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Demonetisation Adds To Weavers' Woes

For the weavers who were already not earning enough, the government move has resulted in shortage of customers and supply disruption

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The government's demonetisation drive may be seen as infusing fresh life into India's economy, but the same has exacerbated the miseries of certain segments of society. For the weavers who already were not earning enough, demonetisation has come as a major blow.

Rashtra Chetna Jana Samakhya (RCJS), a leading trade union of handloom weavers, has conducted a research and found that in previous 2-3 years almost 50 weavers have committed suicide due to debt trap. Nearly 5,000 weavers families have migrated to Surat in previous 2-3 years because they were unable to earn minimum wage required for their survival.

According to the findings of RCJS, the joint director of handloom based in Varanasi spent Rs 19,211,516 in the year 2015-16 out of which Rs 49,880 (0.23 per cent) was spent on payment for professional and special services. Rest of the amount was spent for salaries, dearness allowance, travel and medical allowances.

Ehsan Ali, an activist from Varanasi, said, "It won't be an exaggeration to say that almost 70 per cent of weaving industry has been affected. While 50 per cent of weavers got bank accounts during Jan Dhan Yojna drive, 50 per cent still don't have account. Also most of the people working in the handloom sector don't work through bank accounts.

"Lack of raw material and orders from exporters have only added to their woes," he added.

Inammullah, a carpet weaver from Bhadohi in Uttar Pradesh, said, "I can't say it's is a bad or good move by the government but all I can say that it has affected our businesses and homes a lot."

"I have a bank account but I was mostly dependent on cash. I travel from Mirzapur to Varanasi to sell carpets. I visit houses and sell carpets but with this new move I haven't sold a single carpet in the last 10 days," he added.

Rajendra Maurya, a saree weaver, said, "We were getting just Rs 200 for weaving a saree. Things were not good earlier as well but after demonetisation there is no work for us."

A saree trader in Delhi said on the condition of anonymity, "No one will ever say in the open that demonetisation is a bad move, but it has hit us badly. We were expecting good business this wedding season. The move has certainly come at the wrong time."

Due to the demonetisation, not only weavers but the whole textile industry has been severely affected.

Bijender, a makeshift stall owner at Sarojini Nagar market, said, "We used to do most of the transactions in cash. Now, we are not getting enough material to sell and number of customers has been drastically dipped."

While some believe that the move will have positive impact on the country in future, economists of the country are mostly not convinced with the idea.

The National Institute of Public Finance and Policy (NIPFP) that works under the Ministry of Finance, has published a research paper with a conclusion that demonetisation is "a large shock to the economy".

According to the research paper, the sectors to be adversely affected are where demand is usually backed by cash, especially those not within the organised retailing. For instance, transport services, kirana, fruits and vegetables and all other perishables, would face compression in demand which is backed by purchasing power.

This in turn can have two effects: while it is expected that supply exceeds demand, there would be a fall in prices, however, if supply too gets curtailed for want of a medium of exchange, prices might, in fact, rise. Thus, while generally people seem to expect prices to fall, it is quite possible that prices would instead rise.

In the meanwhile, Aanchal Sagar, co-founder OhFab, said, "Temporarily production is adversely affected due to shortage of raw materials and weavers are facing difficulty in their everyday living. However, this is a good move for the economy and will force people to move towards plastic money illuminating many evils."