The Union Budget for 2018-19 has drastically reduced the allocation for the handloom sector by more than a third from Rs 604 crore to Rs 386.09 crore. The industry which is already suffering under the twin effects of demonitisation and GST, is critical of this move. Industry representatives say this is the lowest the handloom sector, which employs over 1 crore people, has seen in the last century. Narasimha Reddy Donthi, President, Chetna Society, a non-governmental organisation avers, “Handloom sector budget is reduced drastically, by 36 per cent, across all schemes. With rising cost of production, unfair competition and subsidies to rival sectors, handloom sector is being killed deliberately.” He added huge cuts in yarn supply scheme allocations is bound have its impact. This impact would be double when one considers the rising costs of raw material, mostly yarn (silk, cotton, wool and other natural fibres), due to inflation, GST and fossil fuel prices.
The industry is borrowing money at exorbitant interest rates, ranging from 14-60 per cent, adding to its debt burden. Reddy said, the most critical component of their production, working capital flows are drying up from ‘traditional sources’ and institutional mechanisms. The National Bank for Agriculture and Rural Development (NABARD), the only comparatively cheap source of finances for handloom sector has drastically reduced its exposure. Resultantly, handloom weavers were forced to find ‘expensive’, private sources of finances.”