Lack of credit fails Bengal weavers

Burdened by mounting debt, the weaving community in West Bengal is in the clutches of moneylenders as banks have stopped lending.

There are about 2,210 registered handloom weavers' cooperative societies in West Bengal, but not more than 500 are functional. The rest are either under liquidation or dysfunctional, points out state focus paper--2009-10 by Nabard (National Bank for Agriculture and Rural Development).

In the absence of availability of institutional credit, even the government-recognised handloom societies are resorting to moneylenders for working capital, by paying interest as high as 30 per cent over a time period.

"Banks have almost stopped lending to us, as we are unable to meet the capital requirements. Our production has been reducing, even though there is demand for handloom products in the domestic market. We are now dependent on the 'mahajans'(Money lenders) for loans, who charge interest according to their own whims," said G C Basak of Basakpara Tangail Tantubay Samabay Samiti based in the Burdwan district of West Bengal.

 

"The dependency of the weavers' on money lenders often deteriorates into permanent semi-slavery for the weaver," said the Nabard focus paper.

The main source of funds for the handloom societies used to be the District Central Cooperative Banks (DCCBs). However, in view of the precarious financial position of these societies, the quantum of credit flow to the handloom sector has been gradually shrinking. Also, the DCCBs were earlier availing refinance limits from Nabard to fund the primary weavers' cooperative societies. The facility is no longer availed by the DCCBs. According to estimates by the West Bengal State Cooperative Bank, the handloom sector owes about Rs 75 crore to the cooperative banks in the state.

"We are still financing few of the handloom societies in districts like Nadia and Burdwan, but most of the societies are not functioning now. There had been mounting bad debts in the sector. Till about few years ago, our main borrower was Tantuja, but this had also gone through rough times," said Samir Ghosh, chairman, West Bengal State Cooperative Bank.

Meanwhile, Tantuja, the retail outlet for the West Bengal State Handloom Weavers Co-operative Society, run by the department of small scale industries, government of West Bengal, had agreed to repay Rs 35 crore loan to the cooperative banks, said Ghosh.

Since the financial position of the apex society for handlooms, Tantuja, is very weak, there are long delays by it in making payments to the primary societies for cloths supplied by them. The delay results in non-payment of dues by the society to the suppliers of yarn and other inputs. As a consequence, the societies become dysfunctional and weavers' migrate to moneylenders for capital, which results in the creation of a viscous cycle, according to the Nabard document. P Mohanaih, chief general manager, Nabard, said, the state was pinning its hopes on the Rs 2,000 crore revival package for the handloom sector suggested by the bank to the Union government some time back. Out of this, the state could get about Rs 100 crore for revival of the handloom sector, he added.

Apart from the government recognised ones, there are about 3,50,994 handlooms in the state, providing employment of over 6,00,000 people in the rural areas. Only one-third of the weavers of the state are organised into cooperatives. In view of the marketing facility available only in the festive seasons of March-April and October-November, there is an urgent need for providing consumption credit to weavers along with a liberal and targetted social security support intervention, according to Nabard.