It was supposed to be Johnson & Johnson’s biggest manufacturing plant in India. It was to eventually employ at least 1,500 people and help bring development to a rural area near Hyderabad.

Yet, three years after the US healthcare company completed the construction of its production facilities for cosmetics and baby products on the 47-acre site, they stand idle.

Two sources familiar with the company’s operations in India and a state government official said that production at the plant, at Penjerla in Telangana, never began because of a slowed growth in the demand for the products.

One of them said the demand didn’t rise as expected because of two shock policy moves by Prime Minister Narendra Modi: the 2016 demonetisation of high-value currency notes, and the nationwide introduction of the goods and services tax in 2017.

J&J spokespeople in the company’s Mumbai office and at its global headquarters in New Brunswick, New Jersey, declined to respond to a list of questions. Modi’s office did not respond to a call and an email with questions.

Aimed at rooting out corruption and streamlining the tax system, the double whammy of the demonetisation and the GST were two of Modi’s signature policy moves. But instead of encouraging economic activity as intended, they did the opposite, at least in 2016-2018, by sapping consumer demand, according to some economists.

Many businesses, especially small and medium-sized enterprises, complained publicly ---- some in their financial statements ---- that they had suffered a drop-off in orders. The suspended J&J project stands as one of the most vivid examples of the impact of the demonetisation and the GST on the broader investment picture.

In the first month after the demonetisation, some business surveys showed that sales of products such as shampoos and soap had fallen by more than 20 per cent.

Lack of jobs growth and a farm-income crisis because of low crop prices have hurt Modi in the current general election, according to several political strategists.

Still, Modi and his party are expected by many of the strategists to be in a position to get a second term, probably with the support of some other parties, when votes are counted on Thursday, partly because of his strong stance on national security issues.

A range of Modi’s business policies, such as capping the prices of medical devices, forcing tech companies to store more data locally and stricter e-commerce regulations, have in the past two years hurt the plans of American multinationals such as J&J, Mastercard, Amazon and Walmart-owned Flipkart.

The groundbreaking of the J&J facility in Penjerla, the company’s third in the country, was carried out with much fanfare in 2014. Telangana chief minister K. Chandrashekar Rao attended the event and hailed the foreign investment as a big win for local communities.

A document dated April 2017 --- which listed the products the company planned to make at the facility and was submitted to the Telangana government --- named baby oil, baby shampoo, baby lotion, baby hair oil, face wash and creams.

Shaukat Ali, running a teashop under a bamboo stall on barren land outside the plant, said local workers checked in routinely for possible vacancies at the J&J site but nothing had come up in years.

At the local pollution control board office, member secretary Satyanarayana Reddy said the J&J plant had all the required approvals and that he was not sure why it hadn’t started production.

“It is unusual for such a big plant to stay idle for so long,” he said. “But there is no problem from our side.”

Chandrasekhar Babu, an additional director at the Telangana industries department, said a J&J official had told him the plant hadn’t started because of a lack of demand for the products to be made there.

The GST and the demonetisation were two key reasons the plan didn’t kick off, one of the sources said, adding that the lack of consumer demand since then had dented the company’s plans. The second source familiar with J&J’s plans said the company had miscalculated the Indian market demand.

On a recent visit by a Reuters reporter to the plant, plush and furnished conference rooms and cubicles sat inactive. M. Sairam, who said he was the site manager, said the production areas with machines were idle too.

Local officials had hoped the initial J&J plant would only be the beginning. After the groundbreaking in 2014, Pradeep Chandra, who was Telangana’s special chief secretary for industries, had told Business Today magazine that “based on the extent of land (that J&J) have acquired we believe that they are looking at much larger expansion here”.

Local media reports at the time said the J&J facility would employ some 1,500 people.

A J&J official, who was not identified by name, was reported subsequently in December 2016 in the Business Standard newspaper as saying that the $85-million plant would be operational by 2018 after it had overcome procedural delays. The official was quoted as saying the company had earmarked an additional $100 million for expansion.

Vikas Srivastava, managing director of J&J Consumer (India), who was at the 2014 groundbreaking, did not respond to calls for comment.

Reuters also talked to two workers outside a sprawling Procter & Gamble facility, which makes detergents and diapers and stands next to the J&J plant. They said they were part of the P&G plant’s production team and that the plant had been running below capacity.

A P&G spokesperson denied that, saying the plant was “operating at full capacity in line with our business plans”.

“India is a priority market for P&G globally and in recent quarters, P&G’s business in India has registered strong double-digit growth consistently,” the company said.

The weak rural economy, where most Indians work, has also hurt the growth in the sales of basic items such as detergents and shampoo in the past year.

Hindustan Unilever Ltd, an industry bellwether that would compete with the likes of J&J and P&G in some categories, said its volume growth shrank to 7 per cent in the quarter ended March 31, down from double-digit growth in the previous five quarters.

The company warned that the daily consumer goods segment in India was “recession resistant... not recession proof”.