Labour committee criticises textiles ministry on HHEC’s disinvestment

The committee noted that disinvestment of the corporation will jeopardise the interests of a large number of artisans, weavers and craftsmen

The ministry of textiles has come under severe criticism by the standing committee on labour on the issue of disinvestment of Handicrafts and Handloom Exports Corporation (HHEC).

The committee in its report on demand for grants submitted to the Parliament yesterday, noted that the disinvestment of the corporation will jeopardise the interests of a large number of artisans, weavers and craftsman generally from the weaker sections of the society.

The committee has also questioned the move itself on the back of the fact that the corporation has been earning profits since 1997-98. ‘‘The logic of selling such a profit making public sector undertaking is beyond the comprehension of the committee since it would in no way benefit the government,’’ the report said.

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The ministry of disinvestment had decided to study the possibility of disinvesting HHEC in 2002-03 and appointed ICRA Ltd as an advisor.

The committee reviewed the report by the agency in May 2003 and recommended that the entire shareholding of the corporation be disinvested to a strategic buyer through the competitive bidding route.

The ministry of textiles has also endorsed the views of the disinvestment ministry.

The committee criticised the textiles ministry for spreading rumours about the issue and attributed it to the dismal performance of the corporation on the export front. Revenue from export from handicrafts and handloom for HHEC declined from Rs 103.83 crore in 2002-03 to Rs 78.18 crore in 2004-05.

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It has recommended the ministry to check rumours on disinvestment among the foreign buyers to ensure that the financial position of the corporation does not suffer for want of fresh orders.

Further it has asked the ministry to take steps to strengthen the organisation and report to it within three months.

The committee has also come down heavily on the ministry for its handling of the restructuring of National Textile Corporation (NTC). It cast aspersions on whether the modernisation of 15 mills would be complete by 2007-08 as claimed by the ministry adding that a realistic time table for the process ought to be prepared by the ministry.

The committee has also recommended that ‘‘floating joint venture with the private sector for 29 mills (as per the BIFR scheme) should be the last option before the government as NTC itself has emerged from the graveyard of failed private mills.’’

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The corporation had raised Rs 2,500 crore last year from the sale of five mills in Mumbai and the committee was of the opinion that after the sale of mills in other urban centres NTC would have enough resources to modernise the 29 mills itself.