BANKING TRADE AND COMMERCE

STATE AID TO INDUSTRIES

State-Aid to Industries: With a view to encouraging development of small-scale and cottage industries the Government of Maharashtra implements some schemes through the Industries Department. The department gives financial assistance to these industries under various schemes besides the State-Aid to Industries Rules of 1935. Loans are granted to industries for (1) construction of buildings, godowns, warehouses, wells, tanks, etc., (2) purchase of land for buildings, (3) purchase and erection of plant and machinery, (4) purchase of raw materials and (5) use as working capital.

Maharashtra State-Aid to Industries Act of 1960: Various other schemes were in operation in Ahmadnagar district during the last decade under which financial assistance was rendered to individuals and their co-operatives. In 1960, the Government of Maharashtra passed the Maharashtra State-Aid to Industries Act to regulate grant of loans to small-scale and cottage industries in the State. A loan granted under the Act is repayable by instalments together with interest from the date of actual advance of the loan.

Under the provisions of this Act loans are advanced through the Directorate of Industries as well as the Zilla Parishad. The Directorate of Industries sponsors the grant of such loans through the State Bank of India, the Bank of Maharashtra and the Maharashtra State Financial Corporation. It also arranges for credit arrangements with the National Small Industries Corporation for purchase of machinery. The Zilla Parishad authorities also grant loans upto a certain limit for the development of small-scale and cottage industries. The Zilla Parishad is expected to take special care of the industries in the co-operative sector. Financial assistance from the Zilla Parishad takes the form of loans as well as subsidy. Formerly there was a ceiling of Rs. 9,000 for grant of assistance for construction of godown to a single applicant by the Zilla Parishad authorities. The ceiling of Rs. 9,000 was subsequently raised to Rs. 25,000. About one-third of the amount is given as subsidy and two-thirds as loan.

The following statement shows the financial aid given to different industrial co-operative societies for the construction of godowns by the Zilla Parishad:—

The following statement shows the amount of loans and subsidy given to different societies in Ahmadnagar district:—

Besides this, Government also provides management subsidy through Zilla Parishad under the State-Aid to Industries Act. Under the Act, Zilla Parishad can give a maximum of Rs. 600 as management subsidy every year to each society. The following statement shows the names of the institutions and the amount received by them under the Act in the district:—

Maharashtra State-Aid to Industries Rules, 1961: The Government of Maharashtra enacted the Maharashtra State-Aid to Industries Rules, 1961, with a view to granting loans to small-scale and cottage industries for the following purposes:—

(1) purchase of land required for an industry;

(2) construction of buildings or work-sheds, godowns, warehouses, wells, etc.;

(3) purchase of tools, equipment, appliances, plant and machinery;

(4) erection of plant and machinery;

(5) purchase of raw materials or for use as working capital otherwise than as cash credit; and

(6) tiding over initial difficulties or bottle-necks.

Under the Rules the following authorities were empowered to grant loans up to the amount specified against each of them as given below:—

The relevant particulars regarding financial aid to small-scale industries under the Rules in Ahmadnagar district are furnished below:—

(1) Loans under the State-Aid to Industries Rules.—The loans under State-Aid to Industries Rules are given under Government guarantee policy through the Bank of Maharashtra. On the basis of the recommendation of the Industries Officer, the Bank of Maharashtra sanctions the loan and pays the amount to the applicant.

The State Bank of India and the Maharashtra State Financial Corporation too sanction and disburse the loans to the applicants on the basis of the technical report and recommendations of the Industries Officer.

In table No. 14 are given the statistics relating to the number of industrial units recommended by the Industries Officer, Ahmadnagar, and the amount sanctioned and disbursed to them during the period from 1965-66 to 1969-70 by the Bank of Maharashtra, the State Bank of India and the Maharashtra State Financial Corporation.

TABLE No. 14—LOANS UNDER STATE-AID TO INDUSTRIES RULES

N. A.=Not available.

N. A. =Not available.

(2) Hire Purchase Scheme.—The hire purchase scheme aims at providing machinery to small and medium industrialists who cannot afford to raise the necessary funds. Under the scheme the applicant gets the machinery and equipment on instalment basis. After receipt of the application the Industries Officer is required to make himself sure of the feasibility of the proposal by investigating the matter. After being satisfied about the feasibility of the same the Industries Officer recommends the grant of loan for machinery. On the strength of this recommendation the Industrial Finance Corporation grants loans for supply of machinery. Seven units in the district received loans worth Rs. 73,143 in 1966-67. The number of units receiving loans stood at six in 1967-68 and seven in 1968-69 which received an amount of Rs. 66,700 in 1967-68 and Rs. 57,813 in 1968-69.

(3) Subsidy on consumption of electric power.—In order to reduce the cost of production of the articles manufactured by small-scale industries, Government has started giving subsidy on consumption of electric power. Those registered with the Industries Officer, Ahmad-nagar, as small-scale industries and also those who have been allowed electric registration number are eligible to avail of this facility. These units are paid the subsidy quarterly. In Ahmadnagar district subsidy amounting to Rs. 14,082 was given to small-scale industries in 1965-66, while the amount for the years 1966-67, 1967-68, 1968-69 and 1969-70 amounted to Rs. 15,002, Rs. 14,848, Rs. 14,770 and Rs. 11,704, respectively.

(4) Loans to affected goldsmiths: Due to the enforcement of the Gold Control Rules, many goldsmiths were rendered jobless. Government therefore decided to give them immediate help in the form of loans for their rehabilitation. The loans were primarily meant for enabling the jobless goldsmiths to start small industries and business. The loans were disbursed through the Zilla Parishad and the Industries Officer, Ahmadnagar. The amount of loans given to goldsmiths in 1965-66 for industries and business amounted to Rs. 46,710 and Rs. 8,704, respectively. In the year 1967-68 loans amounting to Rs. 4,800 were granted for the establishment of industries.

Besides, financial assistance to cottage and village industries is also granted under the following four schemes:—

(1) Financial assistance is granted to (i) deserving bonafide craftsmen who have received training in the peripatetic school or Government-recognised technical institute; (ii) trained bona fide craftsmen who are already in some business, industry or trade; and (iii) deserving individual hereditary artisans who are not trained.

Under this scheme financial assistance up to Rs. 2,000 (Rs. 1,000 for tools and Rs. 1,000 for working capital) can be granted to each artisan If two or more persons apply for assistance for a joint undertaking, a maximum of Rs. 6,000 can be given. In case of trained artisans, 25 per cent of the amount can be granted as subsidy and 75 per cent as loans bearing interest at 4½ per cent and repayable in five years in equal monthly instalments.

Central co-operative societies having at least one-third of their members as bonafide craftsmen or persons working in cottage industries, can be granted financial assistance up to Rs. 5,000 for the purchase of tools and equipment, of which an amount up to 50 per cent can be treated as subsidy.

(2) Financial assistance up to Rs. 2,000 can be granted to backward class artisans for the purchase of tools and equipment, under terms and conditions as given below:—(i) If the backward class artisan is a trained one, the assistance is free of interest. If he is not trained, half the amount of loan that is granted, is treated as free of interest. (ii) Industrial co-operative societies of backward class artisans are also eligible for the grant of loans and subsidies as in the case of other industrial co-operative societies. Concession in interest is given to the society if its members are trained.

(3) Under the scheme of grant of assistance to educated unemployed to start or develop cottage industries financial assistance in the form of subsidy and loan can be granted up to Rs. 3,000 to educated unemployed persons who have studied up to S. S. C. examination. About 25 per cent of the total financial assistance can be treated as subsidy in deserving cases and the remaining amount is treated as loan carrying interest of 4½ per cent. The loan is repayable in five years in equal monthly instalments. Security in the form of one and two personal sureties or the mortgage of immovable property is required under the scheme.

(4) The scheme for grant of Haskell or nutan ghanis on loan-cum-subsidy basis is meant to induce Telis to use improved types of ghanis in preference to old ones. The cost of ghani is treated as interest-free Government loan to be repaid by the Teli in monthly instalments of Rs. 5, the remaining half being treated as Government subsidy.

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