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1985 Textile Policy and Handloom Industry Policy, Promises and Performance


It is a decade since the New Textile Policy was adopted by the then Rajiv Gandhi government. It is time for a critical appraisal of the policy. This paper attempts to assess the impact of the policy on the handloom sector.

I The Context

RAJIV GANDHI's regime marked the beginning of the early phase of liberalisation. A series of new policy initiatives undertaken during this period, unrestrained by the ideological inhibitions of the earlier regimes, points to the shift. The new found confidence, emanating from a massive popular mandate unprecedented in the electoral history of the Congress and an overwhelming three-fourths majority in the eighth Lok Sabha in the 1984 general elections, was evident not only in these policies but more so in the way they were launched.

The hallmark of the early phase of Rajiv Gandhi's tenure was a decisive attempt at a shift from the framework of state-control led import substitution to that of a liberalised market economy and export-oriented growth. The economic discourse centred on the concepts of modernisation, efficiency, productivity and market-governed competition which distinguished it from the earlier ideological precepts of employment generation, equality, social justice and socialism. If a new crop of political managers and economic technocrats who formed the core of Rajiv Gandhi's think-tank and close advisors "known for their decontrol and pro-liberalisation proclivities" [Kohli 1989:312 gave Rajiv's Gandhi's initiatives a pronounced visibility, then the catchy slogan of launching "India into the twenty-first century its rhetorical flourish. The image of the regime being truly liberalised', especially among the post-independent generation of the elite, was unmistakable.

The signals of the liberal dispensation or rather determination could be deciphered in the very first budget submitted in March 1985 within months after coming to power. The budget offered considerable concessions to the industrial and business classes through a reduction of tax on corporate income, exemption of half of the income from exports from corporate tax net, reduction of import duties on a wide range of intermediate and capital goods, in addition to reduction of public sector bank interest rates and concessions to the salariat by hiking the income exemption limit from Rs 15,000 to 18,000, All these measures are informed

by the proposition that tax reliefs would release resources from the government for productive use by the 'efficient' private sector. Further, the delicensing of 25 industries pointed to the proposed deregulation of industry. Thus, the 1985 budget heralded a beginning towards liberalisation by loosening the hold of the quota-permit raj through tax concessions, import relaxations and industrial deregulation. In addition, the most significant pointer to the liberal turn, at least in ideological terms, was the conspicuous absence of a reference to socialism, a cherished ideological plank of the Congress leaders after independence. This is in sharp contrast to the earlier budgets which had been premised on "the philosophy of democratic socialism, which is the basis of our mixed economy" [Datta 1985]. This cannot but be interpreted as a deliberate avoidance meant to send clear signals to its core constituency of upper class and business elite by a party which has made most of its fortune by swearing by 'socialism' and the poor, even though in the later period more by habit than conviction.

In the context of this new liberalised dispensation, one has to locate concrete policy initiatives like New Textile Policy, New Education Policy, New Exim Policy, etc. It would be pertinent to note that while all these policies were in tune with the liberalisation refrain, the modus operandi in their introduction and enactment point to real or perceived responses to the early liberalisation. To cite two extremes of the liberalisation spectrum, while New Education Policy was released for public debate [Mohan 1985], the New Textile Policy was thrust down hastily without any debate. If the new economic policies were part of a demonstrated move away from the goals of social justice, equality and the promise of protecting the weak and vulnerable sections of our society from the onslaught of the dominant and powerful interests, the New Textile Policy (NTP) unequivocally demonstrated the regime's insensitivity to the plight of the handloom weavers, a numerically significant yet unorganised and vulnerable section of our society. Since resistance was expected to be least effective here, the government

showed its determination to push the reforms further.

It is a decade since the NTP was adopted and therefore this is an opportune moment for its critical appraisal. This article attempts to make a critical assessment of the NTP and its impact specifically on the handloom sector. The economic reforms pursued vigorously since 1991 are analytically seen as a continuity, in fact as an attempt at intensifying the liberalisation process initiated during Rajiv Gandhi's tenure, ands therefore become critical inputs in the implementation of the NTP.

This presentation is made in six sections. In section II, a critical review of the provisions of the NTP, especially those pertaining to the handloom sector, is attempted. In section HI, an attempt to provide an overview of the textile industry by assessing the position of the handloom sector vis-a-vis the mechanised mill and powerloom sectors since 1980s and especially after the introduction of the NTP is made. Section IV analyses the crisis in the handloom sector following the policy shift and intensified after the economic reforms were initiated in 1991. Section V deals with schemes introduced as part of the government' s response to the handloom crisis and analyses the implicit perceptions and prescriptions. Section VI presents the broad conclusions of this study.


The handloom sector occupies an important place in the Indian economy as a major provider of employment next only to agriculture. Within the textile industry, it is this sector which accounts for a large proportion of employment, of which the participation of women and children in both the weaving and related activities is quite significant. According to the 1987-88 Handloom Census there are estimated to be about 2 to 2.5 million directly dependent on handloom weaving and another one million on related activities for their livelihood.1 The weavers' organisations put the figure much higher: according to whom there are about two crore weavers working on 30 lakh handlooms and an equal number engaged in pre- and post-weaving related operations.2


In due recognition of the significant employment potential of this sector, after independence successive governments have both in the plan priorities as well as in the textile policy pronouncements sought to provide a prime place to the handlooms through elaborate safeguards, the most significant being: reservation of articles for exclusive production on the handlooms, imposition of quota and product restrictions on mill sector and discouragement of powerloom expansion through stringent regulations regarding their registration. It is quite a different thing whether these policy commitments were kept in practice in letter and spirit. But what is important to note is that in principle safeguarding the handloom sector has been seen not only as a viable solution to the ever-increasing unemployment problem but also as a means to provide cheap cloth to the poor.


The NTP introduced by the Rajiv Gandhi's government in 1985 marked a decisive departure from the earlier policies not only in terms of priorities and emphasis, but even in the very way of understanding the textile industry. For the first time in the post-independence period, emphasis has been placed on productivity in sharp contrast to the hitherto thrust on employment. Thus it stated:

... the multiplicity of objectives has inhibited the achievements of the main task of the textile industry, that is to increase the production of cloth of acceptable quality at reasonable prices to meet the clothing requirements of a growing population. Henceforth, the approach to the textile industry would be guided by this main objective [GOI 1985, emphasis added].


in pursuit of the main objective [of increasing production of cloth], the employment potential of the industry shall be kept in view [GOI 1985, emphasis added].

The NTP signalled a disturbing trend with serious long-term consequences. As noted by sensitive observers of the Indian economy, the Rajiv Gandhi regime furthered the divorce between planning on the one hand and budget and specific policies on the other, thereby underscoring "once again how irrelevant the notions of planning and five-year plan priorities to encompass the whole economy are in the concrete political-economic circumstances of the country" (EPW, editorial, April 20,1985). This scenario has strengthened the view that "planning commission has been systematically demoted " [Datta 1985].

The specific case of NTP clearly demonstrates the distance between the

identified plan objectives and priorities and the objectives of the NTP. The Seventh Plan document [Planning Commission: 1985] promising "an employment-oriented plan" (p x), identified "generation of productive employment" (p 23) as the central aspect of the developmental strategy. Since the "potential of direct employment generation in large-scale industries and in much of the infrastructural sectors is not high because these industries are fairly capital-intensive" (p 24), to generate productive employment in rural areas "intensification of agriculture and village and small industries and diversification of rural economic activity" (p 33) is emphasised. Deviating from this policy perspective, the NTP, as suggested above, has marked a shift from employment to production as well as (as will be shown below) from labour-intensive small-scale industry (with massive employment potential) to capital- and technology-intensive mill sector. Thus, it would not be an exaggeration to state that the NTP has demonstrated this trend which was to get further strengthened with the passage of time.


The fairly well accepted way of viewing the textile industry and its problems for policy-making and scholarly analysis has

been in terms of sectoral differentiation -the three sectors being handlooms, powerlooms and mills. Since yarn is the principal input for textile production further differentiation of each sector on the basis of fibre use (i e, cotton, silk, wool and synthetic fibres) is also seen as a useful method of understanding the textileindustry. The 1985 policy, without much rationale, had judged the sectorwise and fibrewise policy orientation to the textile industry as leading to the compartmentalisation of the industry and identified it as the cause of "structural rigidities" leading to the emergence of special interests in the industry and its fossilisation. In contrast, it proposed a process-related view of the industry -spinning, weaving and product processing being the principal ones - as the "comprehensive view" and held it as the key to the elimination of the existing structural rigidities, by providing the industry with "fuller flexibility in the use of various fibres" and "pragmatic policies regarding creation or contraction of capabilities by units to increase competition and promote healthy growth". As if to promote competitiveness it promised to open the export window for "cotton, yarn and other manufactures" [GOI 1985:1-3].

Though it is a matter of common knowledge, yet it needs to be emphasised

Notes: Figures in parentheses show gross and per annum percentage of growth in each sector

calculated to the year in the preceding row, except for the year 1982-83 the base year is 1975 Percentage of growth of powerlooms, inclusive of unauthorised powerlooms. Sources: For powerloom data for the years 1941, 1963,1981-82 and 1982-83, LC Jain (1983), 

For handloom data for 1974, 'Report of the High-Powered Study Team on the Problems of

the Handloom Industry, July 1974', quoted in Ritu Anand (1978-79), Annexure I.

For powerloom data for 1975, Ritu Anand (1978-79), Annexure I.

For powerloom data for 1989, Office of the Textile Commissioner quoted in GOI 

that only a sectoral understanding would open up the possibility of appreciating the relative advantages/disadvantages individual sectors have in textile production and marketing. On the contrary, any attempt to view the textile industry in terms of the processes would not only overlook or ignore the specificities of each of the sectors -determined by the requirement of raw materials and capital, employment structure, labour conditions, production and marketing structure and consumer demand pattern, etc - but would in fact tend to treat all the sectors to be equal in their ability to compete in the market at various stages. Needless to say, this is not only far from true but in fact would prove to be detrimental to the vulnerable and disadvantaged social groups involved in handioom weaving.

Once the sectoral view of the industry is declared irrelevant, and fostering competitiveness of the different sectors is identified as the key to boosting fabric production and thereby to increasing consumption then from this perspective and objectives emerges a different diagnosis of the problems of the textile industry and the necessary solutions.

It would be necessary to note that the contribution of the mill sector to total textile production has steadily declined over the years, while the share of powerlooms has recorded a phenomenal increase. For instance, the five-year period before the NTP, i e, between 1980-81 and 1984-85, shows a decline of 9.36 percentage points in the mills share from 37.93 per cent in 1980-81 to 28.57 per cent in 1984-85, while during this period the powerloom share had recorded a 7.64 percentage point increase. The decline in mill production can obviously be traced to the restrictions on capacity and fibre-use, imposition of heavy excise duties, controls on the import of polyester fibre and of technology for modernisation of the mill sector by the earlier policy regimes and of course the resistance of the organised working class to the mill owners' attempt at retrenchment. Though this policy intervention was intended to protect handlooms, its unintended consequence was the expansion of the powerlooms. In contrast, the advantage of low duties, the presence of an unorganised and low paid workforce and the possibility of flouting all kinds of regulations in every conceivable way has benefited the powerlooms. It is against this ground reality that the "proposed restructuring of the textile industry" in the NTP has to be read. The measures to provide "fuller flexibility' in the fibre-use and "pragmatic policies" to increase competition and promote "healthy growth in the industry" are undoubtedly meant for the mill sector. Thus, a Textile Modernisation Fund, soft loan scheme of the IDBI and a Rehabilitation

Fund for workers (i e, to facilitate easing out of the workers by mills) were envisaged. And the pace with which the government acted on the removal of capacity restrictions, reduction of excise duty, creation of Rs 750 crore Textile Modernisation Fund and of special loan provision for Rs.100 crore with a mere 6 per cent interest per annum with a six-year moratorium and repayabtlity of 18 years [Jain 1988] not only point to the power of the millowners lobby but more significantly to the ultimate turn of the NTP. While the mill-owners we uniformly the beneficiaries of the modernisation scheme, its brunt had to be borne by the workers as evident in the fact that in the first three years of NTP around 1.8 lakh mill workers were retrenched [Jain 1988]. This trend continued and by the end of the fifth year of the NTP (i e, from 1985 to 1989) around 567 mills (both spinning and composite) were closed affecting 7.27 lakh workers [GOl 1990:53].'

Thus, a perceptive policy shift in the 1985 statement from the objective of employment coupled with productivity to the single-most important objective of productivity and from a sectorwise

perspective to a process-related one marked a decisive departure from the past and created a favourable atmosphere for the mill and powerloom sector.


The 1985 Textile Policy though it made a major departure from the past by proclaiming increase in productivity as the main objective, did not shy away from making profuse promises to the handlooms - "to preserve the distinctive and unique role of the handlooms to enable them to realise theirfull potential and ensure higher earnings to the weavers" [GOI 1985:4].

The measures intended to preserve the handlooms are:

(a) modernisation of looms to improve handloom productivity and quality;

(b) necessary measures to encourage and increase spinning in khadi sector, given its large employment potential;

(c) ensuring the availability of yarn and other raw materials at reasonable prices;

(d) encouragement to the production of mixed and blended fabrics on handlooms by making man-made fibre adequately


Economic and Political Weekly December 7, 1996

available at reasonable prices by increasing domestic production supplemented by imports.

(e) providing market facilities; and

(f) introduction of Contributory Thrift Fund and Workshed-cum- Housing Scheme.


Handloom (Reservation of Articles for Production) Act, 1985 (22of 1985) reserving 22 varieties of articles for exclusive production in the handloom sector is a major concrete initiative in the direction of protecting handlooms from the powerloom and mill sectors. In spite of the promise made in the textile policy that this act "shall be strictly enforced and the machinery for doing so shall be suitably strengthened" [GOl 1990: 4] the track record of the last decade points to the contrary. The story of this act deserves to be narrated for it clearly illustrates how whatever limited Jegal safeguards the artisanal communities in our society may have are diluted and rendered ineffective, through a combined effort of the powerful private capitalist vested interests.

Challenged by the powerful lobbies of powerloom and mill owners soon after its enactment and helped by the disinterested response, rather the complicity, of the officialdom, the act remained sub judice for eight long years. Thus the implementation of the act was effectively stalled and with the powerloom and mill sector having a field day, the damage caused to the handloom weavers is simply unimaginable. Taking note of the seriousness of the issue the Abid Hussain Committee eloquently recommended that "the reservation for handlooms should be placed in the Ninth Schedule of the Constitution in order to avoid the legal challenge to this legislation"

[GoI 1990:13]. The committee farther noted the urgency to create the necessary institutional mechanism for its implementation. The government simply sat over the recommendation of this high powered committee.

When the Supreme Court finally upheld the reservation of articles to the handlooms in February 1993 the observations it made in its historic judgment (Parvej Akhtar V Union of India) while setting aside the objections deserve to be noted [(1993) 2 Supreme Court Cases 221, p 237].

Two major grounds on which this act was challenged were; (a) that the act would lead to the monopoly of the handloom industry; (b) that the act violated the equality clause (Article 14 of the Fundamental Rights) of the Constitution. The fact that reservations in favour of the handlooms have existed since 1950 and that this has "not deterred the growth of powerloom sector in the last three decades' makes the argument of handloom monopoly "totally baseless". Instead, the powerloom production of the handloom reserved varieties, because of the "unequal competition" has "caused a serious inroad into the handloom industry' [ SCC, p 237, para 54]. Further, invoking "reasonable classification" criterion to vindicate the equality clause, it justified the reservation act for the protection of the "handloom sector against unequal and powerful competition by the mechanised powerloom/mill sector" [SCC, p 240, para 61].

With this, when the ground was cleared for the execution of the act, the liberalisation regime, instead of implementing the act by creating a proper institutional mechanism to effectively control any further damage to the handloom sector, constituted a multimember committee to go into the very question of handloom reservations. Thus,

the whole issue in its serpentine sojourn has practically turned a full circle to arrive at the point from where it has to begin afresh. In any case, the snail's pace of its implementation and the shockingly low number of cases of violations noticed - a mere 656 First Information Reports (FIR) were lodged out of 72,553 powerlooms inspected up to January 1995 [GOI 1995: 12] when violation of the act by powerloom owners is more a norm than the exception - only point to the might of the forces the handloom weaver has to protect himself from.

Ill Impact of the NTP: An Overview

Three methods of assessing the impact of the textile policy on the structure of the textile industry in general and on the handloom sector in particular could be identified. They are: (a) the position and number of handlooms; (b) hank yarn availability; and (c) the fabric production in the handloom sector.


The textile industry presents a dynamic sectoral interrelationship. Thus for the assessment of loom position and weaver status in the hand loom sector, given its structural disadvantages in the competitive textile market, it is necessary to examine the performance of other sectors. The high-powered committee of the Planning Commission (1974) headed by Shivaraman (hereafter Shivaraman Committee) noted that for every powerloom set up, six handlooms are rendered dormant - which means that for every job created in the powerloom sector 14 hand loom weavers arc displaced. 

Data for the years 1988-89 to 1994-95, Annual Report 1994-95, Ministry of Textiles, GOI.

For yarn export figures for 1988-89 to 1991-92, Economic Times, April 11, 1994; for 1992-

been calculated that the per weaver productivity in the powerloom sector is 14 times more than that in the hand loom sector.)4

Though the Shivaraman Committee noted the alarming rate of growth of powerlooms (the overall growth rate in powerloom sector being 9.7 per cent per annum and that of the cotton powerlooms being 21.94 per cent per annum between 1963 and 1974) and duly recommended strict restrictions on both the permission to set up new powerlooms as well as on the varieties to be manufactured, the expansion in this sector went unhindered. While there are problems with the data on powerlooms [Jain 1983; 1518] it could nevertheless be noted with some degree of certainty that between 1975 and 1982-83 while the overall growth of powerlooms was 11.7 per cent per annum, the growth of cotton powerlooms was 14.94 per cent. Though in terms of percentage points, the rate of growth of powerlooms between 1975 and 1982-83 was less than that between 1963 and 1975 ,in numerical terms the growth of powerlooms was phenomenal, that is, by 1982-83 2.3 lakh new cotton powerlooms were added to 1.93 lakh cotton powerlooms estimated in 1975, while with the overall addition of around 2.90 lakh powerlooms the total tally of powerlooms went up to 6 lakh and with another one lakh sixty thousand awaiting regularisation (Table 1). Given the cost effectiveness and price advantage in the textile market that the powerloom products have over hand loom cloth, the phenomenal growth in powerlooms could only be characterised as leading to the 'cannabilisation of handlooms [Jain 1983]. But curiously enough this is not reflected in the available hand loom statistics of 1974 and 1987-88. Going by the Shivaraman Committee's estimate, the addition of 2.90 lakh powerlooms should have displaced 17.4 lakh handlooms (at the displacement rate of 6 handlooms per every new powerloom), which in turn means a loss of 41.76 lakh jobs per annum in the hand loom sector (at the rate of 2.4 persons employed on each hand loom). But the 1987-88 hand loom census show a decline of handlooms to the tune of 2.39 lakh and another 2.46 lakh recorded as being rendered dormant. This is a gross underestimation that makes the hand loom figures suspect unless one wishes to assume that handlooms coexisted very happily with the phenomenally growing powerloom sector, withstanding the intense competition from the latter.


Another method of assessing the relative position of the different sectors in the industry is on the basis of production and delivery of yarn. Though it would be difficult to

establish how much of cotton yarn has been made available to the mill and powerloom sectors, as far as handlooms are concerned on the basis of the data available on the hank yam delivery and assuming that all this is converted into cloth on the hand-looms it would be possible to guess how much cloth is produced on handlooms. It is pertinent to note that while the hank yarn obligation of the spinning mills was 50 per cent of the total yarn production, the cotton hank yarn delivered between 1987-88 and 1994-95 never did exceed 26 per cent, instead has declined to 23,10 per cent in 1992-93.

It is estimated that 1 kg of cone or hank yarn yields 10 metres of powerloom or hand loom cloth.5 Thus the hank yarn delivered should (assuming that all this reached the hand loom sector) match with the cotton cloth produced on the handlooms in the proportion of 10 metres per 1 kg of yarn. But what could be found in the data for the period of five years from 1988-89 to 1992-93 (Table 2 and 3) is a gross incongruity or mismatch between the figures of cotton cloth produced and the hank yarn delivered, with the former being many times more than the latter during this period. For instance, in the year 1988-89, if cotton hank yarn delivered was 315 mn kgs the cotton hand loom fabric production was 3381 mn metres (ie, the fabric production exceeded by 231 million metres) and by 1992-93 the differential reached a staggering 1206 mn metres with the hank yarn delivered being 348 mn kgs and fabric production being 4686 mn metres in 1992-93. All this in spite of the export of hank yarn far above the ceiling fixed by the government.

The reason for this should not be very difficult to look for. It cannot, by any stretch of one's imagination, be due to the free availability of hank yarn, nor because of the conversion of cone yarn into hank yarn. As a number of studies and reports of hand loom committees clearly point out this cannot but be due to the marketing of powerloom cloth as hand loom cloth at various stages [GOI 1990, Jain 1983].6



Now let us turn to the analysis of fabric production, sectorwise. While the cotton fabric production in the mill sector was 41 percent in 1980-81, it has declined to 28.18 per cent in 1985-86; its decline has been sharper and reached 10.5 per cent by 1992-93. The total fabric production in mill sector also recorded a declining trend: from 37.93 per cent to 9.15 per cent between 1980-81 and 1992-93. The cotton fabric production in the hand loom sector during this period has fluctuated between 31 and 37 per cent. In contrast, the cotton fabric production in the powerloom sector has recorded a sustained increase of 26.63 per cent during this period (10 per cent sharp rise in 1989-90). The overall production in the hand loom sector has recorded a marginal increase between 1985-86 and 1988-89 but declined by 4.6 per cent in 1989-90 and recovered only marginally in 1992-93. The powerloom sector's total production has been one of steady increase: its proportion has increased from 37.68 per cent in 1980-81 to 66.98 per cent in 1992-93.

Though fabric production statistics clearly establish the extent of decline of the mill sector due to the expansion of the cost -effective powerloom sector, which could also be a consequence of the mill owners' entry into and encouragement to the powerlooms, especially after the Bombay


But the widely held view that a substantial part of powerloom production is being marketed as hand loom cloth by the proliferating bogus hand loom co-operatives set up by powerloom owners to corner loan and market facilities available to the hand loom co-operatives may account for the relative steadiness in the hand loom production figures.

The conclusions that follow from the above analysis are summed up below.

(i) The massive increase in the total number of powerlooms and especially that of the cotton powerlooms should have logically led to the displacement of handlooms by six times. Instead, the handlooms census figures show a low decline by 1.67 times.

(ii) The decline of handlooms to the tune of 4.85 lakh between 1974 and 1987-88 and of course sudden dormancy forced during the crisis times should logically be reflected in the quantum of hand loom production. The fabric production statistics (Table 2) for the period from 1980-81 to 1992-93 and 1993-94 (provisional) show the hand loom share to be varying between 21 and 27 per cent in the total fabric production but in absolute terms the cotton hand loom production between 1980-81 and 1993-94 has doubled. The total production in this sector has also recorded a two-fold increase from 2,680 million metres in 1980-81 to 5,851 million metres in 1993-94. All this in spite of the fact that during this period 4.85 lakh handlooms have been thrown out of production and the competition from powerlooms has been increasingly felt by the handlooms.

(iii) The yarn figures show the supply of hank yarn to have not only been far below the actual requirement of the handlooms but in fact to have recorded quite wide fluctuations with a downward tilt. Ironically enough; the production figures show wide variance with the hank yarn figures with the former being far higher than the yarn available.

Due to the incongruity or rather illogical variance between the number of handlooms, the quantum of cotton hank yarn availability and total cotton cloth produced, the official statistics not only become suspect but in fact strongly confirm the judgment of Jain that "the hands of the textile commissioner's organisation, which knowingly puts out fictitious estimates of production in the powerloom and hand loom sectors are not clean' [Jain 1983; 1517]. The only way one could make sense of this is by stating what is by now a fairly well-established fact, that powerloom cloth has been shown as being produced in the hand loom sector at different levels - through bogus co-operatives floated by the powerloom owners, and with official

connivance through the manipulation of statistics.

IV Handloom Crisis

The hand loom industry in the last decade witnessed a crisis serious in terms of its intensity and expanse. The consequences of this were large-scale displacement of weavers, steady decline in hand loom cloth production and of course severe hardships to the weavers in the old age group when they were pushed to starvation while the younger weavers resorted to occupational shift and migration for survival.

It would be improper to talk about this crisis in general terms for its impact has been differentially felt, determined by spatial, organisational and product-related factors. While the weavers in the centres producing colour, jarri, tie and dye, silk varieties and special high value sarees and export varieties coukhcope up with the crisis, in spite of the initial shocks, largely due to the relatively assured up-market, it is the weavers producing cheap varieties using low-count yarn who had to bear the brunt of the crisis. The most severe crises which received national attention occurred in 1988-89 and 1991.

Central to the crisis in the hand loom industry is the scarcity and steep rise in market prices of cotton yarn. Though the 1985 textile policy promised to make special efforts "to ensure adequate availability of yarn and other materials to the hand loom sector" implicitly at reasonable prices affordable by the weavers, that was not in fact to be the case as the 1988-89 and 1991 hand loom crises, claiming 52 and 110 lives respectively, clearly demonstrated.

The Abid Hussain committee appointed in 1988 to review the progress of

implementation of the 1985 textile policy in its report submitted in 1990 noted with concern [GOl 1990: iii):

We have identified certain critical problems that continue to plague the textile industry; many of them persist despite, rather than because of the 1985 policy. High and fluctuating prices of yarn imposed great hardship on hand loom weavers who suffered as a consequence. (Emphasis added)

Though, the Abid Hussain report refused to see the relationship between the shift brought about by the 1985 textile policy which identified the promotion of "export of cotton [and] yarn" as one of the priorities and the hand loom crisis, it nevertheless did identify "high and fluctuating prices of yarn as the cause of the crisis. Between 1985 and January 1990 the prices of yarn in 40s and 60s count used by majority of the weavers producing common varieties had increased by 86.95 per cent and 128.57 per cent respectively. In contrast to the phenomenal rise of yarn prices, the market rates of these varieties have seen only a marginal increase, thereby rendering their production not only unprofitable but even uneconomical.

The crucial question thus is: why this steep rise in yarn prices? Part of the answer, according to the Hussain report itself, lies in the failure of the government to enforce the hank yarn obligation by the spinning mills.

At present spinning mills are requested [sic! it should be 'required') to produce 50 per cent of their total marketable yarn output as hank yarn. The actual delivery of hank yarn amounts to about 40 per cent of total yarn produced. This has raised two different kinds of problems. First, there are widespread complaints of diversion of hank yarn to powerlooms. Second, the demand for yarn by handlooms is for specific quantities. 

Compendium of Handloom Schemes, Development Commissioner for Handlooms, Ministry of Textiles, New Delhi (nd).counts. Hence, there is often a mismatch between the kind of yarn required by handlooms and that which is supplied. The net result is that the mills feel aggrieved with what they consider is too high a hank yarn requirement, while hand loom weavers often face difficulty in procuring adequate quantities of yarn for their requirements [GOI 1990:11].

What is pertinent to note here is that in contrast to the Hussain Committee's assertion about 40 per cent of total yarn production being delivered in hank yarn form, the available data for 1988-89 onwards clearly shows that the delivery of hank yarn was in the range of 22 to 24 per cent (Table 3). In addition, what is lost sight of is the steady increase in the export of yam from 42.1 mn kgs in 1987-88 to 94.68 mn kgs in 1990-91. It may be noted that within these exports, the proportion of hank yarn in the 20s and 40s counts has constituted more than 64 per cent and has been increasing (The Economic Times, April 11, 1994).


The economic reforms initiated by the new Congress government at the centre in June 1991 furthered the liberalisation process at work since mid-1980s. One of the principal objectives of the economic reforms package, introduced after the severe balance of payments crisis experienced by the Indian economy in 1990-91, is to boost the foreign exchange reserves. Though it is not within the scope of this essay to go into a detailed discussion of the package, what is pertinent to the understanding of the survival crisis of the hand loom weavers is the clearly perceptible attempt in the last five years to increase exports with a view to earn foreign exchange. Two important reforms that have a direct bearing on the yarn crisis or rather led to the escalation of the crisis are trade liberalisation and devaluation of the rupee to boost exports. As far as the textile industry , which contributes significantly to our exports, is concerned, these reforms seem to have encouraged an easy, rather less risky way of earning foreign exchange by exporters through cotton and yarn exports, while the export of value added products would involve trading and marketing skills and related risks which the easygoing parasitical exporters are apparently unwilling to take. The government, in its anxiety to somehow earn foreign exchange like a small-time dalal, has allowed freeplay to this lobby in the name of liberalisation.

Thus from mid-1991, we witness a desperate attempt to allow the export of yarn irrespective of the quantum of yarn production and the domestic requirement. Yarn export rose from 94.68 mn kgs in 1990-91 to 110.99 mn kgs in 1991-92 when

yarn production as a matter of fact decreased from 1,510 mn kgs to 1,450 mn kgs. A matter of serious concern is that in these exports the proportion of hank yarn, most of it being in low counts, was 86.8 per cent (The Economic Times, April 11, 1994).7 As a result hank yarn prices rose from i 8 to 20.5 per cent. To be precise, while the price of 40s count rose by rupees 10 per kg the price rise of 60s and 80s counts was between Rs 21 and 25.50. While the periodic increase in yarn prices is within the experience of the weavers, whose adjustment to it, in the face of market unfriendliness (for handloom product price increase does not match yam price increase), through a cut in their wages is a story of tenacity and instinct of an average weaver to survive with a bare minimum, a sudden and unexpected spurt in prices is something which pushes them beyond the limits of endurance. It is pertinent to note that the master weavers, producing more than three-fourths of hand loom cloth, respond to such crises through a corresponding cut in the wages [Srinivasulu 1994]. As the weavers in Chirala and Mangalagiri narrate, in 1991 the yarn price hike was so high that the master-weavers found it beyond their capacity to continue cloth production. As a result, hand loom production was thrown out of gear resulting in a loss of employment for a large number of weavers and in their being pushed to starvation and suicide. This is markedly so in centres with a large concentration of weavers, native and migrant, like Chirala and Mangalagiri, It is from here that a large number of starvation and suicide deaths were reported'.

V Policy Response

It is generally suggested that the early years of transition towards economic liberalisation affect the poor and vulnerable social groups adversely, though once it gets stabilised the benefits would also percolate to them. The public policy intervention therefore becomes imperative to alleviate the social costs of transition. The IMF-World Bank prescription has also provided for civil society initiatives, especially through non-governmental organisations (NGOs) in addition to policy intervention. In the context of liberal democracies like India, the political management of liberalisation and economic reforms, given the attendent social costs, necessitates certain degree of accountability and responsiveness through policy initiatives to mitigate its negative consequences [Goetz and O'Brien 1995]. The role of the press in a liberal democratic system in focusing the issues and raising the political and social awareness and thereby bringing

'responsive' governance on to the political agenda, as the experience of the recent past with reference to the anti-arrack agitation and more specifically (and relevant to the present discussion) to the hand loom crisis shows, is quite significant [Srinivasulu 1995]. In the context of liberalisation, for the above reasons, public policy intervention both through the continuation of certain previous policies and introduction of new policies, becomes imperative. With specific reference to the hand loom sector, because of a serious survival crisis of a large number of weavers as a consequence of the liberalisation drive - the deregulation of the textile industry and decontrol of trade in yarn being two significant aspects of relevance here- public policy intervention, in principle, has become necessary. It is not possible to go into all the policies/schemes pertaining to the hand loom sector here (Table 4) and we shall focus on those schemes that address certain crucial aspects of the crisis.


As discussed earlier, central to the hand loom crisis is the sudden and unexpected spurt in the prices of hank yarn used in the hand loom production. Though the NTP promised to ensure adequate availability of yarn" to the handlooms at reasonable prices and intended to keep up this promise through the provision of hank yarn obligation by the spinning mills and by preventing its violation by them through its reconversion into cone yarn (used in the mechanised sector) and its diversion to the powerlooms, the handlooms crisis has clearly demonstrated the government's failure in this regard.

As a specific response to the hand loom crisis, the government introduced the Mill Gate Price Scheme (MGPS) and Hank Yarn Price Subsidy Scheme (HYPSS). Under the MGPS while the yarn supply target was 10 mn kgs, the yarn actually supplied to the weavers during 1992-93 was 1.6 mn kgs during 1993-94 it was 4.94 mn kgs. The HYPSS provided for the supply of 20 mn kgs of hank yarn with a subsidy of Rs 15 per kg to the weavers in the co-operative sector, It must be noted that the fund of Rs. 30crores allocated to this scheme was in fact carved out of the budgetary provision for the Janata Cloth Scheme (JCS). Even this scheme, in its implementation, failed to make yarn available to the distressed weavers, if the AP experience is any indication. According to Pragada Kotaiah (The Hindu, December 26, 1995) no yarn was supplied to the weavers in AP under this scheme. While the per annum requirement of hank yarn in the country is around 460 to 480 mn kgs, the yarn supply target under these two

schemes is a mere S per cent of the total requirement.


While the liberalisation regime on the one hand explicitly resorted to expenditure and subsidy cuts to different sectors like public health, education in the name of reducing fiscal deficit, it unhesitantly pronounced substantial subsidies for notionally irrelevant and practically useless schemes on the other hand. The scheme of providing loom to the loomless weavers, when the priority should have been for providing hank yarn, is a clear instance of irresponsible behaviour. This scheme, conceived by the ministry of textiles in consultation with the ministry of rural development in 1993, earmarked Rs 523.20 crore with a subsidy component of Rs. 130.80 crore from the IRDP phased over three years from 1993-94 with a target of 1.09 lakh looms per annum (Compendium of Handloom Schemes, p 23-44).

The basis for this scheme is the National Handloom Census conducted in 1987-88, according to which there were 3.27 lakh loomless weavers in the country. It is pertinent to note that in the last couple of decades there has been a steady but definite decline of the independent weaver system and also of the co-operatives. This decline has been largely due to the unequal competition from the powerloom sector and its relatively cheap and affordable cloth flooding the rural markets. The hike in raw material prices in contrast to the relative stagnation in the hand loom product prices has increasingly tilted the economies of scale in favour of the powerloom sector. Unable to cope up with the adversity of the emerging scenario, the vulnerable independent weavers have either resorted to an occupational shift (especially in the younger age groups) or settled with the master-weavers as wage earners. Obviously this meant large-scale migration of the weavers to the major hand loom centres. It is these uprooted (from their native villages) migrant weavers who account for most of the 3.27 loomless weavers. In other words, they have been rendered 'loomless in the context of a survival crisis leading to the decline in the independent weaving sector.

The clue to the magnitude of migration and occupational shift among the weavers could be found in the Handloom Census itself - that is, in its discovery of 2.79 lakh idle looms in the country. In view of this reality, the introduction of a scheme to distribute looms can only be considered either as an act of madness or of wilful destruction of the hand loom sector.

It would be innocent to imagine that the policy-makers are oblivious of the state of

the hand loom industry, as the following extract from a government order brings out clearly;

The hand loom census was done about six years ago. The ground realities might have materially changed since then. It is likely that many loomless weavers might have taken to some other vocations. It is necessary to ascertain the exact number of loomless weavers in each major weaver concentration, who need to be covered by the proposed package under the IRDP. This task may be entrusted to the block development officer or any other block level coordinating agency functioning at that level. The association of the field staff of the Directorate of Hand looms and the Industrial Department of the state governments should be completed in about a month's time and a list of all eligible loomless weavers, who are below the poverty line, drawn up for cent per cent coverage under IRDP. [GOI nd: 27-28, emphasis added.]

This package, in reality, would only be adding another 3.27 lakh looms to the 2.79 lakh idle looms as on 1987-88 and many more that could have been forced to be idle in the intervening years. Given this, no sensible weaver can be expected to show interest in possessing any loom without raw materials and as with most of the IRDP schemes, this scheme's fate is predetermined in its conception itself.


Another scheme announced in September 1993 deserves to be examined both for its generous promise and a whopping cost of Rs 849.15 crore it involves. Under this scheme 3,000 Handloom Development Centres (HDCs) and 500 Quality Dyeing Units (QDUs) are to be set up with an assistance of Rs 27 lakh per QDC and Rs 7.83 lakh per QDU and phased over four years starting from 1993-94 and completed by the end of the Eigth Five-Year Plan. What is fantastic about this scheme is its promise to provide a complete package of assistance to the hand loom weavers in an integrated and co-ordinated manner by "bringing 30 lakh weavers with 7.5 lakh looms in the cooperative fold so that the benefits of all the various schemes accruing to the hand loom co-operative are available to them". Thus the weavers covered by HDCs would be provided with the raw materials, ie, yarn and dyes, training in improved dying and designing, and marketing of the production. [GOI nd: 1-22]

The pace at which this scheme has been implemented, as the figures for the first two years show, runs contrary to its lofty promise. While during 1993-94 only 267 HDCs and 66 QDUs were sanctioned at a cost of Rs 10 crore, during 1994-95 around

605 HDCs and 134 QDUs were sanctioned with Rs 40.18 crore. These figures are uniformly far below the targets set.9 In AP, for instance, where during this period 80 HDCs and 36 QDUs with 6.61 crore were sanctioned these centres have yet to start functioning. If the experience of Andhra, where periodic crisis received immediate attention, is any indication one can very well imagine the situation in other states.

Of more serious concern than the lackadaisical implementation of the schemes is the bureaucratic prescription of ill-conceived schemes involving massive public funds that besides not addressing the key problems may even cause further damage. Thus when the solution to the hand loom crisis is simple and straight, that is making yarn in necessary counts available in required quantities at reasonable prices to the hand loom weavers, the government has come up with irrelevant policies that seek to provide looms to the weavers and promise marketing of production by weavers in HDCs. One even shudders to imagine the only possible consequence of this kind of prescription, which is to snap whatever linkages with the local market the hand loom sector may have retained despite the threatening inundation by the powerlooms.

When the impasse-ridden Reservation Act (discussed in Section II) and the inconsequential attempts at yarn supply are read with the high priority HDC and loom schemes, the real intent of the policy intervention with respect to the hand loom sector becomes suspect.

VI Concluding Remarks

In this essay an attempt is made to analyse the context, text and impact of the 1985 Textile Policy on the hand loom sector. In contrast to the dominant functionalist perspective in the field of policy study, which basically reduces policy analysis to policy evaluation and/or impact assessment, in this essay the attempt has been to view the NTP in the larger context of the economic policy shift to liberalisation brought about during RajivGandhi' stenure-The contextual reading of the policy highlights the fact that in the chequered course of liberalisation of the Indian economy, traced to the mid-1980s, it is with regard to the sectors of the economic activity where the resistance to the new economic policies is weak that the governments sought to push the reforms further.

The study of the NTP clearly shows the increasing gap between the Five-Year Plan priorities and specific policy priorities, thereby strengthening the view that planning may become irrelevant in the context of liberalisation. Thus while the Seventh Plan

identified employment generation as the foremost objective of economic planning, the NTP in contrast by treating productivity andefficiency as the priority concerns sought to create a level playing field by removing hitherto existing restrictions on the mills and powerlooms, meant to protect the large-scale employment - actual and potential -in the vulnerable handloom sector.

In the context of the liberal dispensation of the regime, with productivity, efficiency and market competitiveness being its important catch phrases, the protection and policy package to the handloom sector in a sense becomes a contradiction in terms. Textile being a major sector of industry and the powerful mill and powerloom lobbies constituting a major faction within the ruling class coalition, and the pro-liberalisation elite predominating in policymaking bodies, the major hurdle at the policy formulation and implementation level for the powerful textile lobby is largely removed. If the NTP is evidence of this influence at the policy formulation level, whatever safeguards are provided to the handlooms (apparently as a matter of habit) are sought to be diluted through indifference, delay and inaction. The series of hurdles - legal and other - and the inordinate delay in creating an implementing mechanism for the execution of the Handloom Reservation Act clearly illustrates this. In contrast, the artisanal communities engaged in handloom weaving, in spite of their numerical strength, could show only a limited capability for protest and resistance and they fail to be heard and their limited organisation fails to threaten the electoral prospects of the governing elite.9 The ineffective policy initiative and disinterestedness and indifference to the implementation of the existing policies are largely due to the disorganised nature of the handloom industry.


[I am very grateful to L C Jain for his encouragement and generous support, and also for his encouraging comments on this paper. I am thankful to S Pandan and K J Rama Rao for helpful discussions and to Jyothi and Uttam Kumar for research help.]

1 'Handloom Census 1987-88', quoted in the Abid Hussain Committee report (this excludes north-east India) [Government of India 1990: 13].

2 All India Handloom Weavers Convention (Open Session), welcome speech by Rahmatulla Ansari, February 20, 1993, p 3.

3 Since the launching of the new economic reforms in 1991, the closure of the mills got a further fillip: between 1991-92 and 1993-94,385 mills were closed and as a result

5.45 lakh employees were affected (Annual Report 1994-95, Appendix-IX, p 69).

4 An important study conducted subsequently for the Planning Commission further assessed that in the milt and powerloom sectors, while the capital required per unit cloth output is highest, the employment generated is lowest: in the case of handlooms the converse is found to be true - the capital required being lowest and employment generated highest [Anand 1978-79].

5 'Report of the Working Group on Textiles for the Plan 1978-83', Ministry of Industry, 1979, cited in Jain (1983: 1518).

6 There is a proliferation of bogus co-operatives floated by master-weavers both in the handloom as well as powerloom sectors to comer the yarn, credit and marketing facilities available to the co-operative sector. It is these co-operatives, controlled entirely by a few families who resort to what seems to be a widely prevalent practice of marketing powerloom cloth as handloom cloth. For a detailed account of the phenomenon of bogus co-operatives in Chittoor district in Andhra Pradesh, see 'Study of the Handloom Weavers Co-operative Societies in Chittoor District', prepared by Rural Institute of Social Education (RISE), Tirupati.

7 In spite of severe yarn crisis and protests, exports of low counts used in the handlooms continued almost uninterrupted. As per the latest yam export data, in 1995 while the total yam export was 243.87 thousand tonnes, the share of yam in the 1 -40s count was as much as 203.42 thousand tonnes (Texprocil).

8 For a detailed account of the suicides and starvation deaths among the weavers in 1991, see Frontline, December 6,1991 and APCLC report (1992).

9 In contrast the fishing community has demonstrated a consistent organised resistance to the deep-sea fishing policy under the leadership of the National Fishworkers Forum and through the National Fisheries Action Committee (NFAC) and could succeed in forcing the government to review the policy allowing joint ventures in this sector. For details, John Kurian, 'Impact of Joint Ventures on Fish Economy', EPW, February 11,1995 and K M Shajahan, 'Deep Sea Fishing Policy: A Critique, EPW, February 3, 1996.


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