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

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From 50 Years Ago: Ingenuous but Far-Fetched.

Weekly Notes from Volume XII, No. 34, August 20, 1960.

The latest of the measures adopted by Gov-ernment to encourage small industries is that of promoting private industrial estates. State Governments have now been asked by the Centre to guarantee long-term loans from banks and financial institutions to private industri-alists who organise themselves in a company or corporation for setting up an industrial estate. The interesting part of the scheme is that such companies are to be enabled to borrow three to four times their equity in the estate. If, instead of a company, a co-operative society of industrial units is formed for the purpose of establishing an industrial estate, the proportion of loan to equity capital could be even higher. Credit institutions supplying the necessary loans would have, besides the security of assets owned by the company or co-operative society, the guarantee of the State Government concerned... Whatever the arguments in favour of private industrial estates, this particular scheme for encouraging them seems somewhat off-base. There is no credit institution in India which would, even on a State Government guarantee, be willing to lend three to four times the secu-rity offered by the borrower. Even with margins normally acceptable to them, commercial banks have little taste for term loans; and insti-tutions like the State Financial Corporations would need a special dispensation to function on the lines envisaged in the scheme.

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