BANKING TRADE AND COMMERCE

FINANCIAL ASSISTANCE TO SMALL SCALE AND COTTAGE INDUSTRIES

With a view to implementing the recommendations of the All India Small Scale Industries Board, the Government of India established a Small Scale Industries Section in the Department of Industries. On the advice of the Board following definition of "a Small Scale Unit" was accepted by the Board:―

"A Small Scale Unit is an industrial unit employing less than fifty persons (where power is used) or less than hundred persons (where power is not used) and having a capital of not more than five lakhs of rupees."

In order to help such small-scale establishments and cottage industries Government is granting them financial assistance under the State-aid to Small-scale and Cottage Industries Rules, 1935. This scheme is mainly intended to assist those units which cannot ordinarily secure assistance either from the Industrial Finance Corporation or from the Maharashtra State Financial Corporation. Under the scheme loans are given to artisans for the purchase of tools and equipment and also to serve as working capital. These loans are repayable in fifty monthly instalments, and bear a 4½ per cent, rate of interest.

The general backwardness of the district and particularly of the industrial sector of it necessitates a grant of substantial financial help to the small and big industries of the district for their revival and growth. Under the State-aid to Industries Rules, 1935, some assistance was given to small-scale and cottage industries in Kolaba district since the inception of the scheme in 1935. A major portion of the assistance was given to the industry of transportation of goods by sea, as that forms the most important industry of this coastal district. The loans were given in all the cases save one for the purchase of raw materials. The rate of interest charged was 5½ per cent compound interest in all the cases. However, the duration for the repayment of loans was not the same in all cases as could be seen from table Number 15. The loan was to be repaid either in quarterly or monthly instalments. In some cases, the instalments were annual.

TABLE No. 15

STATEMENT SHOWING THE PARTICULARS OF LOANS DISTRIBUTED IN KOLABA DISTRICT FROM THE INCEPTION OF SAI SCHEME (1935 TO 1955).

State-Aid to Small-Scale Industries.

In order to develop cottage and small-scale industries, the then Government of Bombay adopted a liberal policy throughout the post-war period. The Second Five-Year Plan accorded full support to this policy. To implement this policy the Government established a separate department known as the Department of Industrial Co-operatives and Village Industries. The Department worked out following schemes for giving financial assistance to cottage and village industries and has made considerable progress in meeting the financial demands of many artisans and cooperatives.

(i) Under the scheme for grant of loans and subsidies to educated unemployed persons and bona fide craftsmen for purchase of tools and equipment financial assistance up to Rs. 3,000 can be sanctioned to educated unemployed persons and financial assistance up to Rs. 2,000 to trained and hereditary artisans in the form of loan and subsidy. Under this scheme only one person was given Rs. 1,500-Rs. 500 for tools and machines and Rs. 1,000 for working capital-in 1959. Repayment was to be made by instalments of Rs. 30 each.

(ii) Under the scheme for grant of loans and subsidies to Backward Class artisans for the purchase of tools and equipment: and for working capital financial assistance is given according to the rules. Preference and concession are given to those who were trained in Government peripatetic schools or institutions recognised by Government. Sixteen persons from the backward class group were granted loans and subsidies under the scheme. The amounts of loan varied from Rs. 125 in some cases to Rs. 1,750 in others; while amounts of subsidies varied from Rs. 5 to Rs. 250. Interest was charged at the rate of 4½ per cent, in most of the cases. Some of the loans were free of interest.

(iii) Under the scheme for Grant of loans and subsidies to cooperative societies for purchase of tools and equipment and to serve as working capital co-operative societies whose one-third membership consist of bona fide craftsmen can be granted financial assistance up to Rs. 5,000 of which half the amount can be granted in the form of subsidy. Loans are given free of interest to those co-operative societies, the majority of whose members come from backward classes. For other societies interest at 4½ per cent, is charged.

So far six industrial co-operatives in Kolaba district have received benefits under this scheme. Together they have received (from 1952 to 1958) Rs. 11,710 as loan and Rs. 1,400 as subsidy. Most of the loan was interest-free but in some cases the cooperatives were required to pay interest. The interest charged was 4½ per cent, and the loan was to be repaid in regular instalments.

(iv) Under the scheme for Grant of Nutan Ghanis on loan-cum-subsidy basis the 'Ghanis' are sanctioned to hereditary telis, oilmen's co-operative societies and other institutions. The scheme is started to induce oilmen to use improved types of Ghanis and thereby enable them to increase production. Telis are also eligible for financial assistance up to Rs. 1,000 for the purchase of raw material and for working capital. Nutan Ghanis are supplied to telis and their cooperative societies on loan-cum-subsidy basis. As there is very little production of groundnuts in the district, there are few societies of oilmen here. Most of the oil is imported from outside. The financial assistance given to the oilmen in this district is, therefore, nil.

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