Andhra Pradesh

Small and medium industries face the heat

Most of them are unable to honour the wage bill because of cash crunch

SRIKAKULAM/VIZIANAGARAM: Demonetisation has come as a big jolt not only for entrepreneurs of small and medium scale industries but also those working in them.

The cash crunch is so severe at every level that an estimated over 85,000 workers have not received their wages post the Central government’s announcement demonetising old high-value notes. The impact is being felt in over 400 industries of Vizinagaram and Srikakulam districts.

Several entrepreneurs have not been able to honour the wage bill as their clientele, comprising wholesale and retail dealers, is yet to make payments for the supplies made. Most of them do not have enough bank balance either to make cashless transactions.

Granite, cashew, jute, and food processing units are the worst-hit. They used to help one another overcome short-term financial difficulties arising due to transport delays, strikes, or temporary slump in the market.

That mutual cooperation is now missing as every owner of small and medium industry is forced to either close the shop or get into go-slow mode.

Following slump in the realty sector, the demand for granite has come down drastically in Srikakulam district. Cashew industries located in Palasa and Kasibugga are facing untold miseries with steep drop in demand. Leave alone new orders, they are yet to receive payment for supplies already made.

Jute industries, which are already facing a crisis, have stopped production both in Vizianagaram and Srikakulam districts.

“Demonetisation is a double whammy for us. We cannot use overdraft facility from banks to disburse wages for workers. We will have no option but to close down permanently if the State government does not come to our rescue,” says M. Mohana Rao, chairman and director of Sri Vardhana Jute Industries Private Limited.

“Over 40,000 workers are unable to get wages promptly following demonetisation,” say Uttarandhra Grante Owners’ Association president Kota Muralidhar and general secretary K.M. Hari Kumar.

“Most of the owners do not have cash because of the slump in the market. The government should come up with a policy to protect the interests of the industries in the backward districts. Otherwise, it will lead to migration of more workers from both the districts,” they say.

This being the scenario, the AP Commercial Taxes Department and the Mines Department anticipate a drop in collection of taxes. They fear that they would not be able to achieve their annual target during the third and fourth quarters of the 2016-17 fiscal.

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Printable version | Apr 3, 2020 1:59:40 AM | https://www.thehindu.com/news/national/andhra-pradesh/Small-and-medium-industries-face-the-heat/article16841675.ece

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