(Current Affairs) Economy & Energy | October : 2013

Economy

National Textile Corporation Inaugurated

The Union Minister of Textiles, K Sambasiva Rao on 22 July 2013 inaugurated the New Bhopal Textile Mills of National Textile Corporation (NTC) in Bhopal. The mill was taken for the purpose of revival as well as modernisation along with the BurhanpurTapti Mills in Burhanpur.

It is important to note that textiles sector is the second biggest employment generator in India after agriculture. According to the approved scheme of Board for Industrial and Financial Reconstruction (BIFR), in the first
phase, National Textile Corporation Limited replaced 16848 spindles and commissioned 25200 new spindles in the year 2008 at the cost of 26.42 Crores Rupees. This led to an increase in the monthly production from 1800 kilograms per day to 5000 kilograms per day. This meant that despite providing Modified Voluntary Retirement Scheme (MVRS) to surplus workers, around 380 workers started getting wages every day. The National Textile Corporation Limited (New Delhi) also approved the second phase of modernisation for the New Bhopal Textile Mill. In its second phase, the Head Office approved sanction of 81 crore Rupees, which will help in modernisation of the machines. This would eventually help in increasing the production from 5000 kilograms per day to 14000 kilograms per day. This implies that from present sustenance of 380 workers, the mill will be able to sustain the 650 workers every day. The mill has also obtained ISO Certification.

Background

Under Nationalisation Act 1974, National Textile Corporation Limited (Madhya Pradesh) took over seven mills which were making losses. The Bhopal Textile Mills was one of these Because of high labour cost as well
as old machinery, all these mills were running into losses continuously. The seven mills were registered under BIFR. Under approved scheme of BIFR, five of these seven mills were closed as unviable units and the remaining two mills i.e. New Bhopal Textile Mills in Bhopal and BurhanpurTapti Mills in Burhanpur were scheduled for modernisation as well as revival.

Disinvestment of State Trading Corporation and ITDC

The Cabinet Committee on Economic Affairs (CCEA) on 11 July 2013 approved the disinvestment of government stake in State Trading Corporation (STC) and ITDC. The disinvestment is supposed to bring
around 30 crore Rupees to the exchequer. The disinvestment is required through Cabinet nod to divest 5 per cent stake in India Tourism Development Corporation (ITDC) and 1.02 per cent in STC through the Offer for Sale (OFS) route.

The government is expecting the sale of 5 per cent stake or 42.88 crore shares in ITDC to fetch 23.58 crore Rupees. The Government is also planning to acquire about 10 crore rupees through disinvestment of 1.02 per cent, or 6.13 crore shares, in STC. It is important here to note that the government currently holds 92.11 per cent stake in ITDC and 91.02 per cent stake in STC. The stake is meant to help both the companies meet the minimum 10 per cent public holding norm of market regulator SEBI.

It is mandated for the government to bring down its stake in STC and ITDC to 90 per cent by 8 August2013. Shares of STC were trading 5.75 per cent lower at Rs 99.20 on the BSE in afternoon trade.

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