The owners of the jute mills in Bengal have pressed the panic button over the acute cash crunch.
The Centre’s sudden demonetisation drive left the mill owners at a lurch, as most of them are also anxious about payment of salaries.
The mill owners are now suspecting production outage, as supply of the raw materials has already decreased. They are also anxious about the payment of salaries. Workers are paid once every fortnight in cash at almost every mill.
Getting a missive from Indian Jute Mills Association (IJMA), the Bengal government held an immediate meeting to address the situation.
State labour minister Moloy Ghatak, the officials of the department discussed the issue with the mill owners. It is estimated that all jute mills combined pay around Rs 250 crore a month in wages.
The primary concern of the mill owners are that they do not know how to pay the wages next week. They suspect that delaying the wage payment will only make matters worse.
However, a ‘suspension of work’ notice was hanged at Shree Hanuman Jute Mill in Howrah on Tuesday morning. The demonetisation of high value currency notes was responsible for suspension of work, the mill management said. The management was unable to pay about 20-25 per cent workers of the jute mill in cash, since there is dearth of smaller denomination notes.
“Due to demonetisation of high value currency notes, wage payments of about 20-25 per cent workers were delayed. They do not have bank accounts and we are unable to pay them through cheque or by electronic transfers. We were helpless and are compelled to put up the notice because they were agitating and deteriorating mill’s working condition,” said Dhan Kumar Patni, one of the owners of the jute mill.
However, there are several mill owners who are under the scanner of Income Tax department. Moreover, for over a year, the Union government has been pressurising mill owners to start paying wages through bank transfer of funds.
But only few mills have consented while the rest continue to pay wages in cash. Many fear they might have to halt production soon.
As Jute industry employs a lot of temporary workers, it was difficult to switch to bank transfer of funds, a mill owner said, asking not to be named. “There are three types of workers here. The first lot are the direct employees under the company’s pay roll. They are under provident fund scheme as well. The company transfers money to their salary accounts. So they are not in danger.
“The second lot of employees are contractual. They receive account pay cheque from the company. They are also safe. But there are around 25-30 per cent employees in the mill who are working as casual labourers. They have no bank accounts. They are the ones who are in danger,” the mill owner said.
The owner also added that these casual classes were unruly. They can go on a rampage if they do not get money in time.
Though most mills have not had to scale back production yet, they are concerned that their stock of raw jute is thinning.
Farmers and raw jute suppliers only transact in cash, and supply of raw jute has temporarily stopped.
Even if there isn’t any immediate production outage, mills will run out of raw jute by the end of December and will be forced to halt production from January.