Industry in trouble

Published : Dec 07, 2016 13:25 IST

Migrant workers  at a unit in the Ambattur Industrial Estate. Migrant workers can be paid wages only in cash. They do not have ration or Aadhaar cards with local addresses and are hence unable to open bank accounts.

Migrant workers at a unit in the Ambattur Industrial Estate. Migrant workers can be paid wages only in cash. They do not have ration or Aadhaar cards with local addresses and are hence unable to open bank accounts.


Small units, huge problems

By T.S. Subramanian

THE entrepreneurs of small and tiny/micro industrial units in Tamil Nadu are apprehensive whether they can make cash payments to their workers between December 5 and 10—the usual disbursal period. They are facing a massive cash crunch following the demonetisation. In particular, they are worried about the wages they have to pay to migrant labourers from Bihar, Jharkhand, Odisha and West Bengal, who do not have identity proofs such as ration cards or Aadhaar cards and hence cannot open bank accounts. Their wages, therefore, have to be paid only in cash.

Entrepreneurs such as G. Venu, C. Babu and C.K. Mohan deeply resent the ceiling of Rs.50,000 imposed on weekly cash withdrawals from their current accounts. They have unanimously demanded that the Centre increase the limit to Rs.2 lakh. Venu, who owns several industrial units at Ambattur in Chennai, is the president of the Ambattur Industrial Estate Manufacturers’ Association (AIEMA). Babu is the president of the Tamil Nadu Small and Tiny Industries Association (TNSTIA), Guindy, Chennai; Mohan is its general secretary. AIEMA members had not reported any production loss until November 28.There are about 1,500 units at the Ambattur industrial estate, one of the biggest of its kind in Tamil Nadu; 90 per cent of them are micro, small or medium enterprises. These units, which employ several thousand workers, manufacture components and sub-assemblies for automobiles, light engineering and heavy engineering products, power plant equipment, garments and plastic components. About 700 units are members of the AIEMA. Venu, who heads the association, is an engineering postgraduate. He is the managing director of R.C. Das Engineering Private Limited, which manufactures equipment for power and cement plants.

At Ekkattuthangal near Guindy, there are about 1,200 micro engineering units that manufacture automobile components, forgings, press components, switches, electric panels for engineering industries, aluminium welded products, and so on. They also take on projects. Production has been partially hit in the small units of Ekkattuthangal, though there have not been any lay-offs.

Problem of wages

The problem of paying cash wages is what worries the entrepreneurs at Ambattur and Ekkattuthangal. Venu said: “All our members welcome demonetisation, but they are worried about how to pay the salaries and wages in cash to our workers in the first week of December.” Even in November, cash wages could not be paid because of the weekly withdrawal limit imposed on current accounts. Mohan, who owns a unit that specialises in aluminium welding at Ekkattuthangal, pointed out that Rs.50,000 a week was not enough to cover wage payments and other expenses that cannot be met without cash. He recalled that first a limit of Rs.12,000 was imposed for weekly withdrawals, which was later pushed up to Rs.24,000 and then to Rs.50,000. “Even after the restrictions were relaxed, there was no money in the banks, and so even monthly wages could not be paid [for October in November]. Not all employees of micro industries have bank accounts. We pay their wages in cash. So we found it difficult to pay them even in November,” he added. “Why impose a limit? It is my money I am withdrawing from the bank.”

Venu said much the same thing. “The banks right now do not have money,” he said on November 28. “They do not give us Rs.50,000. They give us Rs.15,000 or so.” Mohan said: “They could have gone about demonetisation in a little more planned manner. They could have circulated the new Rs.500 notes, and Rs.100 and Rs.50 notes soon after the demonetisation.”

Workers employed in micro enterprises need money to commute to their workplaces and back home and for buying groceries or eating in restaurants.

Not just a question of wages

The cash crunch also affects the small entrepreneurs’ ability to pay for the local transportation of raw materials that their units require and for ferrying finished products to the industries who buy them. Vehicle operators accept only cash payments. “My product is ready. Its transportation has to be paid for in cash.... Some of the manufacturers were not able to get the money in cash even after they sold their products,” said Mohan. Purchase of tools and consumables by micro industries can be done only on the basis of “cash and carry”.

Other service providers must also be paid in cash, Venu pointed out. The cash deficit hampers the entrepreneurs’ ability to pay rent for industrial plots, buy tools and consumables, maintain their machines and pay for housekeeping. Venu said: “For machine maintenance, we have to pay only in cash. If we urgently need some critical material, we can only buy them by paying cash. If we give cheques, we will get the material three days later, that is, after the cheques are realised. If we do not get the material on time, manufacturing will be affected.”

“Supposing I need money for an emergency, I cannot even approach the moneylender because he also does not have cash.... All this has affected our production to some extent. I will not say that production has been affected totally, but to some extent,” Mohan said.

“Production has been affected,” asserted Babu. “I have to pay the Electricity Board bill, the interest on my bank loan, the local transporter for the transfer of material from one place to another, the loaders and others, all in cash,” he argued. He said two months’ interest on the money that small entrepreneurs had borrowed from banks should be waived. He said big car manufacturers had already slashed the number of orders they placed for automobile components from these small units.

Coimbatore situation

The situation is grim for medium and small units in Coimbatore, Tamil Nadu’s premier industrial and textile centre. It is host to several hundred small and medium industries that manufacture textile machinery, agricultural and domestic pumps, wet grinders, mixers, castings, forgings and automobile components. It has a number of big yarn, weaving and textile mills. The situation in Tirupur, the country’s hosiery hub and host to scores of dyeing units, is also alarming.

The sale of agricultural pumps to farmers in Madhya Pradesh, Maharashtra and Rajasthan is depressed. “Farmers who want to buy agricultural pumps have the demonetised notes, but dealers are unable to accept them,” said V. Krishna Kumar, vice president (marketing), Aquasub Engineering and Aquapump Industries, Coimbatore. These units manufacture bore-well submersibles, domestic pumps, agricultural mono-blocs, open-well submersibles, pressure boosting systems, single phase jet pumps, and so on.

Krishna Kumar is also the vice president of the Southern India Engineering Manufacturers’ Association, Coimbatore. He was in Mumbai on November 29, after touring several States in the north, to attend a meeting of the Indian Pump Manufacturers’ Association. He said: “Sale of agricultural pumps is seasonal business and it will last for three months. This is the season in Madhya Pradesh, Maharashtra, Rajasthan and other States. But farmers pay only in cash, and they do not have cash now. If the dealers cannot sell pumps to farmers, there is no question of their buying from us [the manufacturers].”

The sale of mixers, wet grinders and pressure cookers, all manufactured in Coimbatore, is hit because housewives do not have cash to pay for them.

Krishna Kumar said: “We do not know how long this situation will last.... It has affected the complete range of industry in Coimbatore. It is having an impact on the pump manufacturing industry in the town. Overall, trade in Coimbatore has been affected.”


Going up in smoke

By Suhrid Sankar Chattopadhyay

AIZUL REHMAN (45), a beedi worker of Mahendrapur village in Jangipur subdivision of Murshidabad district, blames the demonetisation of Rs.1,000 and Rs.500 currency notes for the death of his wife, Marjina Bibi (40). She suffered for two weeks before passing away in the early hours of November 25. “The old currency notes that I had were not being accepted either by doctors or medicine shops, and I could not change the money because of the huge rush in the banks and the lack of cash there. Finally, when I was able to take her to Kolkata, it was too late. Even though I had money, I could do nothing,” he said. The villagers, practically all of whom make a living by rolling beedis, claimed that work had dried up in the last couple of weeks and that their wages stopped soon after the demonetisation announcement was made on November 8. “If the beedi industry closes, we will all starve for we have no alternative means of livelihood,” said Tonya Rabibi of the same village, whose family of 10 is dependent on the beedi industry.

The villagers are not accepting the old currency, which beedi contractors are being compelled to offer them because of the unavailability of new currency, and, as a result, for more than a week (as of November 27) they have not received any payments. “If we earned Rs.700 in a week, the contractors offer an old Rs.500 note and two Rs.100 ones. Nobody is accepting old currency, so how can we use it?” said another villager. If the lack of ready cash in the banks is a serious problem in cities and towns, it is particularly acute in the rural areas of Jangipur. People are still able to get essential commodities on credit from the local market, but they know that that facility will end very soon.

Today, despair and panic sweep across the villages of Jangipur, the hub of West Bengal’s beedi industry. Unable to make timely payments to their labourers, more and more beedi units have suspended work. Officially there are 12 lakh beedi workers in the region, but the actual figure is much higher for beedi is a household industry there, with all members of the family, from little children to the elderly, actively engaged in rolling and binding beedis. The official rate for the work is Rs.155 for 1,000 beedis rolled. However, the workers have to be satisfied with a rate of Rs.125-130. “On an average a woman can roll about 600 beedis a day—we have other household work to do as well. The income from that alone is not enough, so our daughters too have to do it. Otherwise it will be impossible to make ends meet,” said Tutu Das of Nimtita village. Her 12-year-old daughter, Debi, has been binding beedis from the age of nine. So inextricably linked is the economy of the region to beedi manufacturing that the impact of demonetisation on the industry has affected every aspect of life. The local markets have turned sluggish, and a large number of shops remain closed for lack of business.

In Jorpukuria village in the Farakka block of the subdivision, 65-year-old Anisha Bewa has been lying ill for 14 days (as of November 26). Her grandson Rafiqul Islam (24) has not even been able to take her to a doctor because the doctor will not accept old currency. “For days I stood outside banks to exchange my money, but the banks themselves do not have cash yet,” he said. Rafiqul works as a labourer in various places outside West Bengal. “The money I have earned with the sweat of my brow is now useless they tell me,” he said. More than 90 per cent of the men of the villages in the region work as labourers outside West Bengal, while the women earn from binding beedis at home. As the men troop back to their respective villages from various parts of the country, penniless for not having been paid for their labour after the demonetisation, they find the situation as bleak at home as outside. Moiful Sheikh returned home from Andhra Pradesh with a due slip in his pocket to find there was no money to be made in the villages either because the beedi units had temporarily shut down. The villagers claim there has been no “100 days’ work” in the region for more than a year. Putul Basak of the neighbouring Andhua village said that earlier the contractor would supply beedi materials every day, “but now he comes only once a week, and he has no money to pay us either. If this continues, 400 families in this village will simply starve to death.”

The owners of the beedi factories too are helpless. Imani Biswas, one of the biggest beedi barons in the region and the owner of the popular Howrah Beedi, said among the 18 big beedi factories, five had already closed down and it was a matter of days before his two factories would also stop operations. “We have dealings in crores of rupees, and now we cannot take out more than Rs.50,000 a week from the current account. I have 20,000 workers in the two branches of my company and have to pay weekly wages of Rs.40-50 lakh. We cannot pay our labourers,” he told Frontline . According to him the government gets revenue amounting to Rs.8-10 crore every month from the beedi business in the region. “But if things continue like this for 10 more days [said on November 25], the industry will not be able to continue any more.”

West Bengal Labour Minister Jakir Hossain, who is also the owner of “Shiv Beedi”, one of the State’s biggest beedi brands, is of the same opinion. “Where is the law which says that even if you have money you will not be able to give it to anyone? That is what is happening; we have the money to pay the workers, but we cannot because of these rules imposed by the Centre. If workers start dying because of this situation, we will hold the Modi sarkar responsible for their deaths,” Hossain told Frontline .


Cup of misery

By Suhrid Sankar Chattopadhyay

THE tea gardens of north Bengal have for long presented a picture of neglect and abject poverty. Starvation and death due to malnutrition and lack of medical facilities have become a common feature on the tea estates, particularly in the Terai and Dooars region, in the foothills of the Darjeeling hills. The demonetisation has pushed lakhs of tea garden workers eking out a desperate existence there further to the brink. An advertisement published in a local vernacular weekly, Janashartha Barta , on November 26, titled “Tea Labourers’ Anguished Plea”, gives one an idea of their plight:

“In our emaciated, shattered state, we do not know what is black money and what is white. We only know what a one thousand rupee note and a five hundred rupee note look like. What is legal or illegal means little to us in our starving state…. Those who are burning their black money, or donating to temples, we request them to consider our plight. If you show us how to legalise that black money, several thousands will live. Nothing can be more pious or white than this act. Let the government think about what is just and unjust. We will be grateful to you as long as we live—from the hearts of thousands of dying tea labourers (Dinesh, Nagrakata, Jalpaiguri, West Bengal).” Shontu Jha, a labourer on the Bhandiguri tea estate in Jalpaiguri district, believes that demonetisation to rid society of black money may be a correct thing, but it is disastrous for the tea gardens. “Owing to the lack of cash in the banks and the restrictions on withdrawing money, we are not getting our wages on time nor are we getting proper ration supply. The weekly amount we get is spent on essential commodities, and long before the week is through we are left with no money. If the payment is delayed, then our families are in deep trouble,” he said.

The present wage rate of a tea worker in West Bengal is a meagre Rs.132.50 a day, as on tea gardens the cash component is only a part of the cost of employment of labour. According to the Plantation Labour Act of 1951, the management of a tea estate has to provide a tea labourer housing, medical facilities, education, potable water supply, concessional foodgrains and various other amenities. However, it is common knowledge that very few gardens actually adhere to the directions of the Act. In most cases, the daily wage rate is all that a worker gets.

On November 24, after two weeks of not receiving any money, the workers of tea gardens, in desperation, obstructed the National Highway and held up rail traffic to demand payment of wages. Those of Bhandiguri received part payment on November 25 and were assured the rest on November 29. But come November 29, there was neither any payment of wages nor any ration supply. “We thought even if we do not get our wages, at least there will be food from the ration, but that is also not there. We now have nothing,” Shontu told Frontline on the evening of November 29.

At this time of the year, a flower blooms on tea bushes. According to Shontu, the labourers are plucking these flowers to cook and eat. “The schools are open, but children are hardly attending. Instead they are being sent to pluck tea flowers from morning,” he said. The workers of the garden have apparently never faced a situation like this before the demonetisation. If the situation is this bad in “working gardens”, it is far worse on the sick, closed, abandoned tea estates, in the bought leaf factories, and for the small growers. Among the total number of tea gardens in the state, 87 are in the hills, 47 are in the Terai and 156 are in the Dooars.

According to industry sources, more than 60 per cent of the tea estates in the Terai and Dooars have been in the red for a while, making the scenario extremely bleak for the vast majority of tea workers of Bengal, particularly in the post-demonetisation period; among the 2,64,976 tea workers in the State, 2,10,744 are in the Terai and Dooars region. In the past seven years, in this region alone more than 200 people living on tea estates have died of malnutrition and lack of medical treatment. There are more than 100 bought leaf factories in the region and over 40,000 small tea growers, accounting for over a lakh of workers who are facing starvation if the present situation is allowed to continue.

Dinesh Barwa, of the closed Nyasylee Tea Garden of Nagrakata, said that the entire economy in the region was facing ruin. “We have to go to other gardens for work, but even there we are not getting paid. Our children are going hungry, and there is no scope for any alternative employment, not even MGNREGA [Mahatma Gandhi National Rural Employment Guarantee Act] work. The local shops have already stopped giving us goods on credit,” he said. The only safety net for the garden is the State government’s food security scheme of providing rice at Rs.2 a kg. “The availability of this has come down of late, and the quality is terrible; it is not even fit to feed cattle, but we have to eat it because we have no other option,” said Dinesh.

Basudeb Basu, president of the Terai Sangram Cha Samity Union, which is active in the Terai region, believes that the situation is spiralling out of control in north Bengal. “Economic terrorism is taking place. People are running out of the means to live. If the wages are not paid regularly, the situation in north Bengal may get scary and veer towards anarchy,” he told Frontline .

A circular issued by the Reserve Bank of India (RBI) laying down new rules for disbursing payment in the tea sector in West Bengal has added to the confusion and feeling of uncertainty among the workers. The RBI has restricted withdrawal for the purpose of paying wages according to a preset formula of 2.5 labourers a hectare, each labourer drawing a fortnightly wage of Rs.1,400. The central bank has also instructed that future payments to the workers be made directly to their respective bank accounts. Banks operating in the region have been instructed to open accounts for all tea workers.

Raju Sahani, a worker in the Karola Tea Garden, Jalpaiguri, said that the tea unions of the region have rejected these proposals. “In the present scenario, how is it possible for a worker to stand in line all day to withdraw money from a faraway bank and forgo a whole day’s wage? Can he afford this? They have no idea of the ground realities,” he told Frontline . Highly placed sources in the tea industry confirmed that the demonetisation has severely affected the industry, particularly in the payment of wages. “Obviously, the government has not thought through the issues relating to cash disbursals, banking being what it is in these far-flung areas. It is being sorted out, but it is going to take some time,” said a senior industry official. He also voiced reservations about the restriction of payment to the formula of 2.5 labourers a hectare. “The ratio has been arbitrarily drawn up and is causing havoc for a large number tea growers in meeting the demand for wage,” he said.

S.S. Ahluwalia, the Bharatiya Janata Party MP from Darjeeling and the Union Minister of State for Agriculture and Farmers Welfare, wrote to Union Finance Minister Arun Jaitley on November 22 highlighting the problems faced by the tea workers. “Tea garden workers are solely dependent on wages… and in the absence of wages they are now on the verge of starvation…. Please take corrective measures so that the tea garden workers get their due wages,” he wrote.

+ SEE all Stories
Sign in to Unlock member-only benefits!
  • Bookmark stories to read later.
  • Comment on stories to start conversations.
  • Subscribe to our newsletters.
  • Get notified about discounts and offers to our products.
Sign in


Comments have to be in English, and in full sentences. They cannot be abusive or personal. Please abide to our community guidelines for posting your comment