Killing the handloom industry

Neglect and mismanagement threaten cooperatives and the livelihood of thousands of cotton handloom weavers in Andhra Pradesh, says PANKAJ SEKHSARIA.

THE cooperatives of cotton handloom weavers in Andhra Pradesh are slowly dying - being callously bled, ironically, by the very institutions and structures that are supposed to support them. The neglect of the sector in the State is well known, but developments over the past year or so have taken their toll. The lives of thousands of weavers and their families are involved and no one - neither the State, nor the media - seems to have taken notice.

The villain of the piece is none other than the State's apex co- operative, the Andhra Pradesh State Handloom Weaver's Cooperative Society (APCO). A preliminary survey reveals that this society, the benefactor of this industry, owes cooperatives Rs. 3 crores - Rs. 14 lakhs to the Sai Baba Cooperative in

Ponduru, (Srikakulam district), Rs. 2.5 lakhs to a society in Chirala (Prakasam district), Rs. 3.5 lakhs to the Rajavolu society (Guntur district), Rs. 70 lakhs to a society in Koyallgudam (Nalgonda

district), Rs. 52 lakhs to the Muramanda society, Rs. 60 lakhs to another society in Veeravaram, Rs. 45 lakhs in Angara, Rs. 30 lakhs in Pulagurtha and Rs. 37 lakhs in Pasalapudi (all in East Godavari district).

A look at the way APCO functions vis-a-vis the cooperatives shows how scandalous the situation is. Cooperative societies have a cash credit limit with the local district cooperative bank which constitutes their working capital. They pay a net interest of 8.5 per cent to the bank for this money which is supposed to be rotated from payments received from APCO for stock purchased. For the last few months, APCO has not being making regular payments to the societies though the stocks have been procured. In some cases it is even refusing to buy stock, resulting in a pile-up which amounts to six months of production. Additionally, huge payments, dating back to November 1998 are due to the societies. While the societies have to pay an interest of 8.5 per cent on their loans, APCO does not pay any to the societies on its outstandings. This is not all. The following year's cash credit for the society is determined by adding 20 per cent to the annual production figure and then halving it. Thus, if APCO does not pay up, as is the case, production falls, the cash credit limit falls, bringing down the available credit for the next year as well. It is like getting sucked into a vortex. To this is the fact that APCO's present inventory is stock worth nearly Rs. 4 crores (This is only the official figure. According to other sources, the inventory is 10 times higher). Only half of this is considered saleable. The rest has allegedly been acquired through dubious transactions and is either too expensive or of very poor quality. It is also estimated that various other government institutions owe nearly Rs. 11 crores to APCO, and are refusing to pay up. The main defaulters include, among others, the State Social Welfare Department, the Tribal Welfare Department, the Directorate of Health, the Irrigation Department and the Andhra Pradesh State Road Transport Corporation, Vizianagaram. There could not be a more outrageously unfair situation where the price is being paid by the weavers and the societies.

Take for instance the case of the Sai Baba society in Ponduru, Srikakulam district. One of the oldest societies, it was established in the 1930's, when cooperatives were being started. In the 1950's and 1960's, it had 2,000 members on its rolls. So involved were they in its running, that an acting president helped improve quality and sales when APCO refused to pay an additional 25 paise per metre of cloth. An alternative competing sales depot was set up and money was invested in shares in spinning mills, thus ensuring quality yarn to the weavers at a competitive price. Today, membership has fallen to around 200 people with regular work being made available to not more than 20. No payment has been received from APCO since November 1998 and total dues stand at Rs. 14 lakhs. Stock held in the godown is worth Rs. 7 lakhs. The society is unwilling to sell any more of it to APCO, but has neither the skills nor the resources to sell it elsewhere. A working capital crunch has forced it to halve its monthly production from nearly Rs. 2 lakhs last year, to about one lakh today. To support running costs, it has had to borrow an additional Rs. 3 lakhs from other sources at an interest rate of 24 per cent. The directors have done little to mitigate the situation. A recent board meeting deteriorated into a slanging match.

Earlier this year the society was given aid through the Government of India's Project Package Scheme that is being implemented through the State Department of Handlooms and Textiles. The money was to help build infrastructure - in this case, two rooms facing the road. The money which could have earned Rs. 2,000 every month as interest, today earns the society only Rs. 1,500 when the rooms are let out on rent. For those in charge of formulating schemes and disbursing "welfare" budgets, it continues to be business as usual. There is no realisation that the societies are being starved of working capital and are unable to fulfil their basic function of providing work to weavers.

The situation appears to be amusing, if, in fact, it was not this tragic.

While the Sai Baba society is just about managing, others like the Muramanda Society in East Godavari, have all but collapsed. The monthly production of Rs. 6 lakhs a year ago has fallen to Rs. 2.3 lakhs this year. Here too, the directors have shown little initiative in effecting a solution. In spite of the fact that the society is owed more than Rs. 50 lakhs, supply to APCO continues. The society's cash credit of Rs. 42 lakhs has been wiped out.

Government bodies owe the society another Rs. 7 lakhs as discounts and exhibition expenses. Additionally, last year, the society had to borrow out of its working capital to pay an interest of Rs. 6 lakhs on all its loans. Yarn is bought on credit and weavers have not been paid since October. Instead, the cooperative has given them chitties, little pieces of paper with the society stamp on it. The weaver either mortgages it to the local moneylender, and pays interest till the money is reimbursed by the society, or can get a chitti immediately discounted at a loss of 20 per cent. The total amount due to the weavers is Rs. 6 lakhs. And the society has been given Rs. 65,000 worth of APCO's own unsaleable inventory to sell, in lieu of payment.

Last year, in East Godavari, a profitable society actually locked up its stock to prevent it from being commandeered by APCO. This, however, did not prevent the stock procurement team of APCO from allegedly breaking in and taking it. The president of a cooperative in Chirala is a weaver director of APCO. APCO owes his society Rs. 2.5 lakhs and he has stopped supplying more stock to APCO. He is extremely bitter when he talks about the treatment meted out to societies by APCO. He cites instances when societies have managed to fulfil export orders received through APCO. Though the latter is paid immediately, it refuses to pass it on to the societies. It joins the general pool of dues to the societies and is never heard of again. Huge outstanding dues, no working capital, the added burden of paying interest on money owed to them, drastic cuts in production ... all this could only be the tip of the iceberg. It is shocking that the cooperative

handloom sector in Andhra Pradesh is being destroyed in this manner. Why is APCO not paying up? Who is responsible for this? The answers need to be found and responsibilities fixed. In 1991 the entire nation was shocked at the reports of starvation related deaths of weavers across the State. A similar crisis is brewing. If a solution has to be found, the Government needs to act quickly.

In association with:

THE TRANSFORMING WORD

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