Kolkata: Demonetisation has killed one of jute industry’s shady legacy practices. More than 275,000 jute workers have made peace with mill owners and have agreed to wait beyond payday for their wages to be credited into bank accounts, ending the practice of settling wages in cash.

Until the government withdrew old Rs500 and Rs1,000 notes earlier this month, all but five jute mills used to pay wages in cash. For almost two years, the union textile ministry has been pressuring mills to pay wages through bank transfer of funds, but they did not pay heed.

Because the industry had too many temporary workers and at least one in five did not have bank accounts, there was no alternative to paying them in cash, mill owners used to say. But following the 8 November announcement of demonetisation, the jute mills had to fall in line.

New bank accounts have been opened and more are being opened, and the settlement of fortnightly wages due on 21-22 November is to be concluded within a week, said Raghavendra Gupta, chairman, Indian Jute Mills Association, or Ijma—a lobby group.

Workers have grudgingly agreed to wait, and have not disrupted production, mill owners said.

“How will a worker make ends meet if wages aren’t paid on time?" asked Ganesh Sarkar, general secretary of the National Union of Jute Workers. For workers who didn’t have the documents required to open a bank account with them, things are even worse.

Migrant workers had to have documents sent from home in Uttar Pradesh and Bihar to start new bank accounts, said Sarkar, adding that even after their wages are eventually paid, they will have to stand in a queue for several hours to withdraw money. “Who will compensate if in the process a worker loses a day’s wage?" he asked.

The other key concern in the wake of demonetisation was replenishment of raw jute stocks at mills. Because farmers receive payment only in cash, mills had to suspend buying raw jute. But a bumper crop this year appears to have helped.

Only about 10 mills are running thin on stocks, which will last 10 days or so, but others have enough raw jute to keep producing at 100% capacity for at least a month, according to Ijma’s Gupta.

In view of the bumper yield this year, the union textile ministry had in September asked mill owners to build a large inventory of raw jute, said a key official, asking not to be identified. The aim was to make sure that the price of raw jute didn’t tank. Only a handful of jute mills didn’t follow the directive, this person said, adding that the others who did will tide over the current cash crunch.

Alongside, Jute Corp. of India (JCI) has stepped in and has started to buy raw jute from farmers. It is estimated to have built an inventory of 150,000 quintals already, according to the textile ministry official. So supply of raw jute is unlikely to face any immediate disruption, he added.

Ijma’s Gupta, too, said that the industry is trying to figure out the logistics of procuring raw jute through JCI until the cash crunch blows over. The state government of West Bengal is keeping a close tab, and will review the situation early next month.

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