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Mr. C. Rajagopalachari, in a letter to the press, dated 25th September, complains against what he calls “ill-informed criticism” by a section of the press which he insinuates, has “motives”. I am not aware of the allegations he seeks to answer, but am so amazed at the remarkable statements he makes in the course of his letter, regarding the fundamentals of the Khadi movement, that I think it necessary to draw public attention to them. Mr. Rajagopalachari is the de facto chief of the All India Spinners Association and is the virtual dictator of the khadi movement. His words are weighty utterances and cannot be lightly brushed aside as “ill-formed criticism”.

C RajagopalachariMr. Rajagopalachari says: “If only we had made khadi business so profitable from the private commercial point of view, our goal would have been already reached. There is enough selfishness and business interest in the country, at once to attract capital and energy into any really thriving business. Unfortunately, however khadi is not a business giving fat dividends”. Mr. Rajagopalachari regrets that the profits accruing from khadi are not yet sufficiently attractive: his goal is to be reached through ‘fat dividends’. The great progenitor of the khadi movement had promised the advent of Ram Raj if we would but adhere to his programme. His successor treats us now to the prospect of an Elysium of “fat dividends”.

We had dreamt a dream – of the dawn of freedom of the awakening of a people, of the quickening of dormant energies, of the springing up of a mighty organization to lead the onward march of civilization. The youth of India was called upon to renounce worldly prospects, to suffer physical discomforts to go into villages to educate and to organize. The charka signified a national revival. Khadi was the rallying call of the leader to dare and to achieve. After eight years of ceaseless endeavour, Mr. Rajagopalachari permits us a glimpse of the approaching “goal”: toiling spinners, sweating weavers, willing buyers, low costs, fixed prices, ready profits, quick return and ‘fat dividends’ – an el dorado where the khadi merchant rolls over heaps of rupees! Well, may one be tempted to exclaim, “Look here, on this picture and on this!”

Rationale of prices

In his anxiety to please “selfishness and business interests”, Mr. Rajagopalachari goes to the length of maintaining that at current prices khadi profits are “little over” an anna per rupee. He moreover, quotes “unimpeachable figures” to support his assertion. I would humbly submit that his figures are wrong and do not warrant his conclusion. To understand the argument, a little examination of the rationale of khadi prices is necessary. Khadi is a commodity whose raw material costs over a third of the value of the finished product.The raw material for this essentially cottage industry has to be bought at the competitive international market which is subject to frequent fluctuations dependent upon world conditions. Hence the production cost of khadi varies with the speculative changes in the commerce of the world.

The spread of the Boll Weevil disease, meteorological forecasts of rains or no rains in a certain corner of America, panicky reports of damages due to floods, adroit attempts by financiers to corner goods, industrial disputes, strikes and lock-outs, declarations of war or threatened conclusions of armistice between remote countries, these and similar causes have violent repercussions on the cotton market which, in turn, react upon the poor spinner at the cottage.This eminently unsatisfactory state of affairs was sought to be remedied two years ago by fixing permanently the sale price of khadi so as to permit a margin for the producer to enable him to build up a reserve fund which would be utilized to contract the fluctuations of the cotton market thereby ensuring steady conditions of work for the spinner. The average price of cotton was assumed at Rs. 300 per candy of 520 Ibs. And the sale prices of the varieties of the finished product were worked out so as to yield one anna per rupee for the producer for every turn over of the capital.

On the one hand the A.I.S.A. which held the monopoly of the retail sales throughout the country undertook to maintain the sale prices permanently at the agreed rates. On the other hand the khadi merchants for whom Mr. Rajagopalachari now pleads solemnly agreed in the presence of the Mahatma to co-operate and build up the reserve fund. It was no doubt an ambitious programme involving a thorough overhauling of the production machinery and a corporate organization of the producers. The private merchant, intent upon quick returns and wide margins of profit, would not easily agree to the scheme. But the A.I.S.A. undertook the task with eyes wide open.

No reserve fund built

How did the scheme work? After the fixation of khadi prices there was a phenomenal fall in the cotton market and for considerable period cotton sold at rock bottom prices. There was a margin, sometimes, of Rs. 80 for every candy of cotton purchase. On former occasions, when there were similar falls, khadi prices also naturally came down. But now, the A.I.S.A. had a scheme on hand and in accordance with it, it maintained the sale prices at the higher artificial level already fixed. The private merchants, however, did not keep to the terms of the agreement but appropriated to themselves the huge margin of unearned profit, instead of utilizing it to build up the reserve fund. The A.I.S.A. felt powerless to enforce the scheme and as a result, an artificial surplus created for specific purposes has been allowed to be misappropriated. The public has been taxed to fill in private coffers. If Mr. Rajagopalachari was unable to persuade “selfishness and business interest” to adhere to the scheme he should at least have done justice to the consumer by lowering the sale price of khadi. The khadi wearer is, after all, a poor person and deserves Mr. Rajagopalachari’s protection as much as the khadi merchant who is intent on “fat dividends”.

Let us examine Mr. Rajagopalachari’s “unimpeachable figures”. He assumes for the purpose of his calculation the price of cotton to be Rs. 282 per candy. But he does not tell us since when and for what length of period did cotton sell at Rs. 282. Even at the 282 market there is an unearned profit of Rs. 18 which Mr. Rajagopalachari seeks to ignore by using the phrase “little over”. A six percent margin on the mere purchase of raw material is not an item which any manufacturer would ignore. And for a long period, as I have already stated, the margin has been not 8 but 180. I would invite A.I.S.A. executives to calculate and tell the public the total amount yielded by this margin during the last two years, taking into consideration the actual cost price of the value of cotton purchased and consumed by every producer. That amount or rather that portion of that amount, which has gone into private pockets instead of to a reserve fund, represents the penalty which the public has paid for having indulged in the luxury of A.I.S.A. management of khadi affairs.

Mr. Rajagopalachari seeks to enlist public sympathy by cataloguing the many and various difficulties of khadi administration. He wants us to know and be impressed by the fact that he is running a really very huge and extensive organization in fact “spread over all the provinces in India”. People “conversant with the details of business can understand what it means”! Let the mere man, therefore, who is bound to be “ill- informed”, stand at a respectful distance and gape in wonder. May I however, take courage in both my hands and humbly suggest that almighty as the A.I.S.A. may be, and extensive in its sway, the profiteer leads it by the nose.

- Mr.S.Ramanathan, M.A., B.L., ex-member of the Khadi Service

(Revolt, 20 October 1929)

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