Over the last two decades, the world has seen dramatic changes–people have moved from landlines to cellphones, from writing letters to using email–but little has changed for Nandan Pagare, a 41-year-old power-loom worker. Pagare, who looked much older than his age, has been working in Malegaon’s power loom industry, 270 km north of India’s commercial capital, Mumbai, since he was 18 years old.
He has graduated to living in a pakka (or cement) house, in Sayni Bhadruk, a village 6 km from Malegaon, but still earns Rs 1,800 a week for spending half his day working in a large factory, whirring with 200 looms. Now, with looms working three times a week instead of six (Friday is the weekly off), Pagare earns half of what he used to. “We are careful with our expenses now. We spend only on the most urgent items,” he said.
High electricity costs, international competition, and widespread violation of complex, unreformed labour laws (144 central and 160 state)–these were the issues the government never addressed in Maharashtra’s northern textile town of Malegaon. Firms stayed small and the industry on an economic knife-edge. Now, the government’s decision to withdraw Rs 14 lakh crore–86% in value of India’s currency in circulation–has dealt a hard blow to 80,000 workers, whose economy was defined by cash. Before notebandi, despite a growing downturn, the town soldiered on.
But when Maya Khodve took the IndiaSpend team to Malegaon, the town’s market–usually bustling with shopkeepers, hawkers and roadside eateries on a normal day–was desolate. There was silence in the lanes, where until November 2016, the loud buzz of power looms usually masked all other sounds.
Since power loom is the largest industry in Malegaon, directly employing more than 20% of Malegaon’s 386,000 adult population, a recession in the power loom industry affects the economy of Malegaon.
Most of Malegaon’s 1.1 lakh power looms are micro, and small enterprises, each with nine to 12 power looms, according to the 2012 economic report on the Malegaon power loom industry, submitted to the Maharashtra Minority Commission. These looms, many of which are outdated, function in small garage-sized rooms with tin roofs.
In the weeks following demonetisation, power looms, known to work 16-18 hours in a day for six days a week, were working only three days a week–Saturday, Sunday and Monday–halving the wages of thousands of workers.
Most of the transactions in the power loom sector are in cash–power loom owners buy raw material in cash, disburse wages in cash, and sell in cash. While many owners tried to work on credit, they couldn’t sustain the same level of production without cash for long.
“Payments are delayed since owners do not have new notes to give us,” said Pagare. Many other workers were being paid in old notes. Many workers were fired as looms were working fewer days, or had remained shut for weeks, due to a cash crunch and fall in yarn prices.
The textile industry is the second largest employer in India, after agriculture, employing more than 25 million workers, according to the 2015 annual report of the textile ministry. The textile industry, of which decentralised power looms and knitting are the largest components, contributes 2% of India’s gross domestic product. Maharashtra, with over 1.1 million power looms, is one of the largest power loom hubs in the country.
“Textiles produced in Indian power looms are not competitive compared to Chinese and Bangladeshi textiles, which is why there is less demand and lower prices for Indian goods,” said Dinesh Patole, the state government’s labour officer for Nashik and Malegaon divisions.