From day one of his taking over as Minister for Commerce, Industry and Textiles, Mr. Anand Sharma has been steadfast in his resolve to restore the ailing textile sector to health. First, fully appreciating the role of the sector which is the biggest exchange earner and the largest employment provider, he saw to it that the Government set up six high-level inter-ministerial committees with representatives from different ministries and departments, including the Planning Commission, to undertake a review of its overall performance. He also found it absolutely essential for textile exporters to tap the hitherto unexplored markets in Latin American, African and Asian countries in view of the gradual fall in traditional Western market demand. Though a little delayed, the vigorous initiatives taken by Mr. Sharma did yield results. Textile exports for 2011-12 at $34 billion exceeded the target of $33 billion fixed earlier.
It is with the same drive and enthusiasm that he persuaded the Finance Ministry to give its clearance for restructuring of debts to revive cotton textile mills all over the country, caught as they are in a worst-ever crisis since last one year. Total exposure of banks to the industry is Rs. 1,56,000 crores, and the projected restructuring involves Rs. 35,000 crores. The package envisages rescheduling of loans, working capital and interest relief. The Finance Ministry would forward the proposal to RBI for a special dispensation in NPA norms to avoid reclassification in allowing a two-year moratorium on term loans to the industry. The Ministry has also taken up the CITI suggestion for converting eroded working capital into working capital term loans (WCTLs) repayable in three-four years. RBI response to the whole proposal is anxiously awaited.
As an impartial analyst, Mr. Sharma has his own reservations on the general RBI approach. For instance, he is visibly upset over the bank’s reluctance to lower interest rates to ensure adequate flow of investment. Industrial production has been severely affected since last seven months, and the so-called inflationary spiral is mainly due to rise in prices of food articles. If the central bank remains adamant, he won’t mind writing to the RBI Governor and the Finance Minister with an urgent appeal for a reasonable cut in interest rates.