FINANCE

STATE FINANCIAL AID TO AGRICULTURE AND INDUSTRY

State aid to Agriculture.

State aid to Agriculture.-The Government has actively helped and encouraged the organisation of co-operative societies with a view to making available to the agricultural population sources of credit other than the money-lenders. With the same object Government has been granting Tagai loans to agriculturists to meet their credit requirements. The Land Improvement Loans Act of 1883 and the Agriculturists' Loans Act of 1884, were enacted to enable Government to grant such loans. The former is broadly concerned with long-term finance and the latter with short-term accommodation.

(1) Loans under the Land Improvement Loans Act, 1883.

Loans under this Act are granted to cultivators for works of improvement on land, as for example: (a) construction of wells and tanks, (b) drainage, reclamation from rivers, protection from floods or from erosion, (c) clearance, enclosure or permanent improvement for agricultural purposes, etc.

The Collector (upto Us. 7,500), Prant Officer (upto Rs. 2,500) and Mamlatdar or Mahalkari (upto Rs. 1,000) are the authorities specified in the Bombay Land Improvement Loans Rules, 1916, who may grant loans and exercise functions of a Collector under the Act.

(2) Loans under the Agriculturists' Loans Act of 1884.

Under this Act, loans may be granted to holders of arable lands for purchase of seed, fodder, cattle, agricultural stock, implements, rebuilding houses destroyed by any calamity.

(b) maintenance of the cultivators while engaged in sowing and tilling their lands prior to the next crop, etc.

The authorities empowered to grant loans under this Act are the Collector, the Prant Officer, the Mamlatdars (specially selected by Collector) and the Mamlatdars or Mahalkaris and the maximum amount per loan which each of them is authorised to grant is Rs. 2,500, 1,000, 500 and 200 respectively.

The rate of interest charged in Kolhapur district is 5½ per cent. for loans granted under these two Acts. Rigid emphasis is laid on the value and nature of the security which may be accepted against loans. The security generally accepted is immovable property (land) whose value generally is approximately three times the amount of loan. Movable property is rarely accepted as security. Personal security may be accepted, even that of one person provided his solvency is certain. The security of immovable property is almost invariably demanded in case of loans of big amounts.

Tagai advances given in the district under various Acts and schemes were Rs. 2,19,400 in 1950-51, Rs. 4,57,309 in 1951-52 and Rs. 15,39,163 in 1953-54. The bulk of the advances were granted for different land improvement schemes and well-digging and other irrigation projects. The figures of recoveries were Rs. 2,53,439 and Rs. 4,57,436 in 1952-53 and 1953-54 respectively. In 1956-57, the amount of tagai loans sanctioned was Rs. 4,64,953, bulk of which was given for land improvement schemes and various irrigation projects. The rate of interest charged was 5½ per cent. for loans under both the Acts. The loans were sanctioned on the security of immovable property (land) whose value was not to be less than three times the amount of loan. That is, the ratio of the value of the security to the loan was 3:1.

The duration of the advances indicates that bulk of them represented loans for intermediate and long-term periods. The chief reasons for rejection of application were the lack of security or adequate security and old dues to Government.

II. Financial assistance to Industry.

II. Financial assistance to Industry.-Financial assistance to industries is given under the Bombay State-Aid to Small-Scale and Cottage Industries Rules, 1935, as amended upto 20th January, 1956. Loans are granted by the Department of Industries for the following purposes:- construction of buildings, godowns, warehouses, wells, tanks, etc., and for purchase of land for these purposes; purchase and erection of machinery and plant, purchase of raw materials; working capital and finishing.

The Government of Bombay introduced some amendments to the State-Aid to Industries Rules, 1935 in 1955 with a view to bringing them in line with the liberalised policy adopted by the Government of India to encourage development of small-scale and cottage industries. The Central Government has placed Rs. 10 lakhs at the disposal of the Government of Bombay for the grant of loans to small-scale and cottage industries on slightly more liberal terms.

Loans up to Rs. 75,000 and in exceptional cases even up to Rs. 1 lakh can now be granted by the Department of Industries to an individual concern.

The rate of interest is brought down to 5 per cent. compound interest per annum with a penalty of half per cent. for arrears in payment of instalments of interest and capital. As a result of further liberalisation of the rules in January 1956, the rate of interest on loans not exceeding Rs. 50,000 was brought down from 5 per cent. to 3 per cent. per annum.

Loans are advanced to the extent of 75 per cent. of the value of the security offered instead of 50 per cent. as formerly provided and they can be given against raw materials, goods in process and stock-in-trade in addition to immovable properties. Loans can also be given against the personal security of persons other than the borrower. The period of repayment has been increased to a maximum of ten years.

Nine industrial units in Kolhapur district were granted loans totalling Rs. 1,97,600 under the State-Aid to Small-Scale and Cottage Industries Rules, 1935, during the period January, 1955 to February, 1958. Of this the biggest slice was received by four units of the textile industry which among them received in aggregate Rs. 1,25,000 during that period for working capital. The rate of interest charged was three per cent. in all cases and the loans were for a duration of seven years and repayable by annual instalments. Three Engineering concerns were granted a total amount of Rs. 64,000 during the same period. Of this, Rs. 37,000 were given for purchase of machinery and Rs. 27,000 for working capital. The duration of these loans was 10 years and they were to be repaid by annual instalments. The rate of interest charged was three per cent. The other two loans of Rs. 5,000 and Rs. 3,000 each went to two industrial concerns manufacturing respectively the stainless-steel articles and chemicals. These were granted for the purpose of working capital and carried a rate of interest of three per cent. They were repayable in seven and five years respectively in annual instalments.

Financial assistance to cottage and village industries is granted under the following four schemes administered by the Co-operative Department:

1. Scheme for grant of loans and subsidies to bona fide craftsmen and their co-operative societies for purchase of tools and equipment and for working capital.

This scheme has been in operation since 1941 in one form or another. Under the latest version of this scheme, financial assistance upto Rs. 2,000 (Rs. 1,000 for tools and Rs. 1,000 for working capital) can be granted to each artisan. In the case of a trained artisan, 25 per cent. of the amount sanctioned for tools and equipment can be treated as subsidy. The remaining amount for tools and equipment and that for working capital is to be treated as loan bearing interest at 4½ per cent. and repayable in five years in equal monthly instalments. The securities to be furnished may be either one or two personal sureties or the mortgage of immovable property.

Co-operative Societies having at least one-third of their members as bona-fide craftsmen or persons following cottage industries can be granted financial assistance upto Rs. 5,000 for the purchase of tools end equipment. Of this amount, upto 50 per cent. can be treated as subsidy and the remaining portion as loan carrying interest at the rate of 4½ per cent. As regards loans for working capital, the Joint Registrar for Industrial Co-operatives and Village Industries has been empowered to give a marginal Government guarantee of 30 per cent. for a credit upto Rs. 15,000 to be raised by each society from the central financing agencies.

2. Scheme for grant of loans and subsidies to Backward Class artisans for purchase of tools, appliances, etc. (i) Financial assistance upto Rs. 2,000 in each case can be granted to backward class artisans for the purchase of tools and equipment and for working capital on terms and conditions similar to those obtaining in respect of loans and subsidies to bona-fide craftsmen. The only modifications are firstly that if the backward class artisan has received training at one of the peripatetic schools of this Department or in a technical institution recognised by Government, the entire amount of financial assistance is free of interest and secondly, in the case of artisans who have not received such training, 50 per cent. of the amount is free of interest and the remaining 50 per cent. will carry interest at the rate of 4½ per cent.

(ii) Industrial Co-operative Societies of backward class artisans are also eligible for the grant of loans and subsidies as in the case of other industrial co-operative societies. Exemption from interest in the case of a co-operative society is only given when at least 50 per cent. of its members have received training in the peripatetic schools maintained by this Department or in technical institutions recognised by Government.

3. Under this scheme financial assistance in the form of subsidies and loans can be granted to educated persons who have studied upto Secondary School Certificate Examination or passed the Regional Language Final Examination and who are unemployed as well as to educated persons who are already engaged in some business, industry or trade. Assistance upto Rs. 3,000 in each case is offered to enable such persons to set up some cottage industry, business or trade or to expand their activities. A sum upto 25 per cent. of the total financial assistance can be treated as subsidy in deserving cases only and the remaining amount is treated as a loan carrying interest at 4½ per cent. and repayable in five years in equal monthly instalments. Security in the form of one or two personal sureties or the mortgage of immovable property is insisted upon.

4. Scheme for grant of Huskell or Nutan Ghanis on loan-cum-subsidy basis:-The scheme is meant to induce telis to use improved types of ghanis in preference to the old, less productive ghanis.

The following two tables show the financial assistance in the form of subsidies and loans sanctioned by the Deputy Director of Cottage Industries and Deputy Registrar for Industrial Co-operatives, Poona and the Assistant Director of Cottage Industries and Assistant Registrar for Industrial Co-operatives, to Co-operative Societies and bona-fide craftsmen during the period 1953-57:-

TABLE NO. 17

FINANCIAL ASSISTANCE UNDER THE SCHEME FOR GRANT OF LOANS AND

SUBSIDIES TO INDUSTRIAL CO-OPERATIVE SOCIETIES FOR PURCHASE

OF TOOLS AND EQUIPMENT AND FOR WORKING CAPITAL

DURING 1953-57.

TABLE No. 18.

FINANCIAL ASSISTANCE UNDER THE SCHEME FOR GRANT OF LOANS AND

SUBSIDIES TO BONA-FIDE CRAFTSMEN FOR PURCHASE

OF TOOLS AND EQUIPMENT AND WORKING

CAPITAL DURING THE PERIOD 1953-57.

Financial assistance by the Government is also given in the form of Government guarantee sanctioned to different types of Industrial Co-operative Societies against the credit they receive from the central financing agency of the district on the recommendation of the Joint Registrar for Industrial Co-operatives and Village Industries. In 1955-56 Government extended to three industrial societies an amount of Rs. 2,500 as Government guarantee on which loans upto Rs. 11,000 could be raised.

Financial assistance is given also to hand-loom industry by the State under two schemes viz., Hand-loom Development Scheme and Hand-loom Relief Scheme. The industry occupies a very important position in the rural economic structure. It can provide occupation to a large number of unemployed or underemployed persons. Hand-loom products, however, suffer from the acute competition of the products of large-scale textile industry and both the Government of Bombay as well as the Government of India took steps to support and rehabilitate the hand-loom industry. By a scheme introduced in 1953, a total amount of Rs. 57,400 had been given by Bombay Government as working capital to weavers' co-operative societies. In 1952 the Government of India constituted an All-India Hand-loom Board and allotted certain quotas to each State Government out of the proceeds of the additional excise duty which was levied in 1953 on mill cloth at the rate of three pies per yard. A number of development schemes were submitted to the All-India Hand-loom Board for being financed from the quota of the cess fund allotted to Bombay State. On the recommendation of the Board some of the schemes were approved by the Government of India and consequently financial assistance was made available to the industry under these schemes.

In 1954-55 and 1955-56, a total amount of Rs. 1,77,745 was given as financial assistance in the form of loans, prizes and grants under various schemes. This included Rs. 77,900 given as loans for working capital to weavers' co-operatives, Rs. 62,225 and Rs. 29,178 constituted the grants of rebate on sales of hand-loom cloth in the year 1954-55 and 1955-56 respectively. Grant of Rs. 3,000 and loans and subsidies amounting to Rs. 2,800 were given for establishment of dye-houses during these two years. Rs. 1,643 were given as a grant for opening sales depots. Under the scheme for grant of loans for share capital Rs. 184 were granted during the same period. Under another scheme for replacement of throw-shuttle-looms by fly-shuttle looms Rs. 325 were given as grant. Prizes worth Rs. 420 were distributed among weavers' societies. Grant of Rs. 70 was given for hiring carts and another grant of Rs. 75 was given for publicity and advertisement to weavers' societies. Besides providing financial assistance directly through the various departments, the Government gives medium long-term financial assistance, though indirectly, to small-scale and medium-sized industries through the Bombay State Finance Corporation which is a statutory body having its capital mainly contributed by the State Government. The Government is providing financial aid under different schemes to co-operative societies by way of subsidies, loans and contribution to the share capital of the societies. In Kolhapur district, the total amount given in 1958-59 by way of loans was Rs. 4,03,846, subsidies Rs. 1,61,759 and contribution to the share-capital Rs. 2,70,000. The societies to receive this assistance were the agricultural credit societies, co-operative marketing societies, co-operative farming societies, lift irrigation societies, a milk union and backward class housing societies.

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