Sahibabad: Functional Assembly Lines Bring Little Solace to MSMEs and Workers

The COVID-19 situation in Uttar Pradesh’s Sahibabad assembly constituency is no exception to the norm. Ask anyone about how the situation in this part of Ghaziabad district is and the answer is common: “pathetic”.

However, in the case of Sahibabad, an area that boasts of accommodating major engineering corporations in its industrial zone, the familiar observation conceals more than it reveals about the state of affairs on-ground.

It is not that the sub-locality is currently under a complete lockdown. Industrial units are allowed to operate, despite the statewide imposition of what the Yogi Adityanath–led Bharatiya Janata Party (BJP) government refers to as a partial “corona curfew”.

It’s not even that things are spinning out of control on the health front in this urban town, even as the COVID-19 infection continues to ravage rural areas in the state. Sahibabad MLA Sunil Sharma claims that “enough arrangements have been made,” though he accepted that the “improvement” was being seen “only now.”

The main reasons behind the woes of Sahibabad’s residents, a considerable section of whom belong to a family with one or more industrial worker, is the problem being faced by small and medium enterprises, the lifeline of India's manufacturing sector.

Interviews with the workers, trade union leaders, company management, labour officials and an expert revealed that manufacturers have been bearing the brunt of the Centre having turning its back on the Micro, Small and Medium Enterprises (MSME) sector for far too long. The second wave of the pandemic is only aggravating the challenges it faces.

‘The Company Stopped Paying Us Our Monthly Wages’

Take the case of a worker employed by The Indure Private Limited, a facility that caters to the ash handling needs of major power plants in the country, including the government-owned National Thermal Power Corporation Limited (NTPC).

“Out of the past 12 months, the workforce here has received wages for only about four months,” the worker, employed by the company since 1985, told Newsclick over the phone on Saturday. He requested anonymity fearing a reprisal.

Last year, the company, with over 300 workers – 90 permanent and the rest casual – on its roll resumed production in the month of May after its assembly lines were brought to a halt for almost two months owing to the nationwide lockdown. However, things were not the same as earlier.

Mahavir Singh Gusain, secretary, Engineering Kamgar Union at Indure, said that post-resumption production in the factory was brought down to “half of its capacity,” most likely due to a continuing slump in demand. How bleak the business was could also be understood by the fact that only permanent workers were called back to work in May – the company gates were closed for the rest.

Come August, the company management found difficult to afford the labour costs of its remaining workforce. “The company stopped paying us our monthly wages. The workers would be paid a portion of their salaries now and then, that too after much request. The management wouldn’t pay heed to the union’s demands despite multiple protests,” Gusain lamented.

That same month, the union, affiliated with the Centre of Indian Trade Unions (CITU), filed an official complaint over pending wages to the district labour commissioner. The matter is pending. If one goes by the provident fund and ESI amounts that have been “pending for more than a year”, as Gusain further alleged, the story becomes grimmer.

Rajesh Mishra, Deputy Labour Commissioner (DLC), Ghaziabad, confirmed that a complaint against the management of Indure was filed last year. “We have sought an inspection permission from the Labour Commissioner. We are waiting for the request to be granted,” he said.

Newsclick also approached a company official at Indure who denied the workers’ allegations, saying that “full wages are being paid to workers,” even while accepting that a case against the company management has been pending in the district’s labour court. “Some workers have concerns and we will respond to that in court,” the official said.

But what are the reasons behind the prevailing circumstances? “It is not as if we don’t want our workers to be happy. However, it is also becoming increasingly difficult for us to sustain in the market,” the official reasoned, blaming the Modi government’s “poor policy” calls, most notably those pertaining to the coal sector that arguably had a negative impact on the said company whose business is dependent on its performance.

Another grievance: the Centre “completely failed” in providing any cushion to the medium and small enterprises against the pandemic-triggered economic shocks since last year, the official added. “We are not even expecting anything this time around,” he rued.

‘What MSME Sector Needs is Public Investment, not Credit’

Last year, the Centre announced a special COVID-19 package that included, among other things, a Rs three lakh crore collateral free automatic loan scheme, provision of an e-linkage market, and imposition of restrictions on global players to participate in government procurement tenders of up to Rs 200 crore. The package was intended as a breather for the sector.

Jayan Jose Thomas, professor of Economics at IIT-Delhi, called the package a “good thing” but “rather inadequate”.

“There are two economic elements: supply and demand. As far as the former is concerned, over time – since the 90s – credit received by the MSME sector has been declining – from about 15% then of the total that was disbursed by the commercial banks to the industrial sector to less than five per cent in 2017-18,” he explained.

MSMEs in the country are mostly depended on orders from big domestic firms and public sector enterprises (PSUs). “That ecosystem has been broken, partly because now we don’t have many PSUs and also because big Indian firms, while looking for higher efficiency, began to shift their orders away from the MSME sector here,” he said. That is a “deadly cycle” – there is less efficiency because there is not enough demand; there are no orders because small firms are not competitive enough, Thomas added.

That is where the government’s intervention plays a crucial role, according to him. “What the MSME sector currently requires is not credit, but a substantial increase in public investment,” Thomas said, adding, “The Centre’s slogan of Atmanirbhar Bharat will be more meaningful only if there is a serious commitment to reviving the demand in the sector through public investment.”

According to a survey conducted by the United Nations Industrial Development Organisation (UNIDO), manufacturing in India had stopped in 2020 after the lockdown, except for the rice milling sector where production reportedly dropped to half. Restarting businesses was a “mega-challenge,” the survey report concluded, because of “extreme uncertainties” with regard to demand for MSMEs’ products among other reasons.

While it could appear as a replay of familiar scenes from last year, statewide – unlike nationwide – intermittent lockdowns being imposed this time around haven’t brought the manufacturing to a standstill, at least not in Sahibabad. But things are far from hunky-dory.

‘Not a Single Factory Where a Worker Hasn’t Succumbed to Virus’

Charanjit Singh, office secretary, Sahibabad Industries Association claimed that there was a huge shortage of raw material – usually arriving from nearby Delhi but not as of now due to a lockdown there – that is preventing many of the production units in the industrial area to utilise their full capacity.

“There is also a labour shortage. Most of the workers had gone back to their villages owing to the harvesting season. They haven’t come back as yet,” he said. Singh added that it could also be due to a pandemic-induced fear due to which most workers chose to leave and head back to their families.

Ishwar Tyagi, area president, CITU, Ghaziabad, agreed. “There wouldn’t be a single factory in Sahibabad where a worker hasn’t succumbed to COVID-19 this year,” he alleged, adding, “even the management authorities are panicking in many companies. They are refraining from visiting the factory.”

On Sunday, Ghaziabad district saw 273 fresh cases of COVID-19, even as the positivity rate for the month of May hovers around 14%. The low number of cases can best be explained by an underutilisation of the district’s testing capacity, possibly to project a positive scenario.

Sharma, the BJP MLA from Sahibabad, however, sounded confident on the phone when asked about the preparations in his assembly constituency to tackle the second wave. “The surge in cases came as a surprise last month. But enough arrangements have been made now,” he told Newsclick.

There were 750 beds available – in government and private facilities – in the Ghaziabad district as on Saturday afternoon, according to him. “We are making sure that whoever in need is getting Oxygen. The black marketing of medicines has also stopped now,” Sharma claimed.

These are not the only worries, however. “There have been no measures taken up in the majority of the factories for the safety of workers. Some have distributed masks and sanitisers. But, in most cases, the workers are left to fend for themselves,” Tyagi from CITU alleged.

The trade union has demanded that industrial workers be prioritised for vaccination. “We also want the government to direct the factory owners to not cut wages or retrench workers in these difficult times,” Tyagi added.

On Saturday, Sharma maintained that “only questions about the pandemic” be posed to him. “There are 29 nagariya swastha kendra (local health centres) in Sahibabad where vaccine doses are being administered,” he told Newsclick.

According to the CoWIN dashboard, there are 107 sites – 101 government and 6 private – conducting vaccination in the Ghaziabad district. However, according to a report, no vaccination drive was conducted in Ghaziabad on Sunday.

Mishra, Ghaziabad’s DLC, said that it is up to the workers to get themselves vaccinated. Asked about incidents of wage cuts in recent times, he said: “We have only received one or two such complaints as yet. There has been no incident of any mass-scale retrenchment as far as we know.”

While the administration can draw solace from this, there is little relief for workers like Anil Pandey. The 54-year-old works in Sahibabad's Holy Faith International Private Limited, a facility that specialises in printing school and college books. As COVID-19 cases surge, Pandey, scarred once, is only too anxious these days.

“Last year, after production resumed in May, the management cut our wages by 40%,” Pandey told Newsclick. It was only in January this year that the monthly payments were restored, suggesting that the company’s financials were inching towards normalcy.

However, then came April. “Production has again slowed down as orders were cancelled,” Pandey, employed by the company since 1988, claimed. The workforce received their full wages for the previous month, but the reality stares them in the face.

“What if the management cuts our wages again? Will it be a repeat of last year – or worse?”