Cash crunch leaves millions in lurch on factory payday
LUDHIANA: Millions of factory workers in three of India’s major industrial zones could bring home any money on their payday because of the cash crunch in the country.
In Ludhiana’s industrial belt that produces bicycles, garments, automobile parts and machine tools, factory owners couldn’t pay wages on Wednesday as most of the workers are migrants from far-flung villages in Uttar Prdaesh, Bihar and Himachal Pradesh, and don’t have bank accounts.
The management asked them to accept banned `500 and `1,000 rupee notes or cheques. But they refused.
Of the 560 million people working in factories in India, a mere 10% is in the organised sector, where salaries are transferred electronically into bank accounts. For the rest, cash payment is the norm.
As banks and ATMs are out of cash, traders are buying notes from agents, who are charging at least a 15% commission, to pay salaries of their workers.
“We have given cheques to workers who have bank accounts, but that comprises just 15% our workforce. Since we do not have cash, we have told the rest that they will be paid in installments,” said Harmohinder Pahwa, director of Nova Cycles, who have 550 employees.
Entrepreneurs in Gurgaon and Manesar were forced to adopt ingenious ways to pay their workers, and reduce their misery because of the cash shortage.
“Salaries are being paid in parts or instalments, and we have spoken to landlords of houses where our workers stay and shopkeepers in their neighbourhood to help them,” said Sharad Goel, a prominent businessman.
Workers complained that they have not been able to withdraw money despite the salary being credited into their bank accounts. “What is the point of having an account?” asked Devraj, a worker.
The labour department claimed that it had opened 8,000 new bank accounts in Gurgaon and Manesar. But a conservative estimate says more than 50,000 new accounts are needed in Manesar alone.
In Noida, patience ran thin outside banks and ATMs as thousands of employees from industries, malls, security agencies, shops and showrooms queued up to withdraw money for their daily expenses.
The banks said they had arranged more cash, anticipating the payday crowd.
But most people went home empty-handed, while some such as Shashi Shekhar, who is with a private factory at Sector 59, got only a quarter of what they needed.
(with inputs from HTC Noida and
Gurgaon)