Sickness in Ssi Sector Is Attributed to a Number of Factors Like Inefficiency

1 January 2017

Sickness in SSI sector is attributed to a number of factors like inefficiency in management, over ambitious projects, dispute among partners and non-availability of credit which is one of the major factors responsible for rendering SSI units sick. Government of India has taken various measures from time to time to detect sickness at the incipient stage and rehabilitation of sick units in the small scale sector. Nayak Committee set up by the Reserve Bank of India in 1991 dealing with aspects of adequacy and timeliness of credit to SSIs had gone into the issue of sickness in detail.

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Reserve Bank of India has taken action on its recommendations which relate to modified definition of sick SSI units, reduced rate of interest for rehabilitation, prompt viability studies/nursing programmes of identified sick units, setting up of cells at important regional centres and Head Office to deal with sick industrial units and provision of expert staff, including technical personnel to look into technical aspects. RBI is also advising its officers from time to time to activate State Level Inter-Institutional Committee.

The other main decisions such as: to set up Sub-Committee of SLIIC in all the States/ UTs, to invite SSI Entrepreneurs, Bankers and other concerned Government Departments to discuss and arrive at the rehabilitation package. meeting of Sub-Committee to be held every two months and that of SLIIC every quarter, to set up district level committee of SLIIC in districts having SSI concentration, have been conveyed to all State Governments for implementation.

Though Budget 1998-99 does not spell out measures or revival of sick units directly, there are measures announced in the Budget aimed at the overall growth of SSI sector which, inter-alia, will be instrumental in combating the incidence of sickness. It is a fact that inadequacy and delay in credit to SSI sector ultimately renders the SSI units sick.

There is erosion in the net worth due to accumulated losses to the extent of minimum 50% of peak net worth during the previous accounting year and 3. The unit has been in commercial production for at least three years. SLIICs should be converted into Statutory Bodies under a special Statute and given adequate statutory and administrative powers to enforce their decision on bankers and financial institutions and other agencies concerned with the rehabilitation of potentially viable SSI units. – Branches/benches of SLIICs could be established in Districts having large concentration of SSIs.

It is reckoned that as of today there are more than 2 lakhs sick units with an outstanding bank credit of over Rs 7000 crore nearly 29000 units are added to sick list every year. It seems that the deterioration of the sick industries appears to be faster than the growth of sick industries. Industrial sickness especially in small-scale Industry has been always a demerit for the Indian economy, because more and more industries like – cotton, Jute, Sugar, Textile small steel and engineering industries are being affected by this sickness problem.

Loss making industries, both in the private sector and public sector are contributing for the downfall of industrial economy. There has been an increase in industrial sickness, both in the large and small sectors, in India. By consoling that this is, to some extent, a corollary of industrial growth, one shall not belittle the seriousness of the problem. Industrial sickness affects not only the owners, employees and creditors but also causes wastage of national resources and social unrest.

It is, therefore, considered very much essential to devise suitable measures for dealing with sick units as well as to make suitable arrangements for detecting symptoms of industrial sickness at an early stage so as to take measures to prevent sickness. The progress of industrial sickness has been highlighted from the period before Independence to the present prevailing condition. The Rehabilitation given to sick industrial companies is not the answer and solution for them.

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