There is the problem of sickness in the small scale sector. It is a very major problem. The SIDBI has a number of schemes where we are improving their technology, where we are improving their marketing, improving their export performance and we are already trying to take out the level of sickness of the small scale units. But I do not know whether a body like BIFR for small scale industries will serve any purpose. In fact, the BIFR itself is under a re-think because the whole Sick Industries Act is under a re-think at the present moment.
The final point was in regard to Clause 45 which Shri Pandiyan has raised. I would only like to inform him that this is absolutely in accordance with the old provision. All that we are doing is replacing the words because we will have now a Chairman, as Managing Director. So, there is nothing which I am trying to create afresh or anew. This is in line with the provision which exists in banks and financial institutions. This is to prevent unnecessary harassment of the officials in case they have acted in good faith. Good faith, as you know, is a question which can always be challenged in a court of law. So, it does not completely bar the jurisdiction of the courts of law. So, I will suggest that in view of the all round support that this Bill has found, this Bill may now be passed.
MR. SPEAKER: There is one small clarification by Shri Narayan Datt Tiwari.
SHRI NARAYAN DATT TIWARI (NAINITAL): While I compliment the hon. Minister for bringing forward this Bill, I think it should have been done earlier. But while I compliment him for bringing this Bill to de-link the Small Industries Development Bank from the IDBI, to give it a more authority and to have its own functioning, I would generally like to say that the major problem with the small industries is not just the question of financing or project financing or operating capital from State financial corporations. The major problem is sickness. I am informed authoritatively that more than seven lakh small scale industrial units are sick or very sick.
According to my information, lakhs of units have been closed down. Earlier, the Reserve Bank had a scheme; rather it was the responsibility of the commercial banks to not only look into the sickness of the small scale sector at the bank level but also the banks had to look into the sickness problem of each and every unit, as per the laid down procedure. But recently the banks are looking into and taking more care of the bigger units and the heavy industrial units. The focus on small-scale industries is not there. The earlier focus is no longer there. The lead bank scheme has more or less slowed down. The Banking Committees do not meet at the State level. The Reserve Bank has to convene a meeting of the bankers to discuss all these problems of small-scale industries at the State level. The District Industries Centres are non-functional in many districts of the country. The question of meeting the problem of sickness is having a very alarming dimension in many parts of the country.
I think, it would not be too late if some sort of a project is formulated by which SIDBI interacts with the banks to come to the succour of the small-scale industries which are closing down or have been closed down. Therefore, it is mostly in the States that the Financial Corporations provide help in setting up new units or helping earlier units. I do not have here in the report any account of how the State Financial Corporations are functioning because there is no monitoring that way. SIDBI does monitor and help the State Financial Corporations. But have we gone into the structuring of the different State Financial Corporations? They had a very important meeting a few years ago in Kerala where they had given their suggestions to the Financial Corporations. The Chairmen of the Financial Corporations throughout the country met in Kerala and gave certain suggestions. I think, with the more autonomous SIDBI, operations of the State Financial Corporations will improve. But what is their report? What advice has the SIDBI given to the Financial Corporations?
I find that the sanctions to the State Financial Corporations are Rs. 808 crore and disbursement is only Rs. 340 crore. In 1997-98, for assistance for leasing of the State Financial Corporations, the sanction was Rs. 38 crore, but disbursement was zero. Then, again the disbursement to the small-scale industrial Corporations is satisfactory.
Regarding the gap between sanctions and disbursements, I think, the SIDBI will be well-advised to look into these things.
Sir, I will request you to give me some time later on to say all these things.
Then, what about job creation? Now, the Government set up a target that one crore jobs will be created every year.
How will these ten million jobs be created every year? What would be the role of the banks and specially of the small industries in this regard?
While the SIDBI made a good beginning by itself, it should be a part of the overall thrust of the Government and these new jobs are created through small industries. Already there is a large scale retrenchment after the closing down of industries. Semi-skilled and unskilled people are moving around the country who are jobless. Therefore, we must project a plan for it and SIDBI's role should be very specifically mentioned. I would like to know about the steps that are being taken, well, in the field of development and small scale sectors. What are the State-wise figures of sick units and small scale industries round the country? What steps have been taken? Have we held any meeting of the Industries Ministers or that of the Small Scale Ministers or of the Chief Ministers in this regard by which we can come to the succour of the small scale industries which are getting sicker and sicker and which are closing down?
I was told that this Bill would be taken up tomorrow. As soon as I got a phone call I came here, a little late. I would have spoken at length. But now, because it is time only to seek clarification, I conclude.
Sir, I am very thankful to you for having allowed me this time to seek clarifications. I hope that the hon. Minister will suitably respond to my queries. He might like to give any supplementary information in this context.
THE MINISTER OF FINANCE (SHRI YASHWANT SINHA): Sir, the hon. Member, Shri Narayan Datt Tiwari has raised some very important issues and I would certainly like to respond to them to the best of my ability. The problem of sickness is something which had been raised earlier and I have responded to that. But I will respond in some greater detail.
The total number of sick units in the small scale sector at the end of March, 1997 was 2,35,032. It came down marginally by March, 1998 to 2,21,536. Now I am not reporting this as a matter of great satisfaction. But these are statistics. Now the SIDBI has a special programme as directed by the Reserve Bank of India. Hon. Members will appreciate that one of the major reasons for sickness in the small scale sector has traditionally been lack of timely and adequate finance - especially working capital finance. SIDBI is giving project assistance and re-financing for project assistance. Working capital is the responsibility of the other lending institutions, especially the banks. Recognising this that this is the main reason for sickness, SIDBI has decided to create an exclusive re-finance scheme for rehabilitation of sick units under which assistance is provided to potentially viable SSI units, cottage and village industries and tiny industries with a proper rehabilitation package.
This is something which is already in operation and SIDBI is at it. I must confess that I am also concerned at this situation. Therefore, I have personally gone out, Mr. Speaker, Sir, and attended meetings of State-level Bankers' Committees in some of the States wherever I find time so that we could look at how the banks are financing the small scale and tiny units.
I am taking personal interest in that matter and I have gone to some of the more backward States to ensure this and in future, between my colleagues in the Ministry and I, we will multiply these visits so that we keep a check or some kind of surveillance and monitoring on the functioning of the banks also.
Now, the other issue which was raised by Shri Tiwari was in regard to the functioning of the State Finance Corporations. The State Finance Corporations, unfortunately, have fallen upon bad days in many States. Their net worth has been eroded. In many cases they are not in a position to re-finance and, therefore, this whole matter of the restructuring of the State Finance Corporations is also under consideration.
I hope that very soon, may be by the next Session of Parliament, we will be coming back to the House with a restructuring proposal of the State Finance Corporations.
But Sir, the House will appreciate that as far as the State Finance Corporations are concerned, we will have to take the State Governments with us. Whatever we wish to do, we must have the support of the State Governments. So, that is the direction in which we are working.
Now, Shri Tiwari sought another clarification and that was in respect of the job creation, the ten million jobs that we have promised to create in this country every year. I would like to say that this is not wrestling in the dark. We have a definite plan of action for creation of these job opportunities, and the small-scale sector, the village and rural industries, the tiny sector will play a very important role in the creation of these newer job opportunities. We already have , the SIDBI has a number of schemes to help our small-scale and tiny industries. They are of all kinds. I can take Project Finance Schemes, Venture Capital Schemes. In fact, Members will recall that recently, we have set up a Rs. 100 crore Venture Capital Fund, where SIDBI's contribution has also been made, for development of the information technology industry in this country. Venture capital is going to assume an increasingly important role in the development of industries, especially small-scale industries. We want to bring in a new generation of entrepreneurship in this country. So, it is very important that we create our venture capital funds.
Then, we have schemes for activities relating to marketing of SSI products, assistance for development of industrial infrastructure, equipment finance schemes, integrated infrastructure development schemes, scheme of assistance for ISO 9000 certification, foreign currency term loans, schemes for pre-shipment and credit financing. Then, we have technology development, modernisation, technology upgradation fund scheme for domestic factoring, direct discounting of bills, scheme of bills. So, a number of schemes have been prepared by SIDBI to suit requirements in each and every sector. That is why, I ventured, Sir, to say that in the nine years of its existence, SIDBI has played a very important role. They have met the Eighth Plan target of financing of the small-scale sector and I am quite confident that they will be able to meet the Ninth Plan target of financing of the small-scale sector also.
MR. SPEAKER: The question is:
"That the Bill to amend the Small Industries Development Bank of India Act, 1989, be taken into consideration."
The motion was adopted.
MR. SPEAKER: The House will now take up clause-by-clause consideration of the Bill.
The question is:
"That clauses 2 to 25 stand part of the Bill."
The motion was adopted.
Clauses 2 to 25 were added to the Bill.
Clause 1, the Enacting Formula and the Title were added to the Bill.
SHRI YASHWANT SINHA: Sir, I beg to move:
"That the Bill be passed."
MR. SPEAKER: The question is:
"That the Bill be passed."
The motion was adopted.
The House now stands adjurned to meet tomorrow at 11.00 a.m.
The Lok Sabha then adjourned till Eleven of the Clock on
Thursday, December 23, 1999/Pausa 2, 1921 (Saka)