Jute mills saddled with outstanding dues to financers, operational creditors and workers may face stern action from the Textiles Ministry.
The ministry is likely to either proscribe such jute mills, or truncate orders for packaging food grains under the Jute Packaging Materials Act, 1987, a source close to the development said.
The Jute Commissioner has already shot a notice to jute mills, seeking no-default undertakings on non-judicial stamp papers for statutory payments of gratuity, provident fund and ESI dues to workers.
Food Corporation of India (FCI) and state food agencies of Punjab, Haryana and Chattisgarh are the biggest buyers of jute bags. The government annually subsidises the jute industry by purchasing 70 per cent of total production for Rs 6,500 crore in kharif and rabi seasons.
Presently, the jute industry is confronted with market and statutory dues of Rs 1,950 crore. According to records, the jute industry has Rs 1,200 crore worth of dues owed to financers and operational creditors, and an additional Rs 750 crore to workers. Almost 200,000 workers are employed in 77 jute mills.
“The industry is trying to settle the sues in installments at a bi-partite level. Payment of statutory and gratuity dues to workers is a legacy issue. Moreover, there are different laws governing gratuity, provident fund and ESI payments”, says an industry insider.
The average wage in the jute industry is Rs 628 per day at present. Until mid-2018 it was Rs 450 per day. The industry has dropped the idea of paying living wages to workers because of an increase in cost of production.