Perilous policies

Government policies that focussed on the liberalisation, modernisation and globalisation of the industry but ignored the livelihood issues pertaining to the lakhs of traditional handloom and powerloom weavers are behind the tragedy that has overcome them.

THE new National Textile Policy of November 2000, which seeks to modernise, privatise and globalise the industry in order to integrate it into the world market, has become the noose for weavers and their families in Andhra Pradesh, for whom the loom is not only a means of livelihood but a way of life.

The current crisis in the handloom sector, unprecedented in the post-Independence period in terms of its scale, has been precipitated ironically by successive textile policies and the recommendations of various committees, pushing the weavers into a debt trap, starvation and death. But at the root of the crisis - which in some senses also hastened the decline of the handlooms sector - is the liberalisation process set off by the 1985 Textile Policy and compounded by the structural adjustment programme pursued by the government since 1991.

The thrust of the Textile Policy of 2000, based on the Satyam Committee Report, is to make India a global player in textile production and exports, particularly of garments. It seeks to re-orient the handloom sector to the globalisation process - this, according to the policy, is the principal strategy to ensure its survival. The policy has set a target of increasing textile exports in value terms by around five times in the next decade - from $11 billion worth to $50 billion, and half of it in the form of garments. It also aims at increasing cotton production by 50 per cent, while explicitly encouraging the use of man-made fibres such as polyester.

To achieve these rather ambitious targets, the policy seeks to de-reserve garment-making from the labour-intensive small-scale sector and throw it open to the capital- and technology-intensive national and global investors. To aid this process further, the government is to assist the private sector in specialised financial arrangements and to set up a venture capital fund. The policy permits 100 per cent foreign direct investment (FDI) in the textiles sector against the earlier limit of 24 per cent. It encourages the private sector to set up world-class, environment-friendly integrated textile complexes - from yarn production to garment-making - all under one roof. And, in order to strengthen handlooms it would assist the industry forge joint ventures to secure global markets. It also seeks to liberalise and encourage export of cotton yarn.

The Union Budget 2001 gives a further impetus to this trend by allocating Rs.10 crores to set up "Integrated Apparel Parks" to enable the dereserved garment units to modernise. Also, to set up 50,000 shuttleless looms and to convert 2.5 lakh traditional looms to automatic ones, the provision under the technology upgradation fund scheme (TUFS) is raised from Rs.50 crores to Rs.200 crores.

Clearly, the odd ones out in all this are the traditional handloom and powerloom weavers, with their simple pit and horizontal looms. Neither the plight of the weavers nor the means to strengthen institutions such as the Andhra Pradesh State Handloom Cooperative Society (APCO) that protect the weavers, finds a mention in the policy.

But, then, handloom bashing is nothing new. It was on even in 1952 when the Kanungo Committee was set up to suggest ways to modernise the textile industry, which once constituted India's dominant export sector. The committee report said: "For the ordinary cloth, the pure and simple handloom is and must be a relatively inefficient tool of production. With the exception of those items which require an intricate body pattern, there seemed to be no variety of fabric which the handloom industry could produce in a better quality or at a lower price. A progressive conversion of handloom into powerlooms through organised effort over a period of 15 to 20 years is, therefore, recommended."

The main objective of the Textile Policy is to ready the industry to cope with competition in the international market. The handloom weavers have accordingly been advised to "stand up on their own" and compete in the global market. While suggesting that the government support the weavers in this by devising special schemes, the Satyam Committee recommends the scrapping of the Reservation Act (of 11 items) and the hank yarn obligation which, despite their ineffective implementation, have provided the only means of support to handlooms.

According to Dr. K. Srinivasulu, Reader, Department of Political Science, Osmania University, the main problem with the Satyam Committee Report, which the government is to implement in phases, is its way of looking at the handloom industry. Deviating from the well-accepted method of categorising weavers on the basis of the organisation of production into cooperatives, master weavers and independent weavers, the report seeks to divide them into three groups on the basis of the "quality of cloth" they produce. In the first tier are weavers who produce "unique, exclusive, high- value-added items" (highly skilled weavers). In the second are producers of "medium-priced fabrics from not-so-fine counts of yarn" (semi-skilled). And in the third tier are those who produce ''plain and low-cost textile items'' (unskilled).

It is recommended that while the first tier weavers be encouraged to remain in handlooms, those in the third be made to shift their vocation. The committee, which assumes that the bulk of the weavers are in the second tier, suggests that they be trained, provided with semi-automatic looms and then encouraged to switch to powerlooms.

According to the estimates of the 1974 high-power committee of the Planning Commission on the textile industry, headed by Sivaraman, each powerloom can displace six handlooms (and 12 weavers). Recent estimates indicate that every jet loom displaces 40 traditional powerlooms. However, the Satyam Committee recommended that the bulk of the handloom weavers be accommodated by powerlooms.

The anti-handloom bias of the report is clear from the following statement: "Generally handloom weavers remain tradition-bound and are averse to change... For more than five decades, the poor handloom weavers remained spoonfed through government schemes and they continue to look up to the government for anything and everything." Nothing can be farther from the truth, for if the handloom industry has survived it is largely because of its own strength and resilience and the capacity of the weavers to adapt to market changes.

The latest Textile Policy has its roots in the 1985 exercise which was a clear departure from the policy followed since Independence, which recognised the employment potential of handlooms and provided it adequate safeguards from the mill and powerloom sectors. The 1985 policy made a significant departure from this by according high priority to "productivity" rather than to "employment", thereby viewing the industry in terms of processes - spinning, weaving and product processing - rather than in terms of sectors.

Productivity was sought to be increased in the various processes irrespective of the relative strengths of the different sectors to compete. Powerlooms proliferated and, in the 1980s, their overall growth was estimated at 11.7 per cent per annum (the figure for cotton powerlooms was 14.94 per cent per annum). Over five lakh unauthorised powerlooms were regularised in 1985. By the early 1990s, going by official figures, there were over eight lakh powerlooms which, given their cost and productivity advantages, hastened the virtual demise of the handloom sector.

Despite its emphasis on liberalisation in the industry, the 1985 policy provided two major measures to protect handlooms - the Handloom (Reservation of Articles for Production) Act (which reserved 22 varieties for handlooms), and the hank yarn obligation of the spinning mills (that 50 per cent of production should be in the form of hanks). This move met with stiff opposition from mills and powerlooms; writ petitions were filed by the mills and the Reservation Act was stayed.

In spite of the recommendation of the Abid Hussain Committee (1988) - set up to monitor the implementation of the 1985 policy - to place "handlooms in the Ninth Schedule of the Constitution in order to avoid the legal challenge to this legislation", the government did not move decisively to implement the Reservation Act. And, even as the ground was cleared for the implementation of the Act when the Supreme Court upheld it in 1993, nothing changed on the ground. In fact, on the recommendation of the Mira Seth Committee (set up in 1995 to review the performance of the handloom industry following the implementation of the 1985 policy), which suggested the reorientation of handlooms as the main strategy for its survival, the government in 1996 reduced the number of items reserved for handlooms from 22 to 11. But as the government has not been serious about implementing the Reservation Act, even these 11 items continue to be produced by powerlooms. Says Andhra Pradesh Handloom Workers' Union leader K. Santa Rao: "Even if the government reserves two items - saris and dhotis - for handlooms, it will survive."

Similarly, the 50 per cent hank yarn obligation of the mills has never been enforced. The percentage of hank to total yarn production has never crossed 26 per cent. According to Rashtriya Cheyneta Karmika Samakhya (the largest organisation of independent handloom weavers in the State with 2,340 members) president Mohan Rao, the actual supply of hank yarn has barely touched a third of the requirement.

Thus, not only was there a diversion of hank yarn to the powerlooms - 170 million kg in 1990-91 alone - it was also exported in large quantities - 64 per cent of total yarn exports or 30 million kg of hank yarn (20s and 40s count) to China and Thailand in 1990-91. There was also a mismatch between the quality of yarn the handlooms needed and that supplied by the mills. Thus, the number of working handlooms declined since 1985 (from 48 lakhs to 43 lakhs in 1986 to 38 lakhs in 1995), affecting over 30 lakh families and rendering over one crore people jobless.

Then came the body blow in 1991 in the form of the new Economic Policy and the process of liberalisation. In order to tide over the problems of balance of payments and low foreign exchange reserves, the government went for an export drive, including of yarn and cotton, ignoring domestic production requirements.

Yarn exports increased from 94.68 million kg in 1990-91 to 110.99 million kg in 1991-92 - 86.8 per cent of it was low count hank yarn - when domestic yarn production had in fact declined dramatically. (Ironically, while low-count yarn of 6s, 10s, 17s and 20s was exported, higher count yarn of 80s, 100s and 120s were imported to feed the "foreign" machines.) As a result, hank yarn prices increased by 18 to 20 per cent; while the price of 40s count rose by Rs.10 a kg, that of 60s and 80s went up by Rs.21 and Rs.25 a kg. As part of the privatisation and liberalisation process, sick and inefficient mills were also closed (400 units were wound up between 1991 and 1994). Ninety-five of the 129 independent mills and cooperative mills have been declared sick and are exempt from hank yarn obligation. This accentuated the problem of yarn availability and escalating prices. Thus, handlooms suffered not only due to the non-availability of hank yarn, but also owing to steep increases in yarn prices. This trend continued and the situation worsened through the 1990s. And, as the increase in yarn prices could not be totally passed on to the consumer, every crisis situation caused by a price increase was managed by cutting the weavers' wages.

The yarn price hike, coupled with the Centre's globalisation and modernisation policies (reducing duty on the import of textile machinery and opening up the economy to clothes from countries such as China and Thailand), also pushed the traditional powerlooms to the wall. Unable to face competition from jet and auto looms, and cheaper fabric dumped from abroad, thousands of powerloom weavers lost their jobs.

It is in this background that the Satyam Committee was set up.

The Andhra Pradesh government's schemes did not review the problems of the weavers. Its 'Bicycle to the weaver' and 'Loom to the loomless weaver' schemes, when yarn prices were escalating to unsustainable levels, only reveal the callousness of the policymakers. The latest package announced on March 27, which includes modernisation, and training of weavers to produce for the export market and face international competition, is no different.

The crisis set off by a sharp rise in yarn prices was compounded by a number of problems on the demand side and in the export market. For example, two major export items from Andhra Pradesh to African countries - the 'real Madras handkerchiefs' and 'Madras checks' - have been hit by the steep tariffs and quota barriers imposed by importing countries.

Over the last 15 to 20 years, government policies that focussed on the liberalisation, modernisation and globalisation of the textile industry have steadily marginalised the weavers - both handloom and traditional powerloom.

This is no peripheral industry involving a small section of the population. After agriculture, weaving is India's single biggest employment provider; there are an estimated 36 lakh handlooms in the country, supporting roughly two crore people. Yet, weavers have been let down by successive policies.