ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Industry : Unlearnt Lesson

The mindset of the country’s policy-makers may be changing, but painfully slowly. The government is, it would appear, at long last beginning to see that, unlike diamonds, commercial and industrial enterprises are not forever. A certain proportion of them will, for a variety of reasons, fail to make good or stay successful and an essential part of a legal and policy environment conducive to productivity, efficiency and growth is arrangements facilitating their quick exit. So indications that the government is finally moving to repeal the Sick Industries (Special Provisions) Act or SICA and wind up the Board for Industrial and Financial Reconstruction (BIFR) are to be welcomed. But then what is one to make of the union cabinet’s almost simultaneous decision to bring forward a Companies (Amendment) Bill to establish an insolvency fund, to be built out of contributions by companies based on their turnover, for rehabilitation of ‘sick’ companies? Rough calculations suggest that at the initially proposed rate of one-half of one per cent of turnover, the levy would net Rs 400 crore per annum which would rise to double that amount when the rate is later raised to 0.1 per cent as is apparently the intention.

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