Handloom Sector in Union Budget 2015-16: Analysis - Factly
Sai Krishna Muthyanolla
April 17, 2015
Arun Jaitley has presented his second budget for the year 2015-16, in the Parliament. He was quite worried about fiscal space, consciously reduced. Unfortunately, the same conscious did not increase his understanding of the tremendous fiscal constraints being faced by handloom weavers. Instead of responding with a good and sumptuous budget allocation, cruelly, budget for handloom weavers has been slashed by almost Rs.118 crores. The big question is, will this budget increase the prospects of handloom sector? Will this bring succor to the economic conditions of handloom weavers?
Following is the table of allocations, in comparison with previous two budgets:
BJP Manifesto – Only Talk
BJP Manifesto, and the election-eve speeches of their leaders, has promised inclusive development, sabka saath sabka vikaas. Arun Jaitley’s budget has not included handloom weavers. Handloom sector which provides employment to more than 1 crore people gets a paltry Rs.446.60 crores. This is in fact a reduction of 21 percent over the previous year.
BJP Manifesto promised to strategically develop labour intensive manufacturing. Per capita spending of the government on handloom sector, a labour intensive textile manufacturing section, spread all over India, does not exceed Rs.500. But, it is ready to spend Rs.1,000 crores on Self-Employment and Talent Utilization (SETU). Government’s target of encouraging self employment would have been reached with smaller investments in handloom sector. Thousands of handloom weavers are becoming poorer by the day, as their wages are not increasing.
Big Promise, Tiny Deliverance
BJP Manifesto promises to “augment their traditional artisanship and entrepreneurial skill, which are a backbone of our cottage and small-scale industry – strengthening these sectors through better market linkages, branding and access to credit.” However, no proposals have been made to support beleaguered sections of society, who have been toiling for generations. Handloom weavers have been demanding for long for provision of access to low interest credit. Presently, to produce handloom products, they are borrowing money at exorbitant interest rates, ranging from normal to the bizarre, from 14 percent to 60 percent.
Previously, a Loan waiver package of Rs.2,205 crores included in the 2012-13 budget. This is a huge scale down from Rs.6,800 crore package. However, implementation levels did not exceed Rs.291 crores. Government could not reach the needy handloom weavers to relieve them of debt burden.
Debt burden on individual handloom weavers has been for multiple reasons over which they do not have any control or say. Cost of living has increased in the last fifteen years steadily, and tremendously over the last few years, generously aided by inflation and under regulation of basic food commodity prices. Cost of raw material, especially cotton and silk yarn have also gone up. Prices of yarn have been climbing continuously. Silk has been climbing rapidly in the last four years. With competition, from cheap and fake handloom products, wearing them down, handloom weavers had no way to increase their incomes to respond to raising costs of living and raw material prices.
Further, the most critical component of their production, working capital flows are drying up from ‘traditional sources’ and institutional mechanisms. NABARD the only comparatively cheap source of finances for handloom sector has drastically reduced its exposure. With the result, handloom weavers were forced to find ‘expensive’, private sources of finances. Interest rates at this level usually are higher and are not regulated. Lack of awareness, exploitative conditions compounds the misery caused by high interest rates.
In this scenario, loan waiver was a necessity and a requirement. Governments have telescopically reduced their response in this regard. From a NABARD estimation to Planning Commission estimates to government allocations to actual disbursement, entire route of government doles has failed handloom sector and handloom weavers.
In 2013-14, a paltry Rs.157 crores was allocated. Expenditure in the same year has exceeded this allocation reaching Rs.269.79 crores. In 2014-15, no allocation has been done for this critical support. By this year in 2015-16, government seems to have completely forgotten the need of the handloom weavers, in this regard.
Only three Schemes, Tall Claims
BJP Manifesto promised that schemes will be drawn for skills upgradation and enhancement of business opportunities for handloom weavers. Instead of drawing and adding schemes, which respond to their distressed situation, handloom weavers are now staring at further reduction in existing schemes.
For the past few years, under the guidance of Planning Commission, government has been reducing the number of schemes in handloom sector, reportedly based on a NIMSME study report. I have not seen report yet. From 12 schemes, they were reduced to six, and in the year 2014-15, the schemes are four. In 2015-16, there is further reduction to only 3 schemes.
Less Allocation and Lesser Expenditures
A Parliamentary Committee has squarely asked the Ministry of Textiles to improve its working culture, in order to increase expenditure as allocated. With no allocation in 2011-12 and 2012-13, for Comprehensive Handloom Development Scheme, an expenditure of Rs.139 crores was shown in 2012-13. However, in 2013-14, Rs.107 crores was allocated for this scheme and Rs.115.90 crores were spent. In 2014-15 and 2015-16, there is no allocation. With such discontinuity, one would wonder how this scheme is helpful for the sector. There is a huge atmosphere of adhocism in the Ministry of Textiles towards handloom schemes. There is no serious, transparent and accountable process of scheme formulation, development, implementation and review.
Overall, allocations are decreasing, revised later, expenditures are depressing and the administration remains nonchalant to the conditions of handloom weavers. Comparatively, allocations for other sub-segments of Indian textile industry which is automated, modernized, mechanized, is getting attention of government budget allocations, fully.
Allocation trends:
There is nothing to be elated about handloom allocations, before and also in 2015-16.
In 1997-98, handloom sector was allocated Rs.203.50 crores, which in the next year decreased to Rs.151.60 crores. In 1999-2000, this allocation reached a lowest of Rs.138.30 crores. In 2014-15, the allocation has reached Rs.620.51 crores. It is further reduced to Rs.446.60 crores in 2015-16.
However, between 1997-98 and 2015-16, over a 19-year period, it is obvious that handloom sector did not receive allocations based on the dire situation of handloom weavers. Be that as it may, handloom allocations have not increased even as per minimum 10% inflationary increase is quite worrisome.
As the above graph shows, actual allocations (brown line) have always been below the year-on-year inflationary allocation is done for handloom sector. That is, if a mere 10% addition is done to the previous year allocation; actual allocation for most years is below that. On the other hand, taking 1997-98 allocation of Rs.203.50 crores as the base, and one keeps on adding 10% increase every year, handloom allocations should have been much higher year (as the third line in red suggests).
Continuing with the above, total allocations for handloom sector for the 19-year period is Rs.8,342.69 crores. If the loan waiver allocation for 2012-13 is removed, it would be Rs.6,137.69 crores. Similarly, totaling the year-on-year inflationary increase comes to Rs.8,641.70 crore. However, the total inflationary increase (with 1997-98 as base year) is Rs.10,207.37 crores. Thus, with or without loan waiver, allocations have not been commensurate even with the inflationary needs.
Conclusion
Allocations for handloom sector have been fluctuating, wildly without any rhyme, reason or accountability over the past 19 years. There is no continuity. Schemes are introduced and withdrawn. Implementation has been shoddy. Expenditure is low, even though the allocations are pittance. There is no proper need assessment for handloom sector. Not even single paisa has reached handloom weavers. Handloom funds are being soaked up by institutions, employees, corruption, bad planning and low commitment.
Problems for handloom sector in budgetary allocations stems out of the perspective of Union Textile Ministry, framed as they are in Planning Commission approaches and lobbying by anti-handloom sector groups. In general, Ministers for Textiles are from either Gujarat or Tamilnadu, which boosts the prospects for exporters, spinners and textile mill lobbying. Even Secretaries have been pro-modern textile industry lobby.
Advocates for handloom sector are divided, and do not represent themselves as a lobby in the corridors of Textile Ministry. Handloom weavers themselves are unorganized, and they have ceased to be a vote bank. For this reason, governments have been bold in denying higher allocations even in the elections years. At the same time, business lobby has become stronger and stronger. Handloom weavers are still hanging on, only because of their sacrifices.
Featured Image Source: Saraswati Kavula