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Over 50 SSI items may be dereserved

The Finance Minister may dereserve over 50 items hitherto in the exclusive domain of the small-scale sector.

india Updated: Feb 26, 2003 00:16 IST

The Finance Minister may dereserve over 50 items hitherto in the exclusive domain of the small-scale sector.

Sources said the government would go ahead with dereservation, notwithstanding the apprehensions of the Sangh parivar on the adverse impact it could have on the small scale sector.

While the finance ministry officials are tightlipped over the items that will be dereserved, last minute lobbying by powerful quarters seems to continue with the prime minister's office seeking its intervention against the move.

In the 2002-03 budget, the then finance minister Yashwant Sinha had announced the dereservation of over 50 items including knitwear, some agricultural implements, auto components, chemicals and drugs.

The finance minister, according to the sources, may consider a 1 to 2 per cent interest subsidy to offer cheaper funds to the small-scale sector.

The subsidy is expected to be announced, despite the opposition from the banks and financial institutions which are not willing to take additional exposure in the small-scale industries due to the high risk involved.

The sources said a mechanism was being worked out by the ministry to spread the risk on these loans.

SSIs' outstandings with banks and financial institutions have been estimated to be about Rs 50,000 crore as on April 1, 2002.

But, the government seeks to evolve a policy which would balance the risks for banks and financial institutions on one side with the credit requirements of small-scale industries on the other, the officials said.

Further, the finance minister may also increase the exemption limit for collaterals for SSI borrowings beyond Rs 5 lakh fixed in the 2002-03 budget.

First Published: Feb 26, 2003 00:16 IST