Cash crunch hits industrial sector, many units run at 30 per cent capacity

Talking to Chandigarh Newsline, Arun Mahajan, president of Industries Association of Chandigarh (IAC), asserts that the entire chain has been disrupted due to the currency ban.

Written by Vinod Kumar | Chandigarh | Published:November 19, 2016 2:19 am
demonetisation, Rs 500, Rs 1000, rupee notes, cash shortage, Industries Association of Chandigarh, news, demonetisation industries, latest news, India news, national news, Chandigarh news Workers of One of the Screw Factory suffering after cash shortage has impected manufacturing units, in Industrial Area phase 1 Chandigarh on Friday. (Express Photo by Kamleshwar Singh)

The central government’s move to demonetise Rs 500 and Rs 1,000 notes has taken a toll on the already weak industrial sector in the city. The cash shortage has led to a fall in demand and breakdown in the supply chain, thus forcing industrial units to scale down the production. As per experts, the majority of units are running at around 30 per cent of their capacity. There are around 3,200 industrial units in both Phase I and Phase II of the Industrial Area.

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As the paucity of cash has halted movement of trucks, the units are facing a shortage of raw material and they are also not being able to make the deliveries in time. Talking to Chandigarh Newsline, Arun Mahajan, president of Industries Association of Chandigarh (IAC), asserts that the entire chain has been disrupted due to the currency ban. “Most of the industrial units don’t have sufficient raw material to complete their orders. Deliveries are getting delayed and orders are being cancelled,” said Mahajan. “The situation is not so good at the moment.”

The lack of liquidity has led to a steep fall in demand. B S Sani, who has a screw manufacturing unit, claims that his business has been reduced by 60 to 70 per cent. “After November 8, there has been a drastic fall in the number of orders we received. In the first 15 days of the last month, we had received orders worth around Rs 20 lakh. In the same period this month, we are not even close to 30 per cent,” said Saini.

Due to a fall in demand, most of the units have reduced their production hours. Earlier, most of them were operating 12 hours in a day throughout the week. They have now been forced to bring down their operation hours to 8 hours per day and five days in a week. Surinder Bansal, who runs a plastic manufacturing unit, said that they reduced the working hours to cut down on expenses. “If there is no improvement in the situation, we will even find it difficult to pay wages to our workers,” said Bansal. The scale-down in production also means monetary loss to the workers, who get paid for working beyond their duty hours.

“On average, an industrial worker gets around Rs 500 per day and makes around Rs 250 by working overtime, taking the daily tally to Rs 750. For the last one week, they have not been getting overtime wages,” said Saini.

Anil Kumar, who works in Saini’s factory, said: “My family lives with me in Chandigarh and I also have to support my parents who reside at my native place. How am I going to support my family if I am not able to work overtime?”