Industrial Exit Red Herrings and Real Options

Industrial Exit: Red Herrings and Real Options JM THE failure so far to announce a policy on industrial exit is probably one of the most significant lacunae in government policy-making today. When the new industrial policy was first announced in July, and the July budget made provision for a National Renewal Fund, it was rumoured that high-level differences over the exit policy proposed in the draft document had prevented an early announcement of the policy in its entirety. Later, there was a promise to place such a policy before parliament in the winter session. During this session, parliament did pass an important amendment to the Sick Industrial Companies Act, enabling chronically sick public sector companies to be referred to the Board for Industrial and Financial Reconstruction (BIFR), but the exit policy itself was not revealed. However, since the memorandum attached to the finance minister's letter of intent to the IMF for the stand-by loan promises that ''a suitable framework for reducing barriers to exit'' will be for mulated by the time of the 1992-93 budget, some movement is widely expected on this front in February. But rumours continue to abound of sharp differences within government and the ruling party, and no clear indication has yet emerged of what the government's exit policy is likely to be.