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The Textile Magazine
JUNE 2012
Debt rescheduling underway ?
From day one of his taking over as Min-
ister 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 Com-
mission, to undertake a review of its overall
performance. He also found it absolutely es-
sential for textile exporters to tap the hith-
erto 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 re-
lief. 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.
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TEXTILE MAGAZINE
THE
R. Natarajan,
Managing Editor & Publisher