Who Disowns the Working Class?

A Worker’s Co-operative in Crisis

K.M.Seethi
(Reader, School of International Relations and Politics
Mahatma Gandhi University,
Kottayam, Kerala, India)

e-Monograph Series -7
Web-India-Books
2006
WIB e-Monograph Series 2006/7

Who Disowns the Working Class?

A Worker’s Co-operative in Crisis

K.M.Seethi

The 36-year old Kerala Dinesh Beedi (KDB), one of the prestigious workers’
cooperatives in India (and a role model for such cooperative venture), has been
struggling hard, over the last several months, to overcome the worst crisis in its
history. The survival of this working class cooperative is apparently doubtful
given the complexities it faces today. For the CPI (M)-led Left Democratic Front
(LDF) in Kerala, the challenge is formidable at least for two reasons. First, the
KDB is its own brainchild and the management is still controlled by the CPI (M).
Secondly, the KDB being one of the important traditional industries in the
Kannur district, the current impasse would have tremendous implications for the
forthcoming bye-elections in Kerala. Incidentally, the two constituencies where
by-elections have been scheduled are located in the very same district where the
working class anxiety is snowballing everyday on the question of KDB’s
survival.

Kannur has been the heartland of left politics and working class struggles in
Kerala. This was the place where the undivided Communist Party could
effectively mobilise the working class against all forces who stood in the way of
their interests. Paradoxically, the leaders of the same working class party – CPI
(M) - who had long been the vanguard of the downtrodden (and protecting and
giving patronage to the traditional industries in the district), are instrumental in
undermining them (if not destroying them). The experience of KDB is so glaring
here. The shift of emphasis towards neoliberal programmes and strategies is

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conspicuous in the priorities given by the CPI (M) today. They ranged from the
hi-tech IT park, amusement water theme facilities, to AC auditorium, super
speciality hospitals, resorts, and hypermarket. Traditional industries, where
hundreds of thousands of workers are reeling under pressure (and many on the
verge of collapse), hardly get any attention. One cannot see this as an aberration,
but to be understood in the light/and as part of the emerging programmes and
strategies of the CPI (M). Insofar as Kannur happens to be a place where working
class consciousness is deep-rooted, this change of attitude and perception reflects
the prevailing party ideology and programme, unfolding a new elitism within it.

Kannur saw many vicissitudes of working class struggles in the past. This
Communist fortress was instrumental in transforming labour as a social process
(from labour as a mere means of livelihood). In fact, working class consciousness
developed in the region with the formation of the Congress Socialist Party in the
1930s. Class oriented trade unionism began alongside this. The workers as such
sustained a nationalist spirit and anti-imperialist fervour. That was the period
when workers were being ruthlessly exploited by the nascent industrialists and
feudal landlords. What they earned from their labour was mere pittance - too
insufficient to make both ends meet. Beedi workers had to bear the brunt of this
superexploitation. It was in the background of these difficulties and tensions that
the workers were able to organize themselves. The first of such effort was the
formation the Beedi Workers Union way back in 1935. This was the time when a
good majority of the trade union workers were active in the Indian National
Congress. Inevitably, they were a part of the nationalist movement. Since then
the Beedi workers had not only fought for their survival (and to get a reasonable
wage for their labour) but became more concerned about other social and
political issues as well. The working class struggles and resistance in Kannur
(which the Communists always held in highest esteem) were mainly led by these
Beedi workers during the last four decades. Over years, the beedi workers’ class-

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consciousness expanded beyond their realm to encompass other critical

questions of the time. KDB’s genesis in the 1960s was, therefore, a landmark in
the history of Kerala.

The passing of the Beedi and Cigar Workers’ Conditions of Employment Act in
1966 by the Union government was certainly a milestone in the working class
struggles in India. However, in the wake of this, many Beedi manufacturers
including Ganesh Beedi left the state rendering thousands of workers jobless.
Kannur alone witnessed more than 10,000 workers becoming unemployed. The
Communist Party and its workers could overcome this crisis by mobilizing Rs.1
from each unemployed worker to form a workers’ cooperative society called
Kerala Dinesh Beedi on 15 February 1969. The Communist government of Kerala
led by EMS Nampoothiripad invested Rs. 1.35 million as share capital and
sanctioned a working capital loan of Rs. 700,000. It was a peculiar situation of
workers themselves becoming the owners of the cooperative. The major aim of
the workers cooperative society was to give employment to the thousands of
workers who became jobless during this time. The KDB thus became a model
cooperative enterprise, which provided the workers with confidence, courage
and self-respect. The KDB, over years, had grown into a major cooperative
venture employing nearly 42,000 workers. Its turn over had crossed Rs. 700
million in the 1990s. Initially, a worker used to get less than Rs.4 for rolling 1000
beedis a day. It had increased to Rs.78.50 for rolling 900 beedis a day, which
means a worker could earn up to Rs.2000 a month. Besides, the workers enjoyed
holidays, leaves, pension benefits, maternity leaves, bonus etc. as in any other
public enterprise. KDB has been operating as a federated structure with 22
primary societies spread across Kannur, Kasargode and Kozhikode districts,
which operated 200 beedi centres. It has a central management unit that carries
on raw materials purchase, marketing and financial services.

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Much of the problems the KDB faces today started in the 1990s when it decided
to experiment with diversification. It was found necessary when tobacco
industry began to decline. The crisis mounted as low-cost filter cigarettes became
popular and health awareness campaign against smoking was well underway.
The beedi industry, on the whole, became non-profitable at this time. The
management thus conducted a preliminary survey to explore the possibilities of
diversification particularly towards agro-processing. The plan was to shift 25 per
cent for the workforce towards activities associated with diversification over the
next decade. As such, KDB had invested a good amount of its financial reserve to
train workers in the production of curry powders, pickles etc. During this time a
paper presented by Richard Franke, Pyaralal Raghavan and Thomas Isaac came
as an impetus for the speedy implementation of diversification. It said that “KDB
is attempting a humane and democratic shift away from tobacco while
maintaining the incomes of its workers.” Thus, in the second half of the 1990s,
the KDB started production of pickles and curry powders. This was the period
when the LDF-led government in Kerala initiated the People’s Plan Campaign
for decentralization and local level development. The time was obviously
conducive for a good market strategy at the grassroot level. Unfortunately,
neither the KDB management nor the CPI (M)-led working class popularized the
products of this workers’ cooperative. As a result, pickles and curry powders got
accumulated in the godowns of the cooperatives even as beedis worth Rs. 25
crore did not find any customers. In fact, the KDB had to face stiff competition
from diverse sources in the era of globalisation and, obviously, it lacked an
effective market strategy to popularize its products. When the People’s Plan
Campaign was well underway, the CPI (M) comrades had a great opportunity to
sustain a good market for products locally manufactured. But they had little
regard for the ‘working class-produced’ consumer items. On the other hand,
many multinational products and new brand names found new takers in the
state. As such, the claim of the LDF government that the People’s Plan was an

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effective strategy to check the onslaught of globalisation turned out to be

hypocritical and a betrayal of its own cause.

Surprisingly, when the KDB was moving from one crisis to another, the CPI (M)
comrades, who were supposed to protect the interest of beedi workers, switched
over to private financial investments elsewhere. Overlooking the future of the
KDB, the party leadership started new ventures such as AC auditorium, IT park,
hyper market, amusement park, resorts, super speciality hospitals etc. – all came
to be seen as a major shift of the party’s priorities even as the workers in Dinesh
were moving from poverty to starvation. When diversification went wrong (or
did not achieve its desired objectives), KDB began to decline. The capital that
could have been used for workers’ interests with strict planning and monitoring
was bound to fall into the hi-tech basket. As the survival of the KDB was very
much in doubt, the management decided to introduce austerity measures such as
job cuts, freeze on bonus and gratuity etc. The management sought the reduction
of the production cost considerably by cutting working days to three a week
(from six). The workers have to forget the days when they were rolling as many
as 900 beedis a day and thus reducing it to half of what they did in a year. The
number of workers during this time has come down to17, 000 and the job cuts
are a common feature now. According to the workers, the party leadership is
only interested in amusement parks, super speciality hospitals and resorts and
has very little interest in saving the 36-year old cooperative society. Disgruntled
by the prevailing confusion and tensions, the workers of the KDB recently took
to agitational path and blockaded the society’s headquarters in Kannur – a rare
event in party- controlled institutions. Yet, both the management and the party
leadership remain unmoved putting the blame on globalisation, increased health
awareness and stiff competition from low-cost cigarettes. What the management
ultimately agreed to could be a 5 per cent relaxation to its earlier decision to cut
50 per cent productivity. The chairman of the KDB is still confident that even if

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the society is able to bring back at least 20 per cent of its customers, the crisis can
effectively be got through.

There may be ethical questions about sustaining a tobacco industry in the current
scenario of increased health awareness across the world. Yet, the CPI (M) cannot
disown this worker’s cooperative on the strength of this argument alone. If
diversification is the potential option, that can still be tried out provided the
thousands of working class families in the state, at least, buy and popularize
Dinesh brand products, instead of pushing them to run after MNC’s brand
names. The CPI (M) has now a formidable task before it. If it is seriously
concerned about rescuing, at least, a few traditional industries in the state, like
KDB, it should ensure a sustainable market in the state for their products, which
is not at all a difficult thing in the present scenario.