Govt Should Allow Recycling Of Assets

The new government should allow recycling of assets if a sick industrial unit is heading for a shutdown, the Federation of Indian Chambers of Commerce and Industry said yesterday.

Speaking at a press conference here, Ficci president K K Modi said that at present closing of a sick unit is termed illegal. When a unit is sick and obsolete, it should be allowed to close down after its workers are adequately compensated and the assets recycled for engaging them in some other activity, he added.

Modi also said that banks non-performing assets would increase due to dual control of banking from the Reserve Bank of India and the Union government because of direct lending.

 

To avoid South-East Asian kind of financial crisis, the banking sector should only heed the directives of the Central bank and not that of the government, he said.

Making a case for a `open lid policy on the insurance sector, he said the entire sector should be opened for the Indian and foreign private participants.

Like in telecom sector, new joint venture companies should be allowed to be formed with Indian companies having a majority stake, he said. Modi said reforms and restructuring of banks and financial institutions were of utmost importance to help corporates become competitive.

and to adjust to the World Trade Organisations reforms schedule which will become a reality very soon.

He emphasised the need for a trade development finance corporation (TDFC) for trade promotion and availability of finance at international rates of interests.

TDFC should be an autonomous organisation with separate earmarked fund of us dollars two billion drawn from foreign exchange reserves, borrowings from the foreign money markets and credit line from multilateral funding agencies, Modi said.

All transactions, lending and borrowing should be in foreign exchange so that only the exim business of India draws on TDFC facilities, he said, adding that funds from the corporation should be available to large, medium and small business for purposes of working capital and R&D imports.