Nirmala seeks more cash withdrawal

Commerce and Industry Minister Nirmala Sitharaman on Monday said that she will talk to the Ministry of Finance for increase in cash withdrawal limit for exporters, most of whom have suffered adverse impact on their businesses.

“They voiced the short term difficulties that they are facing. Majority of them felt they still had a segment of their activities (in cash),” she told reporters after a meeting with exporters. She said some of the labour intensive sectors demanded a withdrawal limit of Rs 5 lakh per week. The minister said that some exporters had mentioned that they did not have cash due to this “contraction”.

Due to paucity of cash, some of them preferred closing down the units partially. She said that some of them were also reducing the capacity of production from 100% to 30%-40%.

Exporters in labour intensive sectors like carpet, handicraft and handloom buy raw material and pay wages in cash to migrant workers. Due to the limitation of cash withdrawal of Rs 50,000 per week, not all payments are possibly being made, she said, adding “Carpet exporters are clearly saying that migrant and transient workers constitute a big chunk. So they felt payments to these workers are still not happening through bank accounts, so cash payments are important.” Exporters’ demand is “can this limit be increased to Rs 3 -4 lakh or up to Rs 5 lakh. They wanted larger weekly cash withdrawal ceiling and not Rs 50,000.” she said.

“Some companies have a weekly system of wages where workers seek payment in cash. Even though they have bank accounts, they are unwilling to accept direct payment to their banks largely because if the amount exceeds Rs 50,000, this would lead them to forfeit their subsidy benefits for BPL Account,” Ravi Sehgal, Senior Vice Chairman of EEPC India, said.