Dr G Shunmugam

Introduction

Textile industry is the oldest among industrial sector of India. It is linked to major agricultural crop, namely, cotton. While the decentralised handloom industry has been the embryo of Indian textile industry, the Post Second World War period demand gave the great fillip for the emergence of power loom industry as the decentralised segment of the Indian textile industry. By definition the decentralised sector power loom units are units having less than or equal to four looms.

Problem faced by the Power loom Sector

Even though the power loom sector has been included as a member of modern small-scale industry from the Sixth Plan period, the sector has been continuously deprived from the opportunities of availing concessional short-term and long-term loans from the agencies of institutional finances.

Sample Study

The primary objective of the present paper is to investigate the sources of finance for investment in fixed/working capital and the extent of debt with special reference to the differential organisational pattern. To this end, a sample study has been conducted at Komarapalayam of Salem District which occupies a prominent position in the weaving industrial map of Tamil Nadu.

Entry of Handloom - Weavers

In the economy of ancient India, every occupation was connected with a caste. The percentage distribution of the owner of the sample units in terms of the hereditary occupation clearly demonstrates that still the handloom weaving communities, namely Devangars and Sengunda Mudaliars have their supremacy in holding the power loom units. In fact, nearly two-third of the powerloom owners are from the hand weaving communities. weaving communities, namely Devangars and Sengunda Mudaliars have their supremacy in holding the power loom units. In fact, nearly two-third of the power loom owners are from the hand weaving communities.

Caste-wise Distribution of the Power loom Units

In order to ascertain the facts revealed and to derive improved information from the collected data, occupational status prior to power loom weaving has been prepared in this study.

It is the handloom weavers who have entered in a big way into power loom industry. However, the contribution by the non-weaving communities describes a different note, namely, it is the traders and other allied occupational group that is responsible for the entry rather than the agriculturalists.

Occupational Status Prior to Power loom Weaving

Out of 18 non-weaving community units, owners of 13 units come from trade and other occupations.

Since power loom owners hail from the handloom industry, they are unable to mobilise resources even to purchase the main capital equipment, namely, the loom. Hence, they resort to borrowing from the master weavers and traders/private financiers to their livelihood.

Cost of Yarn

In the power loom industry, the cost of yarn constitutes a major portion - 86 per cent - of the total variable costs or working capital. The micro firms alone are the purchasers of the yarn. Most of these entrepreneurs who availed institutional finance for the purchase of yarn have pledged their properties with banks. it is found that only two micro firms out of eight are able to manage yarn purchases out of their own savings. A few micro firms are getting short-term credit purchase facilities (for yarn purchase) from yarn dealers at pre-determined price and in many cases the credit facilities are extended without any interest but only for a stipulated period.

These yarn dealers are none other than the private financiers and hence the terms of trade are always in favour of the private financiers only. The usual practice, as observed by the researcher, is that the private financiers sell the necessary quantities of yarn on credit facilities only when there is a decreasing tendency in the prices of the yarn. The private financiers usually stock yarn and release only partial requirement of the micro firms. This way many financiers are able to reap large chunk of profits, which are disadvantageous to the micro firms. This is similar to the system envisaged by Karl Marx, where high profits were the prerequisite of accumulation while at the same time accumulation was carried on in order to maintain high profits (W J Bawmol, 1951).

Lack of Knowledge on Output Market

It has been found that most of the power loom owners suffer from lack of knowledge on the output market. Most of the micro firms are forced to sell their products through the financiers who also act as commission agents.

The master weavers and traders have greater role to play. They provide the yarn in sized beams to these unabled owners and get back woven cloth for selling. By the terms of unwritten contract, these private financiers pay wage for the service done by the weavers at pre-determined piece rates. At the time of payment, some portion of the total wage earned by the job-seeking weaver is deducted towards amortisation and interest. Usually, the interest rate is almost twice that of the lending rate of nationalised banks.by the job seeking weaver is deducted towards amortisation and interest. Usually, the interest rate is almost twice that of the lending rate of nationalised banks.

When an attempt was made to know the source of finance for fixed capital and indebtedness of power loom owners, it was found that nearly two-third of loom operators borrowed money from the master weavers, private financiers or from both the sources for fixed capital needs. The most important fact is that nearly 90 per cent of borrowers belong to job-seeking power loom operators.

Historically speaking, master weavers and traders 9merchant class) entered into the field of handloom production at the time when handloom sector came to depend on mill spun yarn. When power loom units came into existence, these middlemen visualised greener pastures in the emerging power loom sector. They exploited the capital-starved hand weavers by seizing the opportunities created by the non-availability of institutional funds providing necessary working capital.

Concluding Remarks

The following prominent features of the decentralised power loom industry in Komarapalayam are considered:

Exploitation by way of usury and yarn ownership in the hands of the same economic class, namely, master weavers and traders alias merchant class or financiers

Lack of accessibility for the small and medium owners of power loom units to both the input and output market

Deduction of a portion of wage from wages earned by tenant-owner-power loom operators, that is, job seeking power loom operators

Perpetual indebtedness of small and medium power loom owners

The economic analysis of the power loom sector of Indian textile industry tend to confirm with the writings of Karl Marx, as a matter of history, capital, as opposed to landed property, invariably takes the form at first as money; it appears as moneyed wealth, as the capital of the merchant and of the usurer (Karl Marx).