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Salaries of over 3.7 lakh workers in the jute sector are in jeopardy with jute mill owners expressing their helplessness to withdraw and disburse high amount of cash.
Salaries of workers in the sector are paid mostly in cash (currency notes) on a fortnightly basis. Disbursements run in to the tune of Rs 250-270 crore every month.
Across the 80-odd jute mills in the country (31 of which are members of the industry body Indian Jute Mills Association), salary due dates fall on the 7th and 22nd of every month.
According to Raghavendra Gupta, Chairman, IJMA, the industry body has already made representations to the State Government, the Reserve Bank of India and the Union Textile Ministry seeking a temporary leeway.
“The weekly cash limit on withdrawals is just Rs 20,000 and this makes wage payments in cash difficult. We have sought some leeway from the authorities,” he told BusinessLine .
As of now, the State labour ministry will meet jute industry stakeholders on November 15.
Resistance to bank transfers
Interestingly, sources indicate that the problem could have been avoided if jute mills had switched over to electronic transfer of salaries.
Jute commissioner Subrata Gupta had in a meeting some two years ago asked jute mill owners to opt for electronic transfer of salaries – this meant salaries would be paid either through cheques or transferred directly to the bank account of employees.
Some two to three jute mills – which are IJMA members – and 3-4 per cent of workers, as per market sources, have introduced electronic transfer method.
“We are more than willing to opt for electronic transfers. But workers have been objecting to it. They are the ones who have to provide us with their bank details to facilitate transfers,” Gupta said.
Impact on raw material procurement
Interestingly, there is another problem with demonetising. It has led to a situation where farmers have expressed unwillingness to release the crop without cash payments.
“We are facing some payments with farmers not releasing their stock without payment of cash. This might lead to disruptions in finished product supply,” he added.
Industry sources indicate that production of raw material this year will be to the tune of 100 lakh bales, 35 per cent higher than last year.
On the other hand, requirement from States like Punjab, Odisha and Chattisgarh and the Food Corporation India has also been good and to the tune of 30 lakh bales of finished product.
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