Authors Lekshmi R Nair and D Dhanuraj of Centre for Public Policy Research respond to the KVIC’s objections
| September 30, 2016
(1) The figures of khadi production and sales given by the KVIC chairman are in nominal terms, whereas we include the real value of production and sales in our paper. The same nominal figures, available in the latest KVIC annual reports, after adjusting for inflation based on WPI deflator, are used in our paper. It is clearly mentioned in the graph that we have included the value of production and sales adjusted for inflation. Thus, the real value of production and sales has shown a decline in the period of analysis even though it is increasing in nominal terms. For a series of nominal values in successive years, different values could be because of differences in the price level. But nominal values do not specify how much of the difference is from changes in the price level. Real values remove this ambiguity. Real values convert the nominal values as if prices were constant in each year of the series. Hence, we used the real value of production and sales in our article, which shows both as declining.
READ: KVIC’s objections
The argument that ‘comparing 1994-95 figures with the latest figures is wrong’ is not valid since we used real values adjusting for changes in the price level over the years. Moreover, a valid trend analysis takes at least a period of 10 years for reaching at a meaningful conclusion and not just four or five years.
The inference of wastage of public monies in the khadi sector is substantiated upon by the CAG audit report (report No. 25 of 2014). It reveals that KVIC is ineffective in utilising the plan funds for the khadi sector promotion, clearly indicating the wastage of public monies.
It is not true that we have not consulted the KVIC officials before finalising the paper. We had detailed discussions with officials of KVIC, Khadi and Village Industries Board (KVIB) and khadi institutions before finalising the paper.
READ: The story we published on Khadi
Both the terms ‘sliver plants’ and ‘silver plants’ are used even in KVIC documents and other government documents interchangeably (For example, see www.kvic.org.in/chnimda123/upload/Tend_CSP_Thrissur.pdf and http://18.104.22.168/rs/book2/reports/indus/96threport.htm).
(2) It is true that there are initiatives for revising the wages of khadi artisans and different incentives and we have mentioned them in the paper. What we are pointing out in the article is that despite these, the amount is not benefitting the poor artisans working in the sector. This is based on our interviews with khadi artisans in Kerala as well as on secondary research.
From field visits we found that the spinners and weavers are paid a guaranteed minimum wage of '125 and '100 respectively in cash every day. They get the other allowances as lump sum amounts once in a year or so, while there is no certainty on when they would receive these allowances. The reason is that in majority of these institutions, the wages are given in cash and there is no arrangement for the provision of wages through banks or post offices. This is in spite of the mandatory requirement from the ministry of micro, small and medium enterprises (MSME) to give the artisans’ wages only through banks or post offices. With a daily wage of '125, the khadi spinners are hardly able to make their ends meet, as pointed out by the spinners themselves in our interviews with them. Their earnings are much lower than the average daily earnings of women workers ('336 per day) in other similar sectors like match industry in many states like Kerala, as shown by the ministry of labour reports. Due to this, there is unavailability of spinners and weavers willing to work in this sector now, as related by khadi artisans themselves in our interviews. The same findings are supported by secondary evidence available in public domain.
These include the case study of Ponduru Khadi in Andhra Pradesh, where the number of spinners and weavers has declined from 2,000 and 150 respectively in 2001 to 800 and 50 respectively at present due to low wages (www.altacit.com/publication/ponduru-khadi-a-case-for-geographical-indication/). Giriraj Singh, minister of state for MSME, had stated that low wages were keeping the workers away from the khadi sector. This statement is also available in public domain (www.fsmeindia.com/downloads/aug-2015.pdf, page 19) in the August 2015 issue of the journal Industrial View. The CAG report 2016 also states that the inadequate follow-up of loans by KVIC resulted in non-recovery of '551.46 crore and funds amounting to '226.70 crore, meant for development through execution of schemes and programmes, were diverted to service the loans of institutions. The wages in the khadi sector were far below the national minimum wages (www.cag.gov.in/sites/default/files/audit_report_files/Union_Civil_Complaince_Report_11_2016_Chapter-12.pdf).
(3-4) The KVIC policy allows khadi institutions to sell khadi products at prices based on their demand and acceptability in the market rather than the product cost. It demands the khadi institutions to use the surplus created from the market-linked prices for enhancement of wages of artisans and undertaking reforms in production and marketing, called benefit chart of pricing. We have stated this in our paper. Despite this, the khadi institutions continue to follow the old cost chart pricing and not the market-linked pricing, as shown by our field visits and interviews with khadi officials in Kerala. For example, the khadi institutions in Kerala still follow the cost chart, where the costs of the products, mainly the raw material costs, are translated into the prices of the khadi products, rather than the market conditions. The Kerala khadi cost chart 2015, which shows this, is illustrated in our paper. The artisans still get very low wages as stated above, which results in many artisans, especially the young generation, leaving the sector.
(5) We have stated in our paper the policy regulation allowing individuals or institutions to produce khadi, provided they have the Khadi mark. We are pointing out that this is a restrictive practice because receiving the Khadi mark for a product still requires the approval of KVIC. No individual can freely produce khadi without the approval of KVIC. There are such recognisable entry barriers created by the government through KVIC, which decrease the choices available in the market.
(6) The government through KVIC authorising the certification process of khadi is a restrictive practice that leads to creation of entry barriers in the khadi market. Individual certification marks are becoming less important to consumers in choosing products since their selection of products is largely based on brand image rather than certification marks, as proved by studies (Barron, 2007; scholarship.law.marquette.edu/cgi/viewcontent.cgi?article=1099&context=iplr Hallett, 2012;)
(7) Rather than the khadi retail outlet timings, our point is that khadi should be made available in all private retail stores, without the approval of KVIC. Based on the policy decision of KVIC, private parties are allowed to sell khadi through a franchise model, while the approval of KVIC is required for using the Khadi logo. There is also no rebate for the franchisee. For example, the recent initiatives of KVIC like the tie-ups with Fabindia and Raymond for khadi sales are commendable. Yet, the requirement to get the approval of KVIC for using the Khadi logo could be a dampener.
(8) Our point is that the KVIC monopoly in khadi marketing needs to be removed.
The policies practised by KVIC are anti-market and anti-artisan. The government through KVIC plays a paternalistic role in the khadi sector, restricting the choices for production, sales, distribution and marketing as well as imposing rules and regulations in the sector. The patriarchal view of KVIC is reflected in their claims by citing the imposition of khadi materials on the government departments and public servants. Apparently, it is necessitated by a lack of demand for khadi products sold through KVIC stores and to save the status quo of the institutional setup. This initiation contradicts the stated position of KVIC that ‘Khadi India is not just a programme of clothing the nation’ but an admission that the sale of khadi materials to government employees is easier than in the open market. Popular products do not require any government rules to generate market demands.
The question here is whose fault it is. We should salute the weavers for their continued patronage of khadi even in such adverse conditions. Having a few thousands wearing khadi materials is not going to help the weavers in the long run. In fact, the role of khadi in our national movement would continue to engage the coming generations only when more and more young people wear it and there are more choices in the market. We respect the PM’s initiatives through ‘Mann ki Baat’, but they will not help khadi survive the odds set against it. There is high chance that khadi will become extinct, if the patriarchal view of KVIC continues. There needs to be more choices available in the market, which means opening up the khadi sector.
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