The collapse of APCO

Print edition : April 14, 2001

THE handloom weavers' cooperative societies in Andhra Pradesh are in a precarious condition, thanks to institutions, mainly the Andhra Pradesh State Handloom Cooperative Society (APCO), set up to support them. And this has directly impacted some 1.7 lakh weaver families, dependent entirely on the primary cooperatives. APCO, set up in 1974 on the recommendations of the Sivaraman Committee (to protect handlooms from the onslaught of powerlooms) to help the handloom weavers with finance and marketing facilities, has become virtually defunct.

Gavvala Bhumiah examines freshly dyed material.-P.V.SIVAKUMAR

Its turnover in 2000-01 (up to January) at Rs.20.38 crores was less than 20 per cent of the 1992-93 figure of Rs.128.41 crores, and its procurement worth Rs.6.36 crores was down from Rs.112.45 crores. It has accumulated losses totalling Rs.58.82 crores.

According to a note submitted on February 7 by Handloom and Textiles Minister Padala Bhoomanna to Chief Minister N. Chandrababu Naidu, since January 1999 APCO owes the primary cooperative societies Rs.36.26 crores for the purchase of cloth and Rs.10.32 crores for procuring yarn. As a result of these dues, and the interest of 8.5 per cent on the loans taken from the district cooperative banks, most primary societies have collapsed.

APCO has been consistently defaulting since 1998 on its payments for the stocks procured. In some cases it has even refused to lift the stocks, resulting in a massive accumulation with the primary societies. The cash credit or the working capital for the society is determined by adding 20 per cent to the annual production value and then halving it. When APCO does not pay up, the societies are caught in a severe bind - their working capital would drop, production levels would fall and the cash credit limit for the subsequent year would decrease.

It is in this vicious cycle that the primary cooperative societies have found themselves since 1992, when APCO started to fall back on payments, till it stopped them completely in 1998. According to B. Balaraj, manager the Handloom Weavers Cooperative Society established in 1949 at Dubakka, the crisis worsened after 1996, when APCO stopped the Janata cloth scheme, on which most primary societies depended.

The story is no different for most of the 598 primary cooperative societies - huge outstandings from APCO, no working capital, growing interest burden on the working capital loans taken from the district cooperative banks, drastic cut in production and large-scale unemployment. Not surprisingly, 85 per cent of the societies are defunct. The rest are in poor shape.

For instance, the Saibaba Society in Pondur in Srikakulam district, a pioneer establishment of the early 1930s, has just about managed to keep itself afloat. Its membership has dropped from 2,000 in the 1950s to a mere 200 now. And not all the members get regular work; the society is able to employ only about 20 members. APCO owes it Rs.14 lakhs (without taking into account the interest on outstandings); stocks worth Rs.7 lakhs are lying in its godown and the society has drastically cut production levels. And even to run at such low output levels it has borrowed Rs.3 lakhs at 24 per cent interest.

The plight of the Maramanda Society in East Godavari is no better. Its working capital of Rs.42 lakhs has been wiped out as APCO owes it Rs.50 lakhs. Government bodies owe the society another Rs.7 lakhs by way of payment on discounts and exhibition expenses. The society borrowed in 1999 Rs.6 lakhs for outstanding interest payments. Now it has stopped working.

What set off the collapse of APCO? Dubakka Handloom Cooperative Society president A. Chandramouli says it is largely because of mismanagement and the government's apathy towards weavers, an attitude that has been reflected in the non-clearance of dues to APCO. In his February note Padala Bhoomanna stated that the State and Central governments owed APCO Rs.1.39 crores and Rs.1.29 crores respectively. However, according to independent figures, various government departments owe APCO nearly Rs.11 crores. The defaulters include the Social Welfare and the Tribal Welfare departments and the Directorate of Health.

According to Mohan Rao, president of the Rashtriya Cheyneta Karmika Samakhya, APCO's collapse is primarily due to political interference at every stage of its working.

The intent of the State government to close down APCO is evident from its recent move to retrench 925 employees, sell some of its assets and shut down six divisional offices, three marketing offices and 148 units.

According to the Handloom Workers Union general secretary, K. Santa Rao, representations to the Textiles and Handlooms Minister and the Chief Minister to revive and sustain APCO as also to clear the dues have fallen on deaf ears. Promises are made freely, but never followed up. Even the latest package of Rs.15 crores announced by the Chief Minister to clear part of APCO's dues to the societies will meet with the same fate, he fears.

APCO's revival would certainly pull the weavers from the brink. Ironically, the Textile Policy released in November 2000 is silent on the fate of the apex institution.

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