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Oil mills in Modi backyard idle minus cash -Basant Rawat
-The Telegraph

Ahmedabad: Samir Shah never had such spare time in his life as an oil mill owner. This is, after all, the peak season when mills buy oil seeds that are available after the harvesting of kharif crops.

But the Saurashtra businessman has been sitting idle the past fortnight. There's no cash to do business.

The demonetisation drive has left entrepreneurs like him with a shrunken wallet. And farmers don't usually accept cheques.

"Normally,during November and December, we are so busy that we don't even have time to go home for lunch. This time we have nothing to do. Our mills are operating at 20 per cent capacity," said Shah, president of the Saurashtra Oil Mills Association (Soma).

The cash crunch - triggered by the central government's November 8 move to withdraw old high-value notes as part of its efforts to crack down on black money - has not affected Gujarat's oil mills only. The textile industry in Suratand the ceramic business in Morbi district have been hit too, with the currency crisis shrinking the purchasing power of people at both ends ofthe production chain.

Shah said the demonetisation move had brought the oil mill business to a standstill in Saurashtra, home to around 800 mills that employ, on average, 60 workers each.

"Usually,the mode of payment is cash as farmer don't accept cheques. Now, after the demonetisation drive, we don't have cash, which has hugely impacted the industry," he said, adding the situation was "going to worsen in thecoming days".

Shah has written to Prime Minister Narendra Modi, explaining how the oil mill industry had come to a "standstill as a result of demonetisation".

In his letter dated November 20, Shah has urged Modi - the state's chief minister before he moved to Delhi in 2014 - to reconsider his "ill-advised" decision to withdraw the old 500-rupee and 1,000-rupee notes saying it had affected transactions along the entire chain - from the rural markets to wholesalers, retailers and, finally, the end user.

"We are not against cashless transaction, but were not prepared for it as yet. Moreover, allcash transactions are not illegitimate and not all farmers that we procure oil seeds (from) have bank accounts," Shah said.

It's thesame story with Morbi's ceramic industry, which has seen nearly 70 per cent of its 600-odd factories close down because of the cash crisis, said Nilesh Patel, the president of the Morbi Ceramic Industry.

Thebiggest problem, he says, is that transporters have to be paid in cash -Rs 25,000 per truck - for the raw material that comes from near Bikanerin Rajasthan. Four truckloads are needed every day, which comes to at least Rs 1 lakh a day.

"We have cash credit but no cash available," said Patel.

Yesterday,members of the Morbi Ceramic Association had met district collector I.K. Patel and told him if adequate cash was not made available within afew days, the industry would have to shut down.

In a letter to Kalraj Mishra, the Union minister for micro, small and medium enterprises, the Southern Gujarat Chamber of Commerce and Industry has urged him to make cash available to the sector "as per their requirement".

Otherwise, it said, "small units are likely to close down in (the) next few days" because of the "acute shortage of cash".

Inthe letter, chamber president B.S. Agrawal said the processing houses of Surat were about to be closed and "thereafter a whole value chain of textile will be broken down".

Industry insiders are not the only ones who are worried. Ajay Patel, the chairman of the Ahmedabad DistrictCooperative Bank (ADCB), appeared equally anxious.

Like the other 13,000 cooperative banks in the country, his bank, one of the largest of its kind in Gujarat, has been barred by the RBI from accepting or exchanging the withdrawn currency notes. Patel is worried that his bank's customers might migrate to other banks.

BJP national president Amit Shah was the ADCB chairman till 2003 and continues to be one of the directors.

Accordingto Gujarat government estimates, the state needs Rs 5,000 crore worth of newly printed notes every day to meet the demands of its economy, at least five times more than the Rs 800-1,000 crore that the RBI has been giving in new notes to banks across the state.

The note crunch was raised before a three-member team from the Union finance ministry that arrived in Gujarat yesterday to get ground reports from cooperatives and industry leaders.

The team of senior IAS officers Guruprasad Mohapatra, R.P. Gupta and Nipun Vinayak met chief minister Vijay Rupani and chief secretary J.N. Singh. Both requested theCentre to pump in more cash into the state's banking system.