Lesser role for MP State Industrial Dev Corporation

Will the Madhya Pradesh State Industrial Development Corporation go the MP State Transport Corporation way? Or, will it be a less dramatic change?

Although MP Chief Minister Shivraj Singh Chouhan has reportedly shot down the department of industry's proposal to close down its sinking arm Madhya Pradesh State Industrial Development Corporation (MPSIDC), the state government has planned to hand over the operations of the MPSIDC to the newly created Trade and Facilitation Corporation (TRIFAC).

Thus, the MPSIDC, according to an insider, is likely to be reduced to a cell after the launch of the new "Industrial, Investment and Employment Promotion Policy, 2006".

A Cabinet minister had recently told Business Standard that the state's finance department could not fund the corporation anymore.

The new policy draft has a provision to restructure the department by providing more teeth to the TRIFAC. However, unlike other states, the state does not have any facilitation Act, rules or regulation to run the TRIFAC smoothly.

There are plans to increase the corpus of the "Industrial Infrastructure Development Fund" to Rs 20 crore from the existing Rs 10 crore. This fund option had been mentioned in the Uma Bharti government's "Industrial Promotion Policy 2004".

In a recent meeting with senior department officials, Chouhan said the MPSIDC would not be closed down but it would be a tough task for the state government to bring it back into the black.

The corporation had disbursed loans of more than Rs 300 crore to various private organisations but failed to recover the outstanding amounts, now touching more than Rs 714 crore.

"The loans had been disbursed during 1999-2003 by the MPSIDC after obtaining funds from the IDBI (Rs 100 crore), Mumbai District Central Cooperative Bank (Rs 90 crore), Apex Bank Mumbai (Rs 55 crore) and Bombay Mercantile Bank (Rs 19 crore).

"These banks have obtained property attachment orders against the corporations from court," an insider in the MPSIDC, said adding, "if the government does not bail out the MPSIDC there is no option left but to close it down".

Despite stating that the MPSIDC is facing a severe financial strain, Managing Director Praveen Garg said: "The chief minister has assured us that the corporation will not be closed down at any cost."

Former Chief Minister Uma Bharti had launched a move against borrowers and the officials who are alleged to have sanctioned loans to benefit their industrialist friends. A first information report was also lodged with the state's economic offences wing.

However, even after two years nothing has happened except a few one-time settlement cases.

The state government has also planned to fund the TRIFAC block grants each year in proportion to the projected investment in the state.

The principal secretary, department of industries OP Rawat, was not available for comment, but according to insiders, the TRIFAC has not been given any legal powers. "A TRIFAC Act is mandatory if the government wants other departments to extend co-operation to it," an insider said.

The new policy draft also says the TRIFAC will play a facilitating role only while other departments will promote micro, small and medium enterprises. This indicates the state government has planned to either close down the MPSIDC or reduce it to a cell.