The challenges facing Auroville’s commercial units

After the nationwide full lockdown began on March 25, in Auroville only those employed in essential services, like health facilities, grocery outlets, a limited number of restaurants which could serve take-away, and the farms and food production units supporting them, were allowed to continue work. The rest of Auroville’s workforce, both those living in Auroville and those from the surrounding bioregion, were forced to stay home and, if possible, work from there. 

Some sectors, like computer-based services and consultancy, and food and health products, were able to function even at the peak of the restrictions. Now, as the lockdown in Auroville and all around India passes the two-month marker, restrictions are easing and an increasing number of the offices and production facilities of Auroville’s units are restarting their work, while respecting the new public health measures and acknowledging the economic realities. But the Auroville economy has been shaken by the mandatory shutting down of the bulk of its units.

Facing the immediate financial implications of the lockdown

When units began preparing to close for the stringent lockdown, the projected duration was only until the end of March. But very soon it was extended until mid-April, then till the end of April, and even now it continues, albeit with certain relaxations. Many Auroville units have had to face the challenge of how to pay maintenances to Aurovilians and salaries to workers with limited or no means of bringing in income because the initial recommendation of the Government of India was to continue to pay all salaries, regardless of the suspension of work. 

One significant boon for unit managers here is the smaller infrastructure costs of running a commercial unit or activity in Auroville. Whereas businesses around the world have been crushed by the additional expense of paying sizeable rent on unused offices and facilities during closures, in Auroville the units have their own facilities or only have to give a contribution for the spaces they use. And Auroville’s commercial units are also strikingly debt-free compared to establishments around the world. This is not a typical business strategy, but it has been a saving grace for the units during this uncertain economic period.

But bridging periods of economic downturn can also be challenging in the Auroville context because of the community’s aspiration towards a fraternal economy. Rather than keeping financial reserves in their units’ accounts, many Aurovilian unit executives choose to give more than the requisite 33% of profits to the community pot. This can make unexpected misfortunes more difficult to weather. And even closing down a unit can have sizeable costs as non-Aurovilian employees are owed retrenchment compensation when forced to leave their job, and gratuity if they have worked at the unit over four and a half years, both of which are calculated based upon the last salary and the number of years worked. 

As COVID-19 and the associated lockdown have begun to have their impact, the Auroville Board of Commerce (ABC) research group has made itself available to Auroville’s units to provide information about loans and financial assessment. Already, they have been contacted by a first wave of units who are experiencing cashflow problems that make them unable to pay salaries or meet other financial obligations. When requested, one or two members from the ABC research group with expertise in the sector of the commercial unit help the unit’s executives to evaluate ways to reduce fixed costs and formulate a trial balance sheet and projections for the coming months. These decisions depend largely upon the sector that the unit works in, and whether their commodities will rebound quickly or whether the unit can easily shift to a more resilient product or service.  

Abha is the executive at Shradhanjali, a 40-year-old Auroville unit that produces stationery, home goods and jewellery using pressed leaves and flowers, seeds, and natural fibres.  The Shradhanjali team stopped working when the lockdown began, but she managed to pay the March and April salaries in full to the 17 women and 4 men who are employed in the workshop. Now that they have begun working  again, she is considering paying salaries for the days they work (as they are not yet working full-time), though she adds that if this does not produce a living wage, “We might also need to provide a flat allowance for everyone.” 

At Rio, an Auroville Small-Scale Activity (ASSA) that does elaborate beadwork, the Aurovilian in charge had to resort to a personal loan in order to cover the salaries of her four helpers, as all her income is generated from sales in the Auroville boutiques. She expects to have to stop her activity’s monthly city services contribution until revenue begins to pick up again.

Kumar, who is one of the executives for the larger umbrella of 57 ASSAs and 18 Auroville Food Activities (AFAs), says, “Most of those who have an ASSA only have income from that activity. And if they don’t have money in their account, they can’t cover their maintenance and the salaries of any workers, and they can’t even cover their city services contribution.” He explains that many of the ASSAs are waiting until the end of May to re-evaluate their financial situation. Those that cannot continue viably may choose to go “dormant” until such time as their activity can pick up again. 

The lockdown has also hit the Auroville Earth Institute, a unit specializing in research, training, and construction using earthen building techniques, as it depends heavily upon income from its regular training courses that draw participants from across India and abroad. Already two of its courses have had to be cancelled due to the lockdown and prospects are dim for those scheduled in the months to come. After managing to pay full salaries and maintenances to its team at the beginning of April, the Earth Institute had to halve the payments to workers and Aurovilians alike the following month. Now that some construction work is being allowed and there is a possibility of consultancy work, this situation will hopefully improve. 

Resuming work with caution and safety measures

As the restrictions have eased during the current “Lockdown 4.0”, many of Auroville’s units and activities have been able to return to work, though the government has imposed strict guidelines concerning checking the temperatures of employees, wearing masks, disinfecting work spaces, and keeping the workforce socially distanced. Still, some units have decided to remain closed for financial or safety reasons. And some of those whose occupations have allowed them to work from home have continued doing so to reduce health risks to the community. 

At the beginning of May, employees from Shradhanjali came in to clean the workshop after almost six weeks of disuse. One week later they were able to resume limited work, with half-strength teams coming in on alternating days and only key members coming in every day. “Safety measures are not so difficult for our workshop because we don’t work very closely together,” Abha says. “So, it’s more a question of awareness and diligence.” Even though many of Shradhanjali’s clients - both in India and abroad – have not yet opened their shops, they are placing a few small orders. “One export client who is concerned about us has hurried to send us an order so that we can start work again. She is not able to function fully in Germany, but she has placed this order based upon trust, hope, and anticipation.” 

Returning to the workshop has been important for the morale of the team, many of whom have been working together at Shradhanjali for decades. “If it hadn’t been for the social distancing, everyone in our team would have been hugging each other!” Abha says. “But we are aware of the very uncertain and open-ended situation ahead of us. The Auroville boutiques are not going to function immediately, and that is where half of our production goes.”

Gastronómica, which specialises in Italian delicacies like handmade pasta and bread, was able to continue functioning throughout the lockdown because of its designation as a food production unit. Antonello, the Aurovilian who runs Gastronómica, reduced staff to one employee to help with baking during April, and they supplied ciabatta bread to three of Auroville’s shops and sold loaves through a window at the front of their factory shop. “The important thing was not to stop, because it would be too difficult to start up the activity again,” he says. 

A key challenge Gastronómica faced was getting the essential ingredients for its recipes. Just before the lockdown restricted the transport of goods, Antonello had made a bulk order for high quality organic flour from Rajasthan on behalf of his activity and two others that make baked goods in Auroville. While he has been able to make do so far, when he tried to re-order the flour now that goods are moving again, the price had tripled and so he has had to find a new source. Likewise, he would usually buy chicken from a farm run by Pondicherry-based NGO Volontariat but is now getting chicken through an Auroville farmer, albeit at a higher cost. But although he has seen a hike in some production costs, he has also noted an increase in local demand for his bread and prepared dishes.   

Auroville.com, the online shop that markets the products of about 60 Auroville units and activities, has been able to resume shipping products with India Post, though they are restricted to the orange and green zones of the country, which are less affected by COVID-19. And so far, they have not been able to resume export. They have told their regular customers in India that the online shop has opened again, though the bulk of these customers who have greater spending power live in the urban areas, many of which have been labelled as red zones where only essential goods can be delivered. As these shifting situations can easily lead to deliveries being delayed or returned, Auroville.com is offering free shipping. 

“Our main reason to reopen was to give the Auroville manufacturers some way of selling their products while all the brick and mortar outlets are closed,” says Luise, who is one of the executives at Auroville.com. In particular, the boutiques at the Visitors’ Centre are the primary salespoint for many of Auroville’s commercial units, but most of the boutiques are closed.

Miniature, an Auroville unit producing a large range of garments from hand-dyed textiles, has also resumed operations with workers coming on alternating days. In an announcement to the community, they explained the importance of resuming their work. “We wanted to open not because we have orders in progress, but above all to give a signal of hope and support to our economy: a signal for us all to get back on track and get ready for the new challenges and opportunities that are emerging.”

Planning towards an uncertain future

As unit executives make financial decisions and resume fuller activity, they also have to address the questions of how to protect their employees in the long run and meet the changing demands of the larger market. Auroville is unlikely to encourage tourism until the public health risks have diminished, yet a significant part of Auroville’s economy depends upon an influx of visitors. And even for those units which can serve a wider geographical area with their products and services, the global nature of this crisis means that all must carefully plan towards the future. 

The ABC research group expects that they will continue to receive requests for loans or assistance in financial planning as the continued ramifications of the crisis are felt. Even those units that have been able to use financial reserves or personal loans may still need to reformulate their products or services in response to the market. As Auroville has always attracted far more craftspeople and other creative types than it has businesspeople, the group’s skills are an important asset. In the longer term, the experience of this economic crisis may also change how the role of trustees is seen, as the financial responsibility for units rests with the trust, the legal umbrellas under which units are organized. 

Luise has also been engaging in extensive research to gauge where the market is heading and to prepare Auroville.com for what lies ahead. “Online sales are going to get even stronger, both in India and on a global scale,” she says. She predicts that consumers of the high-end lifestyle products that Auroville’s units produce will react to this crisis by re-evaluating their habits and consumption. “There will be an increasing shift to personal health, wellbeing, and mindfulness. Auroville is already very connected with this because we have long believed in conscious living and natural health – it’s part of our life here.” But she warns that other market players are also moving into this segment, and so Auroville.com must continue to reach out to share its story. 

Luise points to a few ways that units can optimize their activities. They need to shift to having the least stock in hand and reducing their overhead costs. “The global market indicates that units need to weather the next six months. And if they survive, they need to rethink their activities and reinvent themselves.”

When Antonello considers the lockdown, he thinks it had a positive influence on Gastronómica. “I didn’t make money, but it helped me to better reorganize the operations,” he says. He was able to streamline production of the bread, which will allow him to focus on the pasta-making part of the activity. As wholesale orders come in from Delhi, Mumbai, and Bangalore, he is looking to expand to a second kitchen facility to dedicate to pasta production and hopes to move Gastronómica to one of the larger food-focused trusts.

For Shradhanjali, the outlook is more complex because even before the COVID-19 crisis hit, Abha was beginning to analyse the long-term outlook for the unit. “Already, I was thinking that our kind of labor-intensive, handcrafted work may not have a future and the demand for our products might eventually peter out,” she says. But some clients have confirmed their orders, even if goods have to be stored locally until they can be shipped out. “Now there is a possibility that our products will be more appreciated and valued, even though they are not essential goods. So, for the future, it’s all up in the air.” 

Shradhanjali is one of many units in Auroville that has relied on labor-intensive work that brings livelihoods to thousands of workers throughout the bioregion and this question about long-term prospects therefore extends to many of Auroville’s commercial units. But as consumers around the world take a step back and consider what they wish to align themselves with, perhaps this will lead to greater interest in all of Auroville’s products and services.