ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Politics-The Southern Backlash

mobilisation which would require narrowing of the vast disparities of incomes and assets holdings. If, in such circumstances, industrialists exhibit concern over the convertibility question, the explanation may be sought in the latest budget's tax concessions when loss-making units are merged with well-managed units. Clearly, this offers considerable incentive for plundering a unit and leading it to sickness, and then using the special window ostensibly to 'rehabilitate' the unit without the attendant possibility of conversion of a small part of the official assistance into equity. The door for this, and the possibility for even further softening of other conditions attached to the scheme, has already been opened by the IDBI chairman. In the same speech to AIMO, he said: "the soft loan scheme was essentially meant for the modernisation of industrial units and not the survival of sick units. If both the 'operations' were separate, the modernisation of a 'sick unit' would not be possible at all". He further said that, in sanctioning of debt loans for modernisation purposes, there is no rigidity about the debt-equity ratio, etc; the contribution of the borrower was also flexible: "it might be from 15 to 20 per cent of the total outlay, and it would be considered on a case- to-case basis". It needs to be remembered that, once IDBI finances such a weak unit under the soft loan scheme, it would earn many other preferences, such as the commercial banks being more willing to advance large working capital loans, with which promoters could in turn carry on many other activities in other 'sister' concerns.

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