Monitor sops to industry

Industrial subsidies should be provided only if they result in substantial value addition or employment generation, the Planning Commission has recommended in its mid-term appraisal (MTA) of the Tenth Plan. The subsidies, it said, should be monitored to ensure they served their objectives.

The MTA recommended that the North East Industrial Policy should be extended to cover services, information technology, construction, health and tourism.

However, the real incentive in the Northeast was excise duty exemption, the MTA argued adding that the subsidy should result in substantial value addition or employment generation.

The MTA argued in favour of phasing out of the Textiles Upgradation Fund Scheme (TUFS) after March 31, 2007, as it could make exports vulnerable to barriers imposed by developed countries against subsidised products.

Subsidies, the Plan panel felt, should be provided only if they resulted in positive externalities""like environmentally sound practices""or assisted industries in geographically disadvantaged regions like the Northeast and Jammu and Kashmir.

The transport subsidy scheme, to facilitate export of goods, should be limited to Darjeeling, the Andaman and Nicobar Islands and Lakshwadeep Islands, as special packages for areas like the Northeast, Jammu and Kashmir and Sikkim already exist, it recommended.