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Thursday, Aug 29, 2002

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A frayed argument

THERE IS A familiar ring to the jute mill industry's contention that dilution of the norms for use of jute bags for foodgrains and sugar under the Jute Packaging (Compulsory Use in Packaging Commodities) Act of 1987 will result in sizeable idle capacities which, in turn, will depress raw jute prices. This will put at stake jobs of a large number of mill workers and the livelihood of an even larger number of growers. The new norms stipulate that till June 30 next year 80 per cent of foodgrains and 75 per cent of sugar have to be packed in jute bags against the 100 per cent and 90 per cent respectively stipulated earlier. The percentages are to be reduced to 60 and 50 respectively for the jute year, July 1, 2003.

Prima facie, it appears the synthetic bag lobby has won one more round. This sector has all along argued that the Act of 1987 was not only inhibiting its growth but also depriving user-industries of their right to choose the packaging for their products. Progressive dilution of the norms for cement and urea and their ultimate deletion from the list of commodities to which the Act of 1987 applied marked this sector's earlier victories. The arguments and counters of the two industry segments for and against the Act have their own validity, though it has to be conceded that the jute mill industry was on stronger wicket after the Supreme Court upheld the Act in April 1996 and thereby the Centre's decision to bail out the jute mills and the growers. The Supreme Court's observations were also telling — the right to socio-economic justice of producers of farm items is more important than the individual right to carry on trade/business; moreover, as farming in different areas hinges on climate, soil and water resources, the pronounced diversity rules out comparison in terms of population and, therefore, the Act cannot be seen as a `class legislation' in favour of a small section. And, yet, it is pertinent to ask how long the protection will continue and when the jute mill industry will learn to manage without the support of the Act.

But there is another side of the story that shows the Centre in poor light right from Day 1 of the Act. The worst defaulter was the cement industry, followed by urea units. Last year, the CAG had pointed out that New Delhi's failure to penalise defaulters had resulted in a revenue loss of Rs 3,522 crore. Given this, it is debatable to what extent the Act has achieved its objectives. Ideally, the jute mill industry should set it house in order, step-up R & D, bring down costs and promote its products. It has a natural advantage over the synthetic packaging sector because raw jute is environment-friendly and jute bags are reusable while synthetic bags are non-biodegradable and cannot be reused. These considerations are already weighing abroad. Also, it should further exploit the export opportunities for the whole range jute-diversified products that have its come way. For New Delhi, the prime concern should be to enforce the diluted norms.

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