The Centres bid to revive the sick mills of the National Textile Corporation (NTC) has received a setback with the governments of Maharashtra, Madhya Pradesh and Rajasthan refusing the textiles ministrys latest offer. The sick mills are located in these states.
Textiles minister R L Jalappa had recently offered these sick NTC mills to the states saying that the Centre would give the mills to the state governments, including land and properties, without charging anything and waive the loans totaling Rs 4,000 crore. The ministry was even willing to write off the voluntary retirement scheme (VRS) amount paid to workers.
The ministry also offered to pay the statutory dues amounting to about Rs 122 crore to the employees. The government was, however, unwilling to bear the burden of loan and interest liabilities extended by the banking sector.
Also Read
While these three states have refused the offer, no concrete response has come from the other state governments to whom the offer was made. The proposal will hence not be taken to cabinet.
A government release puts the total net loss suffered by the mills as on 30.06.97 at Rs 4630 crore.
The idea behind the offer was that the state governments would take over the mills without any burden.
The official confusion on the issue of reviving these NTC mills dates back to the original revival plan cleared in 1995.
This package involved modernisation of 79 mills at a cost of Rs 2005.72 crore, restructuring 36 unviable mills into 18 mills by merger and covering 32,900 employees under VRS. The entire funding was proposed to be made out of the sale of surplus land and building available with the NTC mills.
The plan was however dropped soon after Jalappa took over. One, the states primarily Maharashtra (from where 80 per cent of the proceeds were to accrue) was unwilling to allow the use of money raised from sale of mills in Maharashtra for revival of mills located elsewhere.
Following this, the ministry and NTC came up with an alternate plan. This plan suggested that 70 mills with a total workforce of around 67,000 should be closed and the remaining 50 should be revived at a cost of around Rs 1,700 crore. It also suggested an enhanced VRS package.
The finance ministry went a step further and suggested that 107 out of a total of 120 mills be closed without an enhanced VRS package. This was met with stiff opposition in Parliament and has now apparently been abandoned by the ministry.