Gujarat board to aid sick units

SURAT, April 13: To deal with rampant sickness in several industrial units, the Gujarat Government has decided to revive an old proposal to ...

SURAT, April 13: To deal with rampant sickness in several industrial units, the Gujarat Government has decided to revive an old proposal to set up a state board on the lines of the Board for Industrial and Financial Reconstruction (BIFR) at the Centre. The announcement was made by Industries Minister Suresh Mehta while talking to mediapersons on Saturday. The former chief minister said the state government would create the necessary statutory mechanism to facilitate setting up of what he called the Gujarat Bureau of Industrial and Financial Restructuring.

Expressing concern over the growing number of sick units, the minister said that such a scheme was first mooted in the 1995 Industrial Policy, but it could not be implemented due to a variety of reasons. BIFR was set up by the Government of India under the Sick Companies Industrial Act (SICA) to decide on the revival or winding up of sick industrial units. However, it did not provide for a statutory mechanism at the state level to deal with sick unitswhich did not fall under the Act.

The Bharatiya Janata Party government here had introduced a scheme for the revival of non-BIFR and small scale sector units, providing for specific reliefs and incentives as part of the revival package. The decisions were to be taken by a state-level committee headed by the industries commissioner. However, the scheme failed to deal with sick units in the small scale sector.

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The scheme’s failure forced the Government to take up its comprehensive review and modify its main provisions so that it could play an effective role in combating sickness in the small scale sector. The new policy document of the Government observed that revival of sick units would not be possible without the active co-operation of financial institutions.So as to ensure this, the Government has now decided to implement the scheme with the full involvement and participation of banks and other financial institutions.

It would also take up this matter with the Government of India and the Reserve Bankof India to ensure that the fullest co-operation is received from all financial institutions for this purpose.

The policy document also observed that the only long term solution to tackle sickness in small scale units not covered under BIRF is to set up an effective statutory body at the state level. Those units which are not considered revivable should also be wound up without delay and the answer lies in the setting of GIFR, the document said. The announcement made by the industry minister on Saturday was in keeping with this view. As far as the sickness of textile mills is concerned, the minister said that past experience showed that neither nationalisation nor measures aimed at continued running of these mills through heavy doses of reliefs and concessions could ensure their revival.

“It is getting established now that nothing short of complete modernisation, often involving total replacement of the old machinery can make these units viable,” Mehta said.