Sick units’ policy fails to enthuse investors

Ambika Sharma

Tribune News Service

Solan, November 20

The Congress government’s policy on sick units that was floated at the fag end of its tenure — days before the announcement of the model code of conduct on October 12 — has failed to enthuse investors.

The policy was approved by the state Cabinet on October 4 and notified on October 9.

The earlier proposal floated some weeks before had failed to find acceptance from some members and the issue was referred to a Cabinet sub-committee.

The earlier proposal was specially floated to favour steel units, the majority of which had closed down or were incurring losses worth crores.

But as these units figure in the negative list due to their high pollution index, the earlier policy had to be amended.

Investors opined that had the state government been serious about reviving sick units, an appropriate policy would have been introduced at least a year earlier.

With the central industrial package expiring in March 2010, there was little incentive for investors to stay put in Himachal.

There are many cases of investors shifting their high-value products to their sister concerns in states where the industrial package is operational.

This tendency was especially visible in the state’s industrial hub of Baddi-Barotiwala-Nalagarh (BBN) which houses 79 per cent of the state’s industry.

Scores of units had closed shop or had drastically scaled down their manufacturing operations after the expiry of the industrial package. The Revival of Sick Units Policy floated by the state government will be applicable till December 31, 2018 but investors are doubtful whether it would be implemented if the BJP comes to power in the state.

This delayed move by the Congress government has put a question mark on its very intent. Even the much-awaited new industrial policy and export policy were not announced by the Congress government despite undertaking consultancy studies worth crores by reputed firms.

Sanjay Khurana, former chairman, CII’s Himachal chapter, vouched for the sick units’ revival policy.

He said that with at least 10 per cent industrial units in BBN being under financial stress, such a policy would help revive their operations.

He said that key issues like adoption of insolvency and bankruptcy code as laid down by the Centre were significant as they would ensure that a sick unit’s statutory dues are known to a buyer before he bids for the unit.

Why it failed

• The policy was approved by the state Cabinet on October 4 and notified on October 9. It was introduced by the government at the fag end of its tennure
• The earlier proposal was specially floated to favour steel units, the majority of which had closed down or were incurring losses worth crores 
• Investors opined that had the state government been serious about reviving sick units, an appropriate policy would have been introduced at least a year earlier
• With the central industrial package expiring in March 2010, there was little incentive for investors to stay put in Himachal