Monday, July 8, 2002, Chandigarh, India


M A I N   N E W S

Proactive industrial policy favoured
P. P. S. Gill
Tribune News Service

Chandigarh, July 7
The Punjab Chief Minister’s advisory committee on industrial growth and development of relevant infrastructure has recommended a proactive industrial policy and stressed on refurbishing government credibility and confidence-building among entrepreneurs to attract investment.

The committee, headed by former Chief Secretary, A. S. Chatha, in its 36-page recommendations for a new industrial policy has desired the creation of an efficient and cost-effective infrastructure, human resource development, positive policy environment and good governance to attract new enterprises and resuscitate the existing ones, particularly small and tiny units that are burdened with outdated technology and equipment and suffer from inadequate market linkages.

The recommendations are prefaced with a brief note on reasons for failure of industrial development in the state after the mid-eighties. It has apportioned a part of the blame to recession, economic slowdown and militancy, as also finding faults with the state financial institutions — the Punjab Financial Corporation (PFC) and the Punjab State Industrial Development Corporation (PSIDC).

Despite the financial constraints faced by Punjab and notwithstanding what the Disinvestment Commission has suggested in respect of public sector undertakings (PSUs), the report favours the revival and restructuring of the PFC and the PSIDC by improving their cash flow and profitability in the future interest of small and tiny units.

The report has recommended various ways to salvage the PFC and the PSIDC as well as upgradation of the existing units and helping new ones. The steps include introduction of a mechanism similar to the BIFR (Board for Industrial and Financial Reconstruction), exclusively for the state to cover such units that are not covered under this. Some states have done this, why not Punjab? Likewise, it wants SIDBI and the IDBI to share some of the financial burden of the states when loan and equity cases are decided.

The suggested industrial policy contains a string of ‘’incentives,’’ including payment of arrears of sanctioned incentives that were promised but not paid. The piled up arrears are to the tune of Rs 500 crore.

The suggested mode of payment is through state guaranteed and redeemable bonds, which should be marketable, so that eligible entrepreneurs can appropriate them for discharging their liabilities towards financial institutions and government departments or for raising loans. And entrepreneurs eligible for incentives by the cut-off date should continue to avail themselves the same for a prescribed duration. The corresponding recommendation is discontinuation of these incentives after the cut-off date but with some exceptions. These exceptions cover special projects involving an investment of Rs 100 crore and above, projects of pioneer nature with an investment of Rs 25 crore and above in a specified border belt up to 20 km from the international border and projects in information technology and biotechnology. It has recommended the deputation of department officers with entrepreneurs investing Rs 100 crore or more for quick clearance of formalities.

Punjab must ask the Centre to extend to the state the special package of fiscal and financial incentives, as available to J & K, since investment climate in its three border districts is no different from that of Jammu and Kashmir.

(To be concluded)

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