Handloom Sector in Union Budget 2023-24

In a year where an economic recession has been expected, employment has spiralled down, purchasing power has taken a dent, rural consumption has nosedived, and the cost of living has exacerbated, there were expectations that this budget would infuse funds into the rural economy. Raising the handloom budget was one route to this infusion and stabilising the economy, employment, and environment. Economic thinkers probably forgot about the importance of the handloom sector in terms of employment potential (especially in rural areas), its positive impact on the environment (thus responding to responsible consumption and sustainable production), and its role as a bulwark in stabilising the Indian economy (non-handloom textiles are always volatile and monopolised).

Previously, the handloom sector got a big blow with a massive reduction from Rs. 604 crores in 2017–18 to a mere Rs. 386.09 crores in 2018–19. By then, it was already reeling under the twin effects of demonetisation and the levy of GST. Never before in the last century has the handloom sector reached such lows.

Demonetisation has severely affected handloom weavers, as handloom production is part of a vast informal economy. The cash crisis has hit them badly, and the tight norms of cash withdrawals have robbed them of any non-government, private money lender support as well. With losses and mounting debts, handloom weavers hoped that the government would announce relief and enable some direct cash transfers.

The government has stopped consultations with handloom sector representatives. With the removal of All India Handloom Board the only straw of consultation has been dispended with. The decision to celebrate National Handloom Day, on August 7th, every year was taken in 2017. This celebration, initiated and actively participated in by Prime Minister, Narendra Modi, had raised a lot of hopes and expectations among handloom consumers, producers, and economists. However, over the years, these celebrations have become symbolic and ritualistic.

Handloom sector budget allocations have become a farcical routine exercise. Instead of increasing percentages and bringing efficiency to expenditures, the reduction has become a feature. With the rising cost of production, unfair competition, and subsidies to rival sectors, handloom sector is being deliberately killed. Massive cuts in yarn supply scheme allocations are bound to have an impact. This impact would be double when one considers the rising costs of raw materials, mostly yarn (silk, cotton, wool, and other natural fibres), due to inflation, the GST and fossil fuel prices.

Handloom weavers did not get any relief in the last 6–7 years, when the government changed. They were hoping for higher allocations, especially after Narendra Modi announced the 7th of August, every year as National Handloom Day. With the "Make in India" campaign and the government leaders being followers of Madan Mohan Malaviya’s economics, they generally hoped that the handloom sector would receive a major thrust in government budgets. But the fourth budget is equally disappointing.

The following is the table of allocations, in comparison with previous budgets:

Manifesto – Only Promise

BJP manifesto, and the election-eve speeches of their leaders, have promised a inclusive development, ‘sabka saath sabka vikaas’. This budget has not included handloom weavers in this kind of development. Handloom sector which provides employment to more than 1 crore people gets a paltry Rs. 456 crores. A ‘Make in India’ and ‘India Handlooms’ programme lie at the consumer end. Handloom weavers require basic support at the production level. Their wages have to increase, their incomes have to respond to living costs, and their families have to have confidence in this livelihood.

BJP manifesto promised to strategically develop labour-intensive manufacturing. Per capita spending of the government on the handloom sector, a labour-intensive textile manufacturing section, spread all over India, does not exceed Rs. 500. Interestingly, on a comparative basis, spending Rs.1,000 crores on Self-Employment and Talent Utilization (SETU) looks churlish. 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.

Allocation of Rs,6,200 crores for youth, towards SANKALP and STRIVE schemes, in 2017-18, was basically to improve employment and skills. Handloom weaver’s employment is not given the same priority in government’s plan of action.

BJP Manifesto promised 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 announced previously. 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. The cost of living has increased steadily over the last fifteen years and tremendously over the last few years, generously aided by inflation and the lack of regulation of basic food commodity prices. The cost of raw materials, especially cotton and silk yarn has 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 rising costs of living and raw material prices.

Further, the most critical component of their production, working capital flows, is drying up from ‘traditional sources’ and institutional mechanisms. NABARD the only comparatively cheap source of finances for the 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 are usually higher and not regulated. Lack of awareness, exploitative conditions compound the misery caused by high interest rates.

In this scenario, a loan waiver was both 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, the entire flow of government doles has failed the handloom sector and handloom weavers.

With demonetization, handloom weavers are left in the lurch, with private money lenders and the banks not responding to their working capital needs. Demonetisation has dealt a big blow to the flow of capital into handloom production, and has affected even the meagre income flowing into handloom weaver homes. The government should have allocated at least Rs. 1,000 crores for working capital support, for the handloom sector, through NABARD, as a relief from the impacts of demonetization.

From 12-3-1 Schemes

About 12 schemes were reduced to three: the National Handloom Development Programme, the Integrated Handloom Development Scheme (CSS), and the Handloom Weavers Comprehensive Welfare Scheme. From 2021-22, it’s only one scheme – National Handloom Development Programme. The BJP manifesto promised that schemes would be drawn up for skill upgradation and enhancement of business opportunities for handloom weavers. Instead of drawing and adding schemes, which would have responded to their distressed situation, handloom weavers are now staring at further reductions in existing schemes.

Long back, under the guidance of Planning Commission, government reduced the number of schemes in handloom sector, reportedly based on a NIMSME study report. From 12 schemes, they were reduced to six, and in the year 2014-15, the schemes became four. In 2015-16, there is further reduction to only 3 development schemes. On paper, there are 8 schemes, but only 3 schemes are administered for development. Inexplicably, lumpsum provision for North-east States for handloom sector has been withdrawn. three are administered for development. Inexplicably, lump-sum provision for the North-east States' handloom sector has been withdrawn.

Conclusion

There is no increase for the handloom budget. Allocations for handloom sector have been fluctuating, wildly without any rhyme, reason or accountability over the past 25 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 a single rupee has reached handloom weavers. Handloom funds are being soaked up by institutions, employees, corruption, bad planning, and low commitment.

Handloom weaver families are disappointed once again. This lack of support, despite the Finance Minister announcing a saptarishi programme, is surprising. She promised (1) inclusive development but failed on including handloom weavers in development, assured (2) Reaching the Last Mile, but remained rooted to its past position, promised (3) Infrastructure and Investment, without any substance, declared (4) Unleashing the Potential, but failed to harness handloom weavers skill, mouthed (5) Green Growth, but did not think of handloom sector as part of this green economy, has not acted upon (6) Youth Power as handloom producers and as consumers, concluded about (7) Financial Sector without delving into GST and other burden on the finances of the average handloom weaver families.

In the first year of Amrit Kaal, the Finance Minister failed to deliver even a drop of Amrit to handloom weavers and many other communities.