The West Bengal government is being forced to scale down its plan to restructure 29 public sector enterprises by at least half after lending agencies baulked at increasing grants for the Rs1,700 crore programme.
The move is a setback for chief minister Buddhadeb Bhattacharya’s efforts to change the industrial landscape of the state. The programme for restructuring, announced in 2005, was banking heavily on grant money from UK’s department of international development (DFID). However, DFID has told the state government it will be unable to increase funds to that extent.
This has sent the state public enterprise department back into a huddle to rework the programme and shrink it to at least half its original size.
The programme is being revisited once more, says Ardhendu Sen, principal secretary, department of public enterprise. “If our expectations still overshoot what DFID is offering, the state government will chip in to bridge the gap.” He declined to state exactly how much DFID had offered or the size of the new restructuring package.
Last year, the department shrunk the size of the early retirement scheme in the programme, by deciding to reskill and redeploy a good part of the workforce. This slashed the project size down to Rs1,000 crore but DFID declined to fund it. That alone would mean stepping up its funds to the state by almost four times. The DFID currently spends GBP30-35 million pounds a year in development projects in the state.
“Any major increase in the requirement here will require DFID to rework its allocations to India,” said Shantanu Das, a DFID spokesman.
The current plan was cleared “in principle” by the Union government in June 2005. The revised plan will be presented in May-June this year, largely built around whatever grant DFID is now willing to give.
The restructuring involves power,transportand manufacturing companies and about 80,000 workers in all the units. It would involve a combination of closure of units, privatisation or a turnaround of these companies.
This is the second round of restructuring by the government for underperforming state linked companies. Under the first plan, 26 state public sector units were revamped with a Rs 210 crore (GBP26.25 million) fund from DFID.
In fiscal 2006, DFID disbursed Rs1,940 crore of UK development assistance in India. Of this, the assistance to West Bengal was Rs243 crore, according the agency’s website.