Sunday, 27 November 2016

Demonetization Woes (1)

(via Sunny Narang)

The informal industry in India may not be paying income-tax or corporate taxes but they employ 95% of Indians and buy the majority of the motor-cycles and mobile phones paying indirect taxes like VAT , excise , service taxes .

No organized sector of Indian economy , either the Government or the Public Sector , and least the corporate sector which employs less than 10 million of the 500 million workforce of India , can provide even part-time employment to them .

The biggest and the deepest shock of Demonetisation will be to this informal sector .

If urgent steps to engage with informal sector are not taken by PM Modi and his Ultra-Smart Team of Global Tech Giants and ex-Goldman Sachs/Boston Consulting Group young advisors who led his 2014 campaign , side-lining even RSS , as they are the Global Diaspora with no idea of how the "processes" of informal India work , there may be much permanent damage to how India has remained sustainable despite how the completely conditioned by western economic models Indian elite thinks .

This Indian elite educated in western economics and ambitions to work in MNC's or Government , regardless of political ideology , Left, Liberal or Conservative has no roots in Indian economic reality .
Old RSS or BJP supporters know what I am talking about , because they are speaking in hushed tongues led by people like Govindacharya .

I see , just like in UK, USA and many other places the irrelevance of old Left-Right parties , the future will be much chaotic and complex . Not the future , as we are already drowned in this new flood .

Local Realities , Local employment and traditions , Local businesses and trade . They provide the foundation on which these regional, national and global layers can be laid .

The Internet and E-trade can be an enabler only, never a replacement of this foundational reality of how India works, earns , lives daily in its billions .

And it needed to be slowly led into this New Cloud , not "Digital Revolution" with the French Revolution attitude of "Guillotining" the Past Republics .

The French Revolution caused a "Reign of Terror" .
Then chaos till a New Emperor , Napoleon took over .

The Demonetisation is now a Fait-Accompli .
It's just like an earthquake and tsunami and with huge collateral damages .
Be Prepared .
Anything is Possible .

AGRA: Lakhs of daily wagers in Uttar Pradesh, as direct fallout of the demonetisation move, have begun losing jobs. Agra, home to one of the country's largest shoe-making industries - it accounts for major exports as well as almost 70% of all shoes purchased within India - has been particularly hit hard.
Close to 2 lakh daily labourers, half of the over 3.5 lakh employed in 150 organised and over 5,000 unorganised shoe-making units, have gone out of work as their employers are not able to pay them in cash. Most don't have bank accounts.
A similar scenario haunts daily wagers in the city's petha-making units, another major source of income for the district's 44 lakh population.
Almost 90% of over 50,000 daily workers employed in petha units have lost their jobs. More than 1,500 petha-making units operate in the city, with a combined capacity of 700-800 metric tonnes per day.
With manufacturers short on orders and very few customers at sweet shops, the turnover has fallen by 75% from the normal Rs 1.5 crore per day.
The glass industry in neighbouring Firozabad is also severely hit. Around 90 of the district's 300 glass factories and bangle-making units have downed shutters, leaving hundreds unemployed.
The local glass industry has an annual turnover of Rs 1000-1200 crore.
The situation is so grim that even chief minister Akhilesh Yadav took note of it and recently shot off a letter to Prime Minister Narendra Modi. In the letter, the CM drew Modi's attention to the plight of this massive workforce and requested him to relax rules to let them get their wages.
Rakesh Garg, national executive president of Laghu Udyog Bhartiya, India's largest MSME industry network, told TOI that some 30% of the 30 lakh workforce of daily wagers is out of job, as manufactures have no orders and no money to pay them. "We can't do anything about it as we, too, are at the receiving end," he said.
Garg said companies are permitted to withdraw cash of up to only Rs 50,000 every week, "which is less than what even the smallest of the units need". He said the government should immediately relax the cash withdrawal limit from business accounts, "as all such transactions are accounted for and can be tracked by the Income Tax department."
According to Agra Footwear Manufacturers and Exporters Chamber (AFMEC), which accounts for 30% of India's total shoe export at Rs 3,500 crore per annum, there is no cash to pay daily labourers and the lack of workforce is hitting exporters hard.
Puran Dawar, president of AFMEC, said almost half of the 3.5 lakh daily wagers working in the footwear industry, including in unorganised units, have lost their jobs since November 8.
Dawar said the nearly 5,000 unorganised units in Agra which used to make over 10 lakh pairs of shoes every day, are in the doldrums. "Production has either stopped or is running at bare minimum capacity," he added.
"Only the 150 organised units, which largely export shoes to EU and mid-eastern nations, are running at present. But if the situation doesn't ease in a couple of weeks, they'll be forced to down shutters too."
Nazir Ahmad, chairman of Park Exports and former president of AFMEC, also said almost half of daily wagers in the industry have been rendered jobless.
The city's renowned petha-making units which employ over 50,000 daily labourers have been forced to shed 90% of their workforce due to low demand and shortage of cash.
Large quantities of pethas are supplied on a regular basis to Delhi, Jaipur, Ajmer, Ghaziabad, Panipat, Faridabad, Gwalior and many other cities in different states. "But after demonetisation, demand has fallen from all centres," said Rajesh Agarwal, convener of Agra petha-makers' association.
In neighbouring Firozabad, hundreds of labourers have been rendered jobless in as 90 out of the 300-odd glass factories, including small-scale bangle-making units, have downed shutters because of the cash crunch. Rajkumar Mittal, president of UP Glass Manufacturing Syndicate, said, "Demonetisation has hit the glass industry hard. We need at least Rs 2 lakh to run a factory every day. With a Rs 50,000 weekly withdrawal limit, we cannot run them."
Hanuman Prasad Garg, president of Glass Industrial Syndicate, added, "The ban has a cascading effect. Our payments have stopped and we are not able to pay our raw material suppliers and truck drivers. The situation of the glass industry is very bad. Losses have mounted to crores. Furnaces are empty." PK Jindal, member of executive committee of Glass industrial Syndicate, Firozabad, said that in his estimate "about 80,000 daily wage workers are sitting at home".
Out of work
1.75 lakh daily wagers in Agra's footwear industry have lost jobs
Over 5,000 footwear units in city have a turnover of 10 lakh pairs a day, supply 70% of domestic shoes, with major exports to EU and mid-east nations
Almost 45,000 labourers working in city's petha units jobless
90 out of 300-odd glass factories in Firozabad, with annual turnover of Rs 1000-1200cr, down shutters, hundreds out of work


Prakash Thangavel Since you are talking about subsidies, govt benefits etc, I have a simple to ask: Does this govt have the guts to let farmers decide the price for their produce just like a corporate company and are you willing to tackle the food inflation? It is the rural poor who are subsidizing your life style, even after urbanites steal their land, water, livelihood, with what they are left with. Where do you think coke you drink at swanky hotels get its water from? USA?

Sure, farmers can wait for a few more days but SW summer season (no monsoon rains) is over and we are in middle of NE summer season (no rains again in rainiest season) and with meager savings locked up for quiet some time, what villagers are supposed to do? Dependable cattle are being distress sold because of lack of fodder and liquidity in local shandies. Slowly this will spread to all their possessions, meanwhile cashless economy will take its own toll just like oil economy. Who is going to pay for minimum deposit, yearly charges, transaction charge from both sides, internet charge, cost of owning smart phone and charging it? All I can i foresee is a villager (it maybe anyone, who knows?) without a spare cloth holding a dead smart phone waiting for his ration of food in front of a super market.
Aparna Krishnan Prakash Thangavel Agree. But there is none so blind as will not see. Those who have not spent time in a village are full of solutions for villages. Starting with those in the Planning Comission. And that is what is killing this country.
Prakash Thangavel And all these solution providers are imports from the west, none with an understanding of this country is up there.
Aparna Krishnan No urban should be allowed to have an opinion on rural india - unless they give some years of their life there. To at least understand.

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