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Severe cash crunch brings to light woes of ailing jute sector

An acute cash crunch that followed the scrapping of high-value currency notes has highlighted the woes of ailing jute sector. Raw jute supplies are narrowing with only 40-45 per cent of the stock reaching the market. With it, concerns over the supply of balance stock are mounting as there is lack of cash to pay off farmers, sellers and stockists in the secondary and upcountry markets where raw jute has been stored. In value terms, raw jute of around Rs 4,000 crore is held up in the rural and secondary markets for want of the required payment arrangement.

Disposal of stock of raw jute has halted due to non-payment either in terms of cash or through bank for the past three weeks. The Jute Corporation of India is unable to continue the purchase of raw jute for the past few weeks in the absence of a facility for payment to farmers, transporters and labourers.

Despite a bumper crop size of nine million bales, farmers are in distress as adequate action has not been initiated for disposal of raw jute. Three government organisations namely the Jute Commissioner’s Office, National Jute Board (NJB) and Jute Corporation of India (JCI) are functioning to control the jute sector right from the producer (farmer) level to end user (jute goods manufacturing) level.