Natural rubber prices are declining, and it’s taking other industries down with it.
Ninety percent of India’s rubber is produced in the coastal state of Kerala. The state has over 1 million rubber farmers, and all of them are taking the hit as their main commodity is losing value. The people of Kerala are now spending less, even with the coming Onam harvest festival.
Effects can be seen as far as the sales of TV sets and luxury cars. P. Balendran, vice president, General Motors India, says that it’s not just the high-end cars, but all car sales are going down. The market expected a boost from the harvest festival, but the rubber prices are making it harder for consumers.
Less people are also looking for new flats said Shaji Mathew of Builders’ Association of India. The demand is already down by 30%.
Property prices are always tied to the rubber market says Paul Raj, president, CREDAI, Kochi. He says that the problem is serious because there is no assurance that prices will go up soon.
The banking sector appears to be unaffected only because to remittances from non-resident Indians (NRI). The NRI remittance grew 30% this year and is cushioning the effect of the falling rubber prices.