Behind the glitter of the diamond

Development Policy27 Nov 2009Astha Kapoor

There are very few people who know about India’s involvement in the global diamond trade. South Africa, Antwerp and New York are usually the names that first come to mind, even though India polishes 11 out of 12 diamonds in the world today.

When the financial crash of 2008 settled in, the booming diamond industry in India was left in shambles. The industry is centred around the city of Surat, in Gujurat, where close to 800,000 workers are employed in the trade. With the descent of the crisis, over 400,000 were left unemployed.

The recession hit in November 2008, when the diamond polishing units did not reopen after the annual winter break. Workers were left out of work and did not know how to respond. They were given no early warning of this closure, nor were any institutional measures put in place to shield workers from what would become the worst economic crisis of our times.

The workers were forced to employ different means to cope with the crisis. The labour force consists of migrant workers and those who still had links with land in the villages chose to leave the city and cut their losses. Others were forced to rely on loans from extended family in the villages. Women came to the forefront to support their families. The men were laid off their jobs and the women, traditionally confined to the household, took up home-based work to contribute to the income of the household.

A peculiarity of the diamond industry in India is the significance of caste. Since the trade is largely based on trust, those employed usually belong to one caste. Caste affiliations extend to the smallest possible level of the industry. At the time of the crisis, it was believed that this social network, exploited for so long to hire people, came to the rescue of those who belong to the caste. However, this is not true; caste was largely absent from its role as a safety net.

Many workers diversified their income. They invested small sums of capital into less lucrative business opportunities, such as vegetable vending and tea stalls, swearing never to go back to the diamond industry because of the crisis. Interestingly, those belonging to the dominant caste did not diversify their trade because their belief in the diamond industry was still strong.

The city of Surat saw 80 suicides during November and December 2008, the toughest months of the crisis. These suicides were committed by diamond workers who were in debt – not those who could return to their villages, or the poorest of the poor, but the middle income diamond workers who had probably taken loans recently to build a new house.

The state, trade unions and support from employers are all absent from the diamond industry. It operates in the dust of informality and no amount of discussion around the issue ever sees results. There is a need for greater social security to make sure that those involved in the diamond industry, and other informal trades like it, have secure safety nets to rely upon.