FINANCE

FINANCIAL AID TO INDUSTRIES

FINANCIAL ASSISTANCE TO INDUSTRIES.

Financial Assistance to Industries is given under the Bombay State-aid to Small Scale and Cottage Industries Rules, 1935—as amended up to the 20th January, 1956. Loans are granted for the following purposes:—

(1) Construction of buildings, godowns, warehouses, wells, tanks and other works necessary for industrial operations and for purchase of land.

(2) Purchase and erection of machinery, plant and appliances.

(3) Purchase of raw materials, and

(4) Working Capital,

Since 1948, when a progressive industrial policy was outlined. Government have been taking a very keen interest in the development of small-scale and cottage industries on a co-operative basis. The amendments to the State-aid to Industries Rules of 1935 were effected in 1955 and 1956 with a view to bringing the rules in line with the liberalised policy adopted by the Government of India of giving fillip to the development of cottage and small-scale industries. The Central Government have placed Rs. 10 lakhs at the disposal of the State Government for grant-in-aid to these industries. Some of the important changes introduced by the recent amendments are given below:—

(1) Loans to small-scale industries will be granted by the Department of Industries up to Rs. 75,000 in each case and in exceptional cases up to Rs. 1,00,000. Applications for loans above Rs. 75,000 are considered by the recently constituted State Financial Corporation;

(2) The former rate of 5½ per cent, compound interest is brought down to 5 per cent, compound interest per annum subject to a stipulation that if the instalments are not paid in time a penalty of ½ per cent, shall be levied on all amounts including the principal and interest for the period for which arrears are unpaid. As a result of further liberation of the rules in January 1956, the rate of interest on loans not exceeding Rs. 50,000 was brought down from 5 per cent, to 3 per cent, per annum;

(3) Loans are advanced to the extent of 75 per cent, of the security offered instead of 50 per cent, as provided in the earlier rules. Loans are also to be given against the security of the value of raw materials, goods in process and stock-in-trade, in addition to the hitherto accepted securities of immovable property. Loans are also given against personal security of persons other than borrowers;

(4) The period of repayment of the loans on account of machinery and equipment was extended up to ten years; such period in respect of that part of the loan which is meant for working capital would not ordinarily exceed five to seven years depending on the merit of each case.

Since the inception of the State-aid to Industries scheme in the year 1935, four industries in the Ratnagiri district were given loans to the extent of Rs. 61,300. Of these Rs. 3,000 were disbursed in 1952 to a manufacturer of wooden toys in Ratnagiri for the development of that industry. The loan was to be repaid in 5 annual instalments with 5½ per cent, compound interest. Similarly loans amounting to Rs. 5,000 and Rs. 5,700 were given to two industries dealing in the transportation of goods by sea for the purchase of raw materials in the years 1949 and 1955, respectively, under the condition that the loans should be repaid in ten annual instalments with a compound interest of 5½ per cent. One industry of Jaigad dealing in the transportation of goods by sea and installation of marine engines in launches was given a loan of Rs. 47,600 in the year 1951, for the purchase of raw materials. This also was at an interest rate of 5½ per cent, but the loan was to be repaid in 48 monthly instalments.

During the period from 1st January, 1955 to 31st December, 1959 only one industry dealing in the transportation of goods by sea was given a loan of Rs. 5,000 with a 3½ per cent, rate of compound interest. The loan was granted for the purpose of the construction of country crafts and was to be repaid in ten annual instalments. Loans were refused in some cases on the ground of inadequate security or for some other reason. For instance applications from two individuals for loans amounting to Rs. 5,000 and Rs. 10,000 respectively, were turned down; the first, because no adequate security was offered against the amount to be loaned and the second, on the ground that the scheme was not economically sound and the returns accruing from it were anticipated to be too low to make any repayment for the amount loaned. Security offered, too, was not very sound.

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