticing destination for both foreign and domestic travellers. It received 0.12 million foreign tourists in 2011.
But today the flood-hit state has a languishing tale to tell with hundreds dead, thousands waiting to be rescued and 200 villages vanished from the state’s Chhota Char Dham pilgrimage route.
Tourism will be the worst-affected sector in the state, as it will take three to four years for the sector to be resurrected in the Kedarnath and Chamoli districts. Vibhas Prasad, director of Leisure Hotels, which has 22 properties in the state, says: “We have not been able to access our camps (luxury tents) in Kedarnath so we don’t know about the damage. But all our guests were evacuated from our properties in Kedarnath and Uttarkashi.
We have been operating in the state for 25 years, but this is unprecedented. It will take a few years before tourism can flourish in these areas again, especially in Garhwal.” According to Hotel and Restaurant Association of North India, about 100 small hotels have been damaged in the state.
The only saving grace for tourism in Uttarakhand is that Kumaon and the tourist hubs of Mussourie and Nainital are not affected by the calamity. Tourists cancelling their travel plans for the state are doing so more out of fear than necessity. The floods and landslides have, however, damaged a series of under-construction projects on the Mandakini River in the Rudraprayag district. Two big projects of L&T Hydro and Lanco Group have been hit. L&T’s 99-MW Singholi Bhatwari project near Kedarnath hills has been damaged, according to sources. Two hydel projects of the state-run Uttarakhand Jal Vidyut Nigam Limited, the 6-MW Kaliganga-I and 4-MW Kaliganga-II, have incurred losses worth `77 crore.
Telecommunication is affected too, with as many as 207 mobile towers being knocked down by the fury of the floods. BSNL, however, says it will restore the towers in the next three days.
According to data from the state industries department, there are at least 230 large industries in the state with investments of Rs 27,450 crore, employing 85,333 people. While tourism remains the main draw, sectors such as auto and food processing too have a major presence in the region. Companies such as Tata Motors, Bajaj, Ashok Leyland, Mahindra and Mahindra, Nestle, Dabur, Parle, Britannia and ITC have plants in Haridwar and Pantnagar. “We don’t expect industry to be severely affected as most of the plants are located in the plains. However, we are creating a platform under CII Foundation and focusing first on immediate relief followed by rehabilitation,” says Vibha Malhotra, head, Economic & Policy Research, Northern Region, CII.
A Tata Motors spokesperson told this newspaper, “Our plant functioning has not been impacted at present and our employees remain safe but the local teams there have volunteered to be a part of the rescue operations in the impacted areas.” The Mahindra & Mahindra group too says its Haridwar unit is functioning normally. “Everything is normal at our plant in Haridwar and all possible measures will be undertaken to protect plant and machinery as always,” says a Mahindra & Mahindra spokesperson.
However, the multiple MSMEs (Micro, Small and Medium Enterprises) that operate in the state could be affected. The hill industrial policy which came into effect in 2008 had played a major role in boosting the growth of MSMEs in the state. At the end of 2012, there were 41,692 such units functioning in the state with total investment of about `8000 crore, providing employment to 1.9 lakh persons.
Most of these units operate in the segments of floriculture, herbal sector, food processing, hotels, flour mills, packaging, mineral water, handloom, pharmaceuticals, steel fabrication and auto repair.
With the flash floods, many these units may take a beating and thousands could be rendered jobless.
Along with unemployment comes the fear of labour unrest. “People who have become homeless and jobless will come down to the plains looking for work. Therefore, there will be more labour available. Most companies are ready to absorb the labour,” says Vikas Jindal, president, Kumaun-Garhwal Chamber of Commerce and Industry, a promoter organization of ASSOCHAM. However, excess labour could mount pressure on the companies’ scope to provide jobs to all.
Another problem that could emerge as an obstacle to industry is the unavailability of power. Every year during the monsoon, corporates pay 7-8 per cent extra for power. The power crisis will further push up the cost of production of the industries. At present, plants face four to five hours of daily power cuts which could continue for the next few months.
“Power availability could be affected which in turn could be a problem for the industries,” says SC Nautiyal, Additional Director Industries, Uttarakhand.