Re-discovering the golden fibre

Updated: Jan 5 2006, 05:30am hrs
The West Bengal governments decision to mandate the use of jute bags in Kolkata and other prominent towns of the state through legislative fiat is an outstanding example of a remedy worse than the disease. At best, it can buy some extra time for what is essentially a dying industry that is out of tune with market realities. Mandatory use of jute bags will only aggravate market distortions and arrest innovation by millers.

The root of the problem is in the Essential Commodities Act (ECA) of 1955 that, inexplicably, treats jute as an essential commodity. The Jute and Jute Textiles Control Order, 2000, and other administrative regulations that impose all kinds of control on jute, from production to consumption, all draw legitimacy from this Act. The other laws providing for tight control on the sector include the Jute Manufacturers Development Council Act, 1983 and the Jute Packaging Materials (Compulsory Use in Packing Commodities) Act, 1987. Regrettably, the National Jute Policy-2005, announced by the government recently, has fallen short of expectations. It pleaded for continuance of regulatory interventions, regular use of the Minimum Support Price scheme and mandatory packing of foodgrains and sugar in jute bags. The Policy proposes to increase jute exports from Rs 1,000 crore to Rs 5,000 crore by 2010, by extensive use of the very regulatory tools that failed the jute sector in the past.

To the extent the sector provides direct and indirect employment to about 40 lakh people, including farmers, workmen, labourers, self-employed artisans and weavers, it would be a pity if it were to disappear. But the way to keep it alive is not through administrative fiat but through market-based incentives. Plastic, the alternative packaging material, is environmentally unfriendly. The government could, therefore, impose some kind of tax on the use of plastic bags. That is likely to do much more for the jute industry than its inclusion as an essential commodity under the ECA. It is time the golden fibre was accorded the freedom to re-invent itself and move up the value chain, from gunny bags to designer outfits!