Why owners of medium/small industries protesting demonetization – The “dark” reason will shock you !!

Soon after demonetization of Rs 500 and Rs 1000 notes was announced by PM Modi, the government also put a cap of withdrawing Rs 20,000 per week per account in cash. For industries and organisations, this amount was later increased to Rs 50,000 per weak for their expenses. However, the owners of small and medium scale industries are totally unhappy. The reason that they are providing behind their unhappiness is that they are unable to pay wages to the daily wage earners who work for their industries.

While the reasons that these owners are providing against demonetization may appear genuine in first look, the truth is far beyond this. Most of the owners of small and medium scale business owners are indulging in dark practices of under-paying the workers, showing more number of workers in their account book than the number of workers who really work and evading huge amount of taxes by showing much less profit. For example, the minimum wage of workers is Rs 350 per day. If a small/medium scale company has 50 workers working with them daily, they should pay Rs. 350 to each of the 50 workers (i.e Rs 17500 daily). But in reality, most of the workers who work as daily wage earners are highly underpaid.

Since the money paid is in cash, it becomes very difficult for the government to ensure that the workers are paid the minimum wage amount. What these owners now do is they underpay these workers. Instead of the Rs 350 which every worker should have duly received, the owner pays them, say, Rs 200 in cash. It means the owner will now pay only Rs 10,000 per day for 50 workers. The story does not end here. While they underpay the workers with cash, in their account books, these owners show that there are 70 workers who work with them (while in reality only 50 people work). This means they show their expenses in paying salaries to the workers as Rs 24,500 while in reality, the amount paid is just Rs 10,000 – an unaccountable profit of Rs 14,500. This is just for a day. If you calculate for one month, the owner is making an unaccounted profit of Rs 4,35,000. This is a common practice going on in various parts of the countries.

Now with the limit of Rs. 50,000 per week, the owners are forced to pay all their workers with cheques or drafts. This means every single penny paid as expenses to workers will be accountable and the practice of exploiting poor workers will stop. It also means that the steps taken by government has hit their unaccounted profits made at the expense of poor people very hard. This exactly is the reason why owners are frustrated and are opposing demonetization.

Kshitij Mohan