Yusuf Ansari, 63, is one of thousands of weavers in Malegaon. He used to work for one of the bigger businesses until he saved enough to set up his own unit three years ago. It’s nothing fancy: eight power looms, two rows of four, in a shed which he and his family of five also use as their home (they sleep in an upper loft).
Mr. Ansari does what is known as ‘job work’: he is subcontracted by a master weaver who gives him cone-shaped spools of yarn which he draws through his looms to create bales of cloth. The business gives the whole family work: each member takes it in shifts to operate the machines. Inside the shed, the rhythmic click-clack of looms working together creates an almost deafening sound. When business is good, the looms sometimes run all night. The family has learned to sleep through the racket.
But on the evening of November 30, when The Hindu visited him, Mr. Ansari says he will be turning the looms off in an hour or two. And, he says, he probably would not be turning them on the next day; for the last three weeks he has only been running them three days a week. There is only a small bundle of cones left for him to weave, and the master weaver is unwilling to give him more, both because he is unable to procure a good supply of yarn from the yarn trader and because he is unable to pay contractors like Mr. Ansari their wages.
Mr. Ansari, like most of the weavers that are the backbone of Malegaon’s economy, has been facing a supply problem. Since the demonetisation announcement, Malegaon has been a town staring disaster in the face.
Maharashtra is home to major power loom centres like Sholapur, Bhiwandi and Ichalkaranji. Malegaon is probably the smallest of these, with over 200,000 power looms. Most of its weavers fall within the informal sector. The town largely follows a system of weekly salary payments in cash; mill owners usually pay the workers who operate the looms on Thursday or Friday (most of them are Muslim). Cash liquidity, therefore, is everything.
The crowds outside each bank, big or small, are easily twice the size you are likely to encounter in Mumbai. And arguably, it’s about half as likely that a given bank branch has any legal currency to dole out. Outside the Bank of Baroda’s main branch, a sign in Marathi comes out at mid-day, proclaiming that the bank has no more cash to give. A little further away, the doors of the Janata Cooperative Bank, where many of the weavers have accounts, are shut.
In a usually bustling town, it is quiet. Where a month ago you would have heard only the steady clatter and drone of the looms, now there is worried conversation. Some estimate that over 50 per cent of the looms have closed in the last three weeks.
“We are supposed to be able to withdraw Rs. 50,000 per week in cash if we have current accounts but at the Janata Bank now we are only able to get Rs. 4,000,” says Mujahid Sultan, a loom owner who employs about 300 people. “I have money but I'm unable to withdraw it. For the past two weeks I haven't been able to pay my employees, some of my units are lying closed and some are only running for three days a week.” If the withdrawal cap is not relaxed in the next two weeks, he says, he will have no choice but to close down the rest of his units.
As Mr. Sultan and others explain, demonetisation has affected the entire cycle of production and supply. In Malegaon, over 90 per cent of the looms make ‘grey cloth,’ an unfinished fabric. Muhib Ansari, another weaver, says, “The majority of informal work in weaving happens here.” The fabric goes from Malegaon to dyeing and finishing centres — notably Balotra in Rajasthan and Ahmedabad and Surat in Gujarat — before it finds its way to customers in various parts of the country. This is not the finer cotton that one gets from the south or part of western India but a coarser variety that services a massive, but often unseen, clothing industry. “It goes into making a nightdress that a woman might purchase on the street in Mumbai for Rs. 90 or Rs. 100, or a cotton petticoat that they might buy for Rs. 60 or Rs. 70,” Mr Sultan explains. For millions of women all across India, these garments make the wearing of synthetic saris — which many use because of their longevity — less harsh on the skin. It is also used to make cheap shirts and furnishing material like curtains and cushion covers that you might find in small shops in thousands of small towns. Almost all of this buy-sell chain is informal, and operates on cash. And is therefore made up of exactly the people most affected by the shortage of currency notes.
The weavers of Malegaon understand this. As Mr. Muhib Ansari says, “At a time when people are struggling to buy food and other essential supplies, spending cash on clothing will obviously be the second priority.” He says that a few months of people not buying the finished product could mean, for places like Malegaon which are early in the product cycle, several additional months for things to go back to normal. After demonetisation was announced, a power loom owner says, massive amounts of old currency poured into Malegaon from the bigger centres, since they could be used as wage payments. “Workers were told to exchange the money in banks but it very quickly became clear that the banks ran out of 100 rupee notes to give.”
Several big weavers told The Hindu that while they are currently making smaller payments to workers to delay closure of their units, it is not sustainable. “If the workers are just left idle and without pay for several weeks then there will just be social unrest,” one says gravely.
In various offices around the town, loom owners check, with some bemusement, the Twitter account of the Ministry of Textiles to see if any help might come their way. Periodic announcements are made through this channel about cash payments being made easier for handloom clusters in Erode, Tirupur and Varanasi, but there is no mention of the power loom industry. One power loom owner sums it up with some resignation: “We fall between the big modern looms and the smaller handlooms which are considered more artisanal, so the Ministry chooses to focus on them.”
The government may have advertised the demonetisation move as an inconvenience that citizens would have to bear for a short time, with good times to follow soon. But for Malegaon, like so many other towns whose economies are cash-based, there is genuine fear — and an increasingly probability — of a much longer depression.
