Handlooms in Distress

Author(s): Noorbasha Abdul

Source: Economic and Political Weekly, Vol. 31, No. 23 (Jun. 8, 1996), pp. 1384-1386
Published by: Economic and Political Weekly
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 of handlooms. Also, the government would
Handlooms in Distress not be able to administer the implementation
of the statutory obligation on the partof yarn
Noorbasha Abdul
mills of packing 50 per cent in the hank
form. Even when such a calamitous lapse
With the withdrawal of several subsidies so far enjoyed by the was brought to the notice of theunion minister
handloom sector and especially by winding up the Janatha clothforscheme
textiles, he surprisingly clarified that
which not only provided cheap cloth but also employment to the "exporters of yarn are exempted from the
vulnerable section of weavers, the old and low-skilled, the new hankyarn obligations" (The Hindu, July 18,
1995). All these liberalisation and decontrol
economic reforms have contributed to the worsening of conditions in the
measures obviously brought about dangerous
handloom sector.
results in the handloom industry.
Industry-observers are critical of the
DURING the past four years, certain policy prices. The supply of the major input in the government handling of the crisis posed by
changes affecting the industrial economy in handloom sector, hankyarn, has been soaring yarn prices. .The main reason'for the
general like reduction in state support, inadequate, unreliable and efratic. It was destitution of weavers in Andhra Pradesh
gradual phasing out of subsidies have been primarily due to the steep increase in prices between 1991 and 1994 was that the prices
undertaken resulting in scarcity of raw of yarn, that the handloom industry had to of yarn had more than doubled from
taste four spells of crisis in the years 1984,
materials to small-scale units due to free play Rs 226.50 to Rs 415 per bundle for 20s and
of market forces. The Entrepreneurship 1986,1988 and 1991. During 1986-91 alone from Rs 174 to Rs 491 per bundle for 40s
Development Institute of India (1993) during the free enterprise regime of the Rajiv count. The price of 40s has further gone up
surveyed the impact of the new economic government, the prices of 40s count increased to Rs 530 now. It is unfortunate that the
policy on small-scale industry and found by 1 5 per cent and 60 by 70 per cent. The promise of the textile policy of 1985 to make
that competition from big industry had grown NER of 1991 through the maiden budget of adequate supply of yarn at reasonable rates
and adversely affected the demand for the central government took the prices higher. has turned a distant dream. The devaluation
products of small-scale units and ancillaries. If the capacity of the 40 lakh handlooms of rupee announced as part of the NER has
Handloom industry is one such vulnerable in India is to be fully utilised, the requirement
contributed to the inflated prices of yarn.
industrial segment which has been severely of yarn would be around 560 million kg a The employment intensity of handloom
affected under the reforms regime and has year. The actual supply however would industry is but aweighty consideration behind
culminated in large-scale de-employment of appear to be only 60 per cent of the require-
the policy subsidisation. In so far as the
weavers and the shrinking of real wages. ment which resulted in drastic under- handloom industry is a major provider of
The large-scale starvation deaths of employment of looms and labour. A couple employment in the rural sector next only to
handloom weavers in Prakasam and Guntur of reasons can be prominently mentioned. farming. Government support to weavers
First, the violation of the hankyarn obligation
districts of Andhra Pradesh in the second half needs to be regarded as a social safety net
of 1991 triggered a spate of media reports by yarn mills and secondly, diversion of rather than merely as a subsidy for econo-
that have focused on the plight of weavers. yarn to the powerlooms and exports. micallyinefficientunitsinthetextileindustry.
An investigative report of the Andhra Pradesh The liberalisation process pursued since If the concept of social safety net is accppt-
Civil Liberties Committee (APCLC) has the early 1 990s encouraged exports regard- able, there would be a strong case for parity
documented a total of 11 1 deaths of weaversless of domestic requirements out of the of treatment of'co-operatives and private
either due to starvation or by suicides. In predominant concern to earn foreign ex- units in regard to subsidy on hankyarn as
1988-89, in another crisis, 52 handloom change. The liberalisation regime has well as s4les rebates.
weavers died of starvation.,No government permitted the export of 100 million kgs of The economic reforms as a measure of
has taken effective steps to reverse the fragile yarn in 1994 which was later raised to 130 fiscal deficit reduction have resorted to
nature of the handloom economy. million kg. For 1995, the ceiling has been slashing down the subsidy being offered to
The textile policy of 1985 announced by fixed at 75 million kg exclusively for yarn handloom industry and to many other priority
the Rajiv Gandhi government, though it of below 40s. The ceiling on export of above sectors. The latest vote-on-account presented
rightly identified the basic obstacles facing 40s was totally waived recently with a view by the union finance minister provides a
handlooms and promised certain safeguards, to encouraging the export of finer varieties detailed account of the subsidies. The total
miserably failed to get them implemented. on the plea that "India has a competitive subsidy as percentage of GDP has been
Among others the safeguards included advantage for such counts". brought down from 2.3 in 1990-91 to 1.1
adequate supply of yarn at reasonable prices,This apart, quite often the ceiling limits now (i e, cut by 50 per cent). Subsidies
reservation of articles for exclusive pro- of exports have been violated by yarn pertaining to the handloom industry have
duction by handlooms, provision of fiscal exporters. For example in 1994 cotton yarn also been brought down sharply both in
concessions, marketing arrangements and exports far exceeded the ceiling and touched absolute and real terms. While in 1991-92
welfare schemes like housing for weavers 216 million kg out of which the share of the subsidy was Rs 187 crore. It came down
and modernisation of looms. The new eco- count group I to 40 was 188 million kg. The to Rs 147 crore in 1995-96 and further to
nomic reforms instead of facilitating the Economic Times (January 30) commented Rs 139 crore in the present budget. If it is
implementation of these safeguards, have that "the export policy has been diluted in discounted for inflation the figure would be
made for the further degeneration of the the last two years to shift semicoarse yam much thinner.
handloom industry and have caused large- in the 40-60 count range to the free list". In consonance with this, the subsidisation
scale de-employment of weavers. Hundred per cent EOUs too have managed pattern for hankyarn has also been modified
to escape the ceiling on the plea that "their recently. Hitherto subsidy was offered on all
YARN AVAILABILITY WORSENS
special export status allows free export". In counts of yarn. The weaver co-operative
The long history of crisis in handloom the hunger for foreign exchange, the societies were able to utilise this opportunity
industry is broadly related to the scarce government has become a mute spectator on to produce cloth of various counts at a lesser
availability of yarn and dyes and their soaring
the violative acts of the exporters at the cost
cost. However, since April 1995 subsidy is

1384 Economic and Political Weekly June 8, 1996

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restricted to yarn of below 40s. In Guntur, government is restricted to only 15 per cent growth of powerlooms would be the death-
Prakasam and Krishna districts of Andhra of the outstanding cash credit of the societies. knell for handlooms.
Pradesh where widespread starvation deaths This new scheme fixed a ceiling on the The Hindu commented recently by that
occurred, most of the handlooms required assistance that can be offered on the sales "reservation of production in favour of the
yam of above 40s.to weave sarees, lungies, of the societies. Weavers societies in A P handloom industry would not be justifiable
shirtings, dhoti-cloth. Stoppage of subsidy have been protesting against this new scheme insofar as it operates against the freedom of
for above 40s naturally hampered the viability for its abolition. choice of the consumers". Logical arguments
of working societies at large. Further, delay Meanwhile, the weavers started demanding of this sort, though they sound rational and
in release of this merge subsidy by govern- the enhancement of the MDA ceiling from democratic, are only directed at defending
ment has resulted in paucity of working the existing level of 15 per cent to 25 per the market forces to determine the destiny
funds and inability to procure fresh yarn to
cent so that handloom cloth would find a of producers, and would undoubtedly deal
continue the employment. wider market and the employment potential a major blow to the unorganised handloom
of the societies would increase. The central sector. Freedom of production given to one
JANATHA CLOTH SCHEME
government instead of enhancing the assis- potentially strong unit should not result in
As a major step towards continued tance, has now come up with a fresh order the unnatural death of the mass of smaller
employment of handloom weavers as well reducing the assistance to 10 per cent, that units.
as supply of low priced cloth to weaker too applicable to non-APCO sales. This not The problem of mounting arrears of the
sections a scheme titled 'Janatha Cloth only discloses the step-motherly treatment Andhra Pradesh state handloom weavers co-
Scheme' (JCS) was launched during 1976. by the government of the crisis-ridden operative society (APCO) to be cleared to
Some 19 states including Andhra Pradesh handloom industry but also demonstrates the primary societies is taking serious
and one union territory implemented this the blatantly commercial approach of the proportions nowadays, causing the latter to
scheme. The central and state govemments government to the sector. become funds-starved and lie idle. The
contribute subsidy under JCS in 80:20 ratio, In order to protect the handloom industry volume of such arrears has touched a new
respectively. The products under the scheme from unfair competition from the power- peak of Rs 20 crore. Since the APCO has
include dhoties, lungies, sarees, shirting and looms and the mill sector and to provide defaulted on the Rs 10 crore loan raised from
long cloth and certain woollen items. A relief to the sector, the government of India NABARD in January 1994 and also another
significant merit of this scheme was that it enacted the Handloom (Reservation of Rs 10 crore towards interest on old debts,
provided employment to weavers of the older Articles for Production) Act of 1985. The the NABARD refused to renew cash credit
ages and those with little skills. Thousands act enables the central government to reserve to the APCO. The state government has
of weavers in the state were earning a certain articles for exclusive production on remained unmoved over this.
livelihood from this scheme. handlooms and for taking legal action against This apart, the procurement operations of
In the name of resource constraint and the powerloom/mill owners who manufacture the APCO for the year 1995-96 have not yet
'better house keeping', the present govern- such reserved items. However, the act has started. Crores of rupees worth cloth are
ment in the state has totally withdrawn the not proved to be an effective instrument lying undisposed with thousands of weavers'
JCS in 1995. Consequently, there was a because of litigation. The Supreme Court co-operative societies. As a result, the sales
sudden liquidation of thousands of looms in had stayed the operation of the act since of more than 430 APCO sales depots
the state. In Guntur district alone the numberNovember 1987. The order was in force till functioning within the state and outside are
of weavers co-operati ve societies plummeted February 5, 1993. But the apex court later going down due to shortageof cloth. Another
very sharply following this drastic step. In upheld the constitutional validity of the 30 sales depots are going to be closed d,pwn
Prakasam district, dozens of weavers who legislation. But states areunableto implementduring 1996. The APCO had to take a hard
lost JCS had to migrate to neighbouring the reservation as the powerloom lobby is decision to close down sales units in which
districts in search of alternative employment
active. annual sales fall short of Rs 5 lakh each. This
or for weaving that commands less skill . The The Abid Hussain Committee had there- bitter story of APCO drives home a couple
retrenched workers who happened to be fore strongly recommended the inclusion ofof tough messages. First, the funds problem
unskilled and aged would not be accom- this reservation in the ninth schedule of thebeing encountered by the state and the APCO
modated by the master weavers who usually constitution "in order to avoid legal chal- not only liquidates the employment of
produce cloth of acceptable quality and lengeof this legislation". Thecentral govern- weavers but also drives out hundreds of
standard designs with the help of skilled ment, however chose to remain tight-lipped white-collar staff from the sales side;
weavers. The withdrawal of JCS therefore over this, amidst the growing agitations ofsecondly, all these retrenched and de-
has become a serious concern for the weavers the weavers. employed have no alternative employment.
now and protest movements are coming up The NER, as already stated, aimed at The Meera Seth committee appointed by
especially in Guntur, Krishna, Prakasam and liberalisation which was intended to mean the Planning Commission recently to review
Chittor districts. the transition to a more open market-driventhe performance of the handloom industry
In yet another development, state support economy. The government is neither would do well to give serious thought to the
to industry was reduced in which the interested in nor capable of implementing following suggestions.
government of India introduced marketing the reservations for handlooms. In spite of As the Abid Hussain Committee recom-
development assistance (MDA) on the eve the legal promulgations by the govemment, mended, the state can organise the reeling
of NER in lieu of the earlier non-plan special
their execution has been stalled because of of hankyarn at decentralised locations nearer
rebate scheme to primaries. Under the earlierthe powerloom lobby. The powerlooms, got the handloom weavers. Cone yarn would
rebate scheme, the government used to a fresh lease of life through the Textile then be supplied to weavers' co-operatives
reimburse 20 per cent rebate on the entire Policy of 1985, which liberalised restrictions at lower cost for reeling into hank form. This
sales volume. Many other states like Tamil on powerlooms and opened up the textile would facilitate not only the supply of
Nadu have been making reimbursements as pyramid for their hegemony. This policy hankyarn at cheaper rates but also boost
usual even under the MDA. However the undermined the growing appeals of the rural employment. Diversion of hankyarn
Andhra Pradesh government has opted for Sivaraman Committee, which prophesied by the powerlooms needs to be checked by
MDA under which assistance by the two decades back that the indiscriminate imposing heavy excise duty, which can be

Economic and Political Weekly June 8, 1996 1385

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utilised for the welfare of the handloom
sector.
Unrestricted exports of yarn should be
stopped. Until the yarn requirements of the
textile sector are fully met, export of yarn
should be banned.
Since the powerloom lobby blatantly
violates the reservation of 22 articles for
handlooms, the state should ban the entry
of such production by powerlooms into the
state's market. Alternatively, 100 per cent
entry tax may be imposed on such goods.
The tax thus collected should be utilised for
developing the handloom sector.
The marnagement of weavers co-operative
societies must be made accountable for all
their operations so as to keep under check
corruption at the societies level itself.
The survival of such a vast and traditional
unorganised sector, handloom, is not pos-
sible without state support. Extension of
support is the constitutional obligation of
the state. But in the final analysis, the abilitysible to question the results and the fait
of the handloom industry to hold its own
will depend crucially on the design factor
and on the craftsmanship of the- weaver.
What the handloom sector should look for
then is institutional support for moder-
nisation of production, substitution of
vegetable dyes for chemical dyes and train-
ing in design and innovative patterns of
weaving.
[Paper presented at the 'National Seminar on
Politics of Liberalisation and Economic Reforms',
held at Hyderabad by Osmania University during
March 15-16, 1996.]
from the Kremlin the already prepared
congratulatory telegrams from the western
leaders confirming his win will be instantly
released. After that it would become impos-
accompli would have to be accepted by all.
Meanwhile, the bewilderedRussian voters
remain greatly agitated and concerned about
electing their president in the mistaken belief
that it is for them to chose. They do not have
the faintest suspicion about all the forces that
have taken the choice out of their hands, and
are determined to foist Yeltsin upon them
for the second term.
The people have 11 candidates to chose
from. Of these, only seven carry political
weight. They are: Boris Yeltsin, Gennady
Zyuganov, Grigory Yavlinsky, Vladimir
Zhirinovsky, Svyatoslav Fyodorov,
Alexandr Lebed and Mikhail Gorbachov.

Yeltsin's Last Hurrah Provided that the results are honestly

declared, it is assumed by all that none of
Dev Murarka the 11 candidates will secure 50 per cent of
the votes in the first round. However, it is
agreed that Yeltsin and Zyuganov will easily
The great tragedy of the current election campaign and its outcome lies go into the second round. No other candidate
in the conviction successfully spread among the voters, by the is likely to make it unless something entirely
Yeltsinites above all, that it is either Yeltsin or Zyuganov, no one else. unforeseen happens and affects the position
of Yeltsin. The only uncertainty is whether
Of course, it is an absurd notion and demeans the electorate and
Yeltsin will head the first round or Zyuganov.
grossly insults its intelligence. But it has worked.
Either way, in the second round Yeltsin is
definitely supposed to win.
My higher politics says: a party [read leader Otherwise, no 'civilised' society would The election thus appears to have become
in the present Russian context - DM] whicheven remotely consider a person with his a two-horse race. At least this is what has
makes errors like this is already finished - record of bloodshed and insidious authori- been dinned into the ears of the public
it is no longer secure in its instincts. Every tarianism worthy of re-election. After all, isby the Yeltsin camp from the very start.
error, of whatever kind, is a consequence
he not the successful putschist who dissolvedEarlier on, some observers gave three of the
of degeneration of instinct, degradation of
and shelled the Russian parliament in other candidates - Lebed, Yavlinsky and
will: one has thereby virtually defined the
September-October 1993, who falsified the Zhirinovsky - some chance of beating Yeltsin
bad (italics in the original).
results of the referendum on the constitution to the post in the first round and then
- Friedreich Nietzsche (1844-1900)
in December 1993, and who has remained Zyuganov in the second round. Yavlinsky
BORIS NIKOLAEVICH YELTSIN, 65, will a determined Chechen killer since December was considered to be particularly well placed
remain the president of Russia, and whether 1994? However, in Russia he is now in this respect. The argument was that all
he wins the polls or not, will be declared considered indispensable for democracy. So the centrist, democratic and liberal votes
the winner. Such is the transformation which too by the cynical western leaders. Poor would combine around him. At that stage,
has taken place in the balance of political democracy! the popularity rating of Yeltsin was very low
forces in Russia and the public opinion duringThe Yeltsin entourage has become so and it was thought he may not make it to
the last three months that in a sense the brazen that they now evenTorecast his victory
the second round. In that any of the above
forthcoming election has already become in the first round itself. However, opinion three could defeat Zyuganov.
superfluous, though the formality has to be poll experts are warning that his ratings, Initially the Zyuganov bandwagon had
observed. The polls are due on June 16. which show a weekly rise of 3 to 4 per cent, rolled, seemingly invincible, due to several
However, if no one secures more than may turn out to be exaggerated. They claim misconceptions. It gathered momentum in
50 per cent of the votes cast, then another that up to 40 per cent of those declaring in
the first place because his Communist Party
poll has to be held on July 7, with only the his favour now may not vote at all. In normal
of the Russian Federation (KPRF) had
two highest ranking candidates taking part. cicumstances it could be serious setback. emerged as the biggest party in the Duma
The one with a majority being declared Not for the Kremlin strategists. elections on December 17, capturing 22.7
elected. Vladimir Bukovsky, a noted dissident from per cent of votes. To this were added the
The declaration of the Yeltsin victory, the Brezhnev period and now a British citizen assumed gains from other left-wing voters,
whether in the first round or second, even living in Cambridge, England, has revealed near to the KPRF in sympathy and feelings.
if by chance genuine, would signify the to Radio Liberty that during a recent visit Altogether some 30 per cent or more of the
degraded state of ethical, moral and spiritualto Moscow he met some influential members votes appeared guaranteed for him. Indeed,
values in contemporary Russian society: of Yeltsin's entourage. They informed him from December to March it was taken for
Since he has made no mean contribution to that his re-election presents no problem at granted that Zyuganov will win over Yeltsin
the decline in these values, his re-election all. It will be all done by manipulation of in the second round. But this very appearance
as the head of the state will symbolise it computer data on voting. At a given moment of success proved to be misleading, even
amply. he will be declared elected, and at a signal damaging to him.

1386 Economic and Political Weekly June 8, 1996

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