the national renewal fund: promise, performance, and prospects

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The National Renewal Fund:Promise, Performance, and Prospects

V R S Cowlagi

The National Renewal Fund (NRF), set up inFebruary 1992, aims to provide a safety netto protect the workers in industrialenterprises from possible adverseconsequences of the new economic policy.

In this article, V R S Cowlagi examinesthe scope and the performance of the NRF

and suggests various ways of enhancing itsimpact.

V R S Cowlagi is Director-General,

Gandhi Labour Institute, Ahmedabad.

Vol. 19, No. 4, October-December 1994

Background

The New Industrial Policy announced by theGovernment of India on the 24th July 1991 seeks topromote technological upgradation and modernizationof Indian industry to make it efficient and internationallycompetitive. It is inevitable that financially unviable ortechnologically obsolete enterprises face the threat of

closure from more competitive units. With no prospectsof nationalization of sick enterprises (as had been thecase in earlier decades), a large number of workers insuch enterprises stand to lose their jobs and incomes.

One can expect the organized labour and the tradeunions to take a stand that there should be no downsizingof work forces, or where it is inevitable, keep thedownsizing as low as possible and prolong the processas long as possible; and when downsizing is unavoidable,to get the best of terms for such severance, characterizedas voluntary retirement in recent years.

Given this standpoint of labour, it is natural that the

New Industrial Policy recognizes this concern. Whilepromoting efficiency and competitiveness, the NewIndustrial Policy is alive to concerns of protecting theinterests of workers. The Policy provides: "Thegovernment will fully protect the interest of labour,enhance their welfare and equip them in all respects todeal with the inevitability of technological change.Government believes that no small section of societycan corner the gains of growth, leaving workers to bearits pain. Labour will be made an equal partner inprogress and prosperity. Workers' participation inmanagement will be promoted. Workers' cooperativeswill be encouraged to participate in the packages

designed to turn around sick companies. Intensivetraining, skill development and upgradationprogrammes will be launched."

During the course of discussion on the NewIndustrial Policy in the Rajya Sabha on 7th August, 1991,Prime Minister Shri Narashimha Rao stated: "We donot want our labour to suffer and our workers to suffer,

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no matter what our industrialization is and what ourpolicy is. But, at the same time, what is it we are reallyperpetuating by having an inefficient industry? Are wereally promoting the interests of the labour ......Unlessthe industry flourishes, labour cannot flourish. We willnot allow the interests of workers to suffer."

As a reflection of this concern, the Ministry ofLabour set up a Special Tripartite Committee on the12th November 1991 to consider the impact of the NewIndustrial Policy on labour and other related matters. Ameeting of the labour side of the Special TripartiteCommittee was held on November 17,1991, under theChairmanship of the Minister of State for Labour. TheCommittee met on 21st December 1991 and 20th January1992. In its meetings, the Committee examined thesituation of public sector units as brought out by theDepartment of Enterprises in its monograph on theperformance status of central public sector enterprises.The Committee recognized that some public sector

units which were chronically sick did indeed require"radical treatment." It recommended that otherenterprises whose current working could be madeprofitable should be appropriately assisted to take careof their past liabilities. The Committee considered, at itsmeeting on 20th January 1992, the Concept Paper on theNational Renewal Fund prepared by the Department ofIndustrial Development after extensive inter-departmental consultations. There was generalagreement on labour being retrained, their technicalskill upgraded, and surplus labour being suitablyredeployed. Labour should not, however, be thrownout of employment in the name of modernization. The

Committee also decided that Tripartite IndustrialCommittees should be set up for industry groups inwhich sickness was endemic to examine the sickindustries and suggest preventive and ameliorativemeasures.

The Promise

The announcement establishing the National RenewalFund (NRF), made in the Finance Minister's Budgetspeech for 1991-92, is a significant step in operationalizingthe policy objective concerning welfare measures forworkers likely to be affected by the implementation of

the New Industrial Policy. While announcing theestablishment of the NRF, the Finance Minister stated:"This Fund will provide a social safety net which willprotect the workers from the adverse consequences oftechnical transformation..... The Fund will not merely

provide ameliorative measures for the workers affectedin the course of technical change but, more importantly,provide retraining to them, so that they are in a position

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to remain active productive partners in the process ofmodernization."

The NRF was set up by a government resolution onthe 3rd February 1992 to protect the interest of workersaffected by industrial restructuring. The CabinetCommittee on Economic Affairs approved the guidelines

on the 28th October 1992 for operationalizing the NRF.The guidelines were notified on 21st December 1992.

Objectives

The objectives of the Fund are:

To provide assistance to cover the costs of retrainingand redeployment of employees arising as a resultof modernization, technology upgradation, andindustrial restructuring.

To provide funds for compensation of employeesaffected by restructuring or closure of industrial

units, both in the public and private sectors.

To provide funds for employment generationschemes both in the organized and unorganizedsectors in order to provide a social safety net forlabour needs arising from the consequences ofindustrial restructuring.

The Fund, to begin with, has been non-statutory innature with a provision to include contributions fromthe Government of India, the proceeds of disinvestmentsfrom public sector enterprises, state governments,financial institutions, insurance companies, industrialundertakings, and bilateral and multilateral donor

agencies.

In the organized sector, the Fund was expected toprovide resources only for the rehabilitation of labourresulting from modernization, technology upgradation,restructuring (including revival) or closure of industrialunits as a supplement to the funds available from othersources. In the unorganized sector, the Fund wasexpected to provide resources for employmentgeneration schemes.

Constituents

The NRF was envisaged in two parts: the NationalRenewal Grant Fund (NRGF) and the EmploymentGeneration Fund (EGF).

National Renewal Grant Fund

The NRGF was to deal with the immediate requirementsof labour in sick units arising from revival or closure of

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such units. The funds were expected to be disbursed inthe form of grants for the following purposes:

For assisting employees affected by technologyupgradation, modernization, restructuring, andrevival of industrial undertakings specifically forapproved schemes relating to:

re-trainingre-deployment

counseling and placement services for employment

compensation payments to employers affected byrationalization in industrial undertakings and partsthereof. Such payments were envisaged under thefollowing circumstances:

when industrial undertakings or parts thereofare to be closed as a consequence of sickness asrecommended by the Board of Industrial andFinancial reconstruction (BIFR). These paymentsmay include the payment of legal dues and those

under Voluntary Retirement Schemes (VRS). Thepayment of employees' legal dues, if made fromthe NRF, would form a claim on the assets of theclosed units as and when they are disposed of,according to the due process of law

when there is a programme for labourrationalization,resulting from rehabilitationschemes for sick units as ordered by the BIFR,including VRS

for VRS in operation in public sector units, notnecessarily requiring BIFR orders

payment of compensation to workers affected by

closure of units already under liquidation asmay be sponsored by state governments inapproved schemes.

The Fund was also expected to provide resourcesfor interest subsidies to enable financial institutions toprovide soft loans for funding labour rationalizationresulting from the industrial restructuring of weakunits.

Employment Generation Fund

The second part of the fund, the EGF, was expected toprovide resources for employment generation.

It was planned to provide funds for approvedemployment generation schemes for both the organizedand the unorganized sectors. This could include schemessuch as:

special programmes designed to regenerateemployment opportunities in areas affected byindustrial restructuring


employment generation schemes for theunorganized sector in defined areas.

The funds were to be disbursed in the form ofgrants.

The NRGF and the EGF were planned to be in

operation for a period of ten years, at the maximum,from the date of their inception.

The Secretariat for Industrial Renewal

The task of administering the NRF was entrusted to theSecretariat for Industrial Renewal, set up in theDepartment of Industrial Development. This Secretariatwas expected to scrutinize proposals received forfunding from the NRF to ensure whether they confor-med to the parameters laid down by the Department ofPublic Enterprises on the grounds of economic viability,technological soundness, and promotion of interest of

workers. It was expected that the Secretariat forIndustrial Renewal would obtain the views of theDepartment of Expenditure, Labour, Company Affairs,Public Enterprises, and the Department of Educationbefore placing the proposals before the EmpoweredAuthority.

The Secretariat for Industrial Renewal laid downsome criteria for eligibility mainly to ensure a control onthe flow of applications made to it. Applications fromcentral public sector enterprises had to be approved bythe cabinet, or the minister in charge of the administrativedepartment or by the BIFR. Applications had to specify

the number of employees in the unit, number whodesired to avail VRS, consequent reduction in salarybill, and impact on the economic viability of theenterprise. The enterprise also had to provide anundertaking that there would be a freeze on recruitmentof employees to replace those availing VRS, unless itwas "for compelling reasons and with prior sanction ofthe administrative ministry." In the case of schemesapproved by the BIFR, all payments, whether under theVRS or otherwise, made to the work force rationalizedas a result of restructing or rehabilitation were to be metfrom the NRF.

Although the guidelines for the NRF are equallyapplicable to the state public sector enterprises, theprocedure prescribed by the Secretariat for IndustrialRenewal specified that VRS payments in the case ofstate public sector undertakings would not be made bythe NRF unless the cases had been referred to BIFR andthe BIFR had drawn up a scheme for revival andrehabilitation. Unlike the case of central public sector

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enterprises, the state public sector enterprises were notentitled to full payments on account of VRS payments.It was left open for the Empowered Authority to fix thepercentage of contribution by the state government.The guidelines also provided that the quantum of reliefto the employees of the state public sector enterprisesshould not exceed the rates applicable to the employees

of central public sector enterprises.

The assistance from the NRF was also expected tobe available to enterprises in the private sector forrationalizing work force resulting from schemes ofrestructuring or rehabilitation formulated by the BIFRunder Sections 15 or 23 of the Sick Industrial CompaniesAct, 1985. The guidelines have left it open whether theNRF assistance would flow in the form of a grant of softloan to be routed through a financial institution or acommercial bank or in the form of a mix of loans andgrant, depending on the financial health of the company.

Shortly after the commencement of the Fund, an

Empowered Authority was constituted, with Secretary(Industrial Development), in the Government of India,as the Chairman. Among the official members of thecommittee are: Secretary (Expenditure); Secretary(Public Enterprises); Secretary (Company Affairs);Secretary (Labour); Secretary (Education); EconomicAdvisor, Ministry of Industry. The Additional Secretaryin the Department of Industrial Development wasnamed the Executive Director of the EmpoweredAuthority. In addition, a labour representative was tobe nominated by the Ministry of Labour and arepresentative of employers by the Department ofIndustrial Development on this Empowered Authority.

Two eminent persons from outside the governmentwith professional experience in the field of management,industrial or labour relations were also designated asmembers. Among the prominent non-officialsnominated to the Empowered Authority were: MrSanat Mehta, eminent trade union leader and formerFinance Minister, Gujarat State, and Dr PradipKhandwalla, Director, Indian Institute of Management,Ahmedabad.

The Empowered Authority was to be responsible tothe Minister for Industry for its overall functioning. Asoriginally conceived, the Authority had powers to

approve proposals for disbursements of funds up to alimit of Rs 100 crore. The Empowered Authority wasleft to devise its own rules of procedures. Although theNRF was expected to cqver public sector enterprisesunder the central and state governments and privatesector enterprises affected by closure or restructuring,the Empowered Authority was expected to disbursefunds only for schemes sponsored by central public

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sector and state government. Only schemes prepared orunderwritten by agencies such as the BIFR, stategovernments or administrative ministries of centralgovernment were to be considered.

Performance

Given the multiple objectives of the NRF, one wouldexpect performance along a wide front, encompassing,among other things, the following activities:

identify enterprises in need of restructuring andmodernization

identify the extent of surplus labour in enterprisesthat are in the process of restructuring or facingpartial or full closure

fund the op eration of VRS in cases whe redisplacement is inevitable; where VRS is notprac ti cable, fu nd fu lly or part ly the cost s ofdownsizing of work forces arising from closure or

retrenchment of labour fund counselling, retraining, and redeployment

activities for displaced labour

help regeneration of local economies to enable re-absorption of displaced labour in alternate jobs orself-employment activities.

Several efforts have been made to identify publicsector enterprises needing revival or rehabilitation. TheMinister of State in the Ministry of Industry, whilereplying to a starred question on the 28th November1991 in the Rajya Sabha, placed a list of 55 public sectorenterprises that were considered chronically sick and

needed a reference to BIFR (Table 1). It shows accumu-lated losses of Rs 9,025 crore in these enterprises,employing 2.67 lakh workers.

Sickness is not confined to the public sector alone.As of 30th September 1994, the BIFR had, before it, 1,602sick companies employing 98,895 workers. Of these, 54were central public sector enterprises and 66 were statepublic sector units.

Shortly after the announcement of the NewIndustrial Policy, it was clarified in response to a starredquestion in the Rajya Sabha on 1st August 1991 thatpublic sector enterprises which are chronically sick and

unlikely to be turned around will be referred to the BIFRor other similar high level institution created for thispurpose for the formulation of revival or rehabilitationpackage.

While options such as mergers, transfer of ownershipand management are available for BIFR in respect ofenterprises in the private sector, public sector enterprises

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1. National Seeds Corporation Limited 971

2. Bengal Chemicals and Pharmaceuticals Limited 332

3. Smith Stanistreet and Pharmaceuticals Limited 130

4. Fertilizers and Chemicals (Travancore) Limited 51

5. Hindustan Fertilizer Corporation Limited 3988

6. Pyrites, Phosphates and Chemicals Limited 74

7. Bharat Coking Coal Limited 5934

8. Eastern Coalfields Limited 7800

9. Neyveli Lignite Corporation Limited 618

10. Indian Telephone Industries Limited 4803

11. Bharat Earth Movers Limited 375

12. Bharat Electronics Limited 390

13. Modern Food Industries (India) Limited 53

14. Bharat Opthalmic Glass Limited 80

15 Bharat Process and Mechanical

Engineers Limited 223

16. Bharat Pumps and Compressors Limited 150

17. Braithwaite and Company Limited 550

18. Burn Standard Company Limited 3357

19. Cement Corporation of India Limited 665

20. Hindustan Machine Tools Limited 1918

21. Hindustan Cables Limited 39

22. Hindus tan Paper Corporation Limited 90

23. HMT Bearings Limited 55

24. Instrumentations Limited 650

25. National Industrial Development

Corporation Limited 13

26. Praga Tools Limited 130

27. Richardson and Cruddas (1972) Limited 784

28. Scooters India Limited 731

29. Triveni Structurals Limited 200

30. Tungabhadra Steel Products Limited 11

31. Weighbird (India) Limited 116

32. National Film Development Corp. Limited 121

33. Bharat Gold Mines Limited 1800

34. Hindus tan Copper Limited 319

35. Hindustan Zinc Limited 1000

36. Biecco Lawric Limited 285

37. Indian Railway Construction Co. Limited 299

38. India Firebricks and Insulation Co. Limited 84

39. National Minera l Development


40. Cawnpore Textiles Limited 1515

41. Elgin Mills Company Limited 5216


42. National Jute Manufacturers CorporationLimited 5102

43. National Textile Corporation Limited

(Andhra Pradesh, Karnataka,

Kerala,, and Mahe) 2393

44. National Textile Corporat ion Limited(Delhi, Punjab, and Rajasthan) 3292

45. National Textile Corporation Limited(Gujarat) 4430

46. National Textile Corporat ion Limited(Madhya Pradesh) 8833

47. National Textile Corporation Limited(North Maharashtra) 5316

48. National Textile Corporat ion Limited

(South Maharashtra) 3075


(Tamil Nadu and Pondicherry) 173


(West Bengal, Assam, Bihar, and Orissa) 2523

51. Hindustan Prefab Limited 50252. National Building Construction


53. Rashtriya Pariyojna Nirman Nigam Limited 1794

54. Electronics Corporation of India Limited 99

55. Nuclear Power Corporation of India Limited 310

usually have had to choose between rehabilitation orfull/partial closure, or continue loss making operationsas long as budgetary support continues to be available.Other options such as worker managed cooperativeshave been tried out only in a very limited number ofcases.

Closures and retrenchment have not been widelythought of as feasible options by sick industrialenterprises in the past on account of the obligations castupon the employers under the Industrial Disputes Act,1947. The law provides that in any industrialestablishment employing not less than 100 workers, noworkman who has been in continuous service for notless than one year shall be retrenched by an employeruntil:

the workman has been given three months' noticein writing indicating the reasons for retrenchmentand the period of notice has expired, or the workman

had been paid in lieu of such notice, wages for theperiod of notice.

the prior permission of the appropriate governmentor such authority as may be specified has beenobtained on an application made in this behalf bythe employer stating clearly the reasons for theintended retrenchment and a copy of that servedsimultaneously to the concerned workman.

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other restrictions as well. Only workmen employed fora continuous period of five years on the date of closureand drawing wages up to Rs 2,500 were eligible.

Up to 31st March 1993, rehabilitation paymentsunder this scheme amounting to Rs 60.20 crore weremade to 31,906 workmen of 24 units, of which 19 werelocated in Gujarat. As of 25th November 1993, the total

amounts disbursed stood at Rs 64.72 crore covering33,852 workers of 23 mills.

The Textile Modernization Fund scheme was cre-ated by the Industrial Development Bank of India witheffect from 1st April 1986 to meet the modernizationrequirements of textile mills. Set up with a corpus of Rs750 crore for a five-year period, this Fund providesassistance at concessional rates of interest to weak butviable units. The rate of interest was fixed at 11.5 percent on modernization loans up to Rs 6 crore; loans wererepayable over a period of 12 years, including amoratorium of six years. Special loans are also grantedfor this scheme towards a part of promoter's contribution

in case of weak but viable units.At the end of March 1993, a total of 357 units had

been sanctioned Rs 1,367 crore from this Fund; of this,Rs 877.7 crore was disbursed to 307 units. Private sectorunits (267) accounted for Rs 764 crore, public sectorunits (26), were disbursed Rs 77.53 crore, and cooperativeunits (14), Rs 34.49 crore. Under the Special LoanScheme, 61 units in the private and cooperative sectorswere sanctioned an amount of Rs 32.33 crore; of this, 49units were disbursed Rs 18.22 crore. Private sector units(44) accounted for a major share (Rs 17.14 crore) of theamounts disbursed.

The Textile Modernizatisn Fund has now beenwithdrawn although the financial institutions continueto provide assistance of this nature consistent with theirresources as a part of their normal operations.

Voluntary Retirement Schemes

Central public sector enterprises, by and large, follow

the guidelines set by the Department of PublicEnterprises. The features of the scheme of voluntaryretirement evolved by the Bureau of Public Enterprisesare as follows:

An employee who has completed 10 years of serviceor attained the age of 40 years can seek voluntaryretirement.

The terminal benefits available to an employeeseeking voluntary retirement would include: theba lance in hi s prov iden t fund accoun t, ca shequivalent of accumulated earned leave, gratuity,one month's/three months notice pay and ex-gratia

paymen t at the ra te of one month and a ha lfemoluments for each completed year of service.

A total of 70,286 workers of central public sectorenterprises had availed VRS from 1st April 1992 to 30thJune 1994. The details of the number of such workers,grouped according to the administrative ministriesunder which the concerned public sector enterprisesoperated, can be seen in Table 4. This table also providesinformation on the age profile of workers availing VRS.Similar data on enterprises, year-wise, are provided inTable 5.


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It can be seen from this data that younger workersbelow 35 years of age constituted only 5 per cent ofworkers availing VRS benefits. Workers over 50 yearsconstitute 51.7 per cent while those between 35 and 50years formed 43.6 per cent.

The budgetary allocation and disbursements under

the NRF are given in Table 6.

* up to 30 June 1994.

Bulk of the funds from the NRF went to finance VRSpayments in 60 central public sector undertakings; ofthese, 37 were sick and were under reference to BIFR.Although state public sector undertakings had alsoapplied for such assistance, as of 30 September 1994, nosuch case had been approved for funding from the NRF.

Among the central public sector undertakings, theworkers of the National Textile Corporation (NTC)were prominent in availing VRS. The NTC has identified70,000 workers as surplus, the actual numbers availingVRS (36,000) is only a little over 51 per cent. Most ofthese (71 per cent) were older workers in the age group

of 46 years and above. Those above 51 years constitutedSlper cent, only 14 per cent were below 40 years, withyounger workers below 35 years constituting only 3 percent. The age composition of 817 workers from theGujarat State Textile Corporation (GSTC) availing VRS(not funded from the NRF) during 1992-94 shows asimilar trend: 57.8 per cent in the age group of 50 orabove and only 7.7 per cent below 35. years of age.

The age composition of workers availing VRSsuggests a situation of early retirement rather than largescale mid-career severence from work.

What did these departing workers seek? A samplesurvey of 1,400 NTC workers availing VRS showed thatonly 10 per cent of the workers expressed a need forretraining and redeployment; 50 per cent desired to beself-employed; about 40 per cent wished to retire and goback to settle down in their villages. This compares witha survey of current labour status of 817 workers ofGSTC mill conducted by the Gandhi Labour Institute

(1994). This survey indicated that 42 per cent of surveyedworkers were in self-employment; 22 per cent in jobs; 21per cent unemployed; and 13 per cent retired or too illto work.

Counselling Services

Although the NRF has so far focused mainly on fundingVRS in central public sector enterprises, there is aprovision of Rs 50 crore in 1994-95 for fundingcounselling services, retraining facilities, and forpromoting redeployment through area regeneration.These facilities were sought to be provided throughconcerned enterprises and selected agencies placed incharge of pilot projects.

Counselling is the first step in employee supportservices. Counselling seems to work best when it isoffered as soon as it is decided to adopt VRS or any ofits variants preparatory to downsizing of the workforce. Counselling requires, among other things,developing and maintaining records of profiles ofoutgoing workers, trained counsellors for offering adviceto workers on how best to handle the amounts receivedfrom VRS payments as also to indicate to themopportunities for retraining. Counsellors would also beexpected to provide information on job-openings in theneighbourhood, and facilities for self-employment,including training for entrepreneurship developmentand financing of small business ventures. Not all thesefacilities can be provided by the employers.

Even so, 20 central public sector enterprises had setup in-house Employee Resource Centres by June 1994.They had provided counselling services to 5,816employees, including 4,601 who had availed VRS.Prominent among such enterprises are: the DelhiTransport Corporation (4403); the National TextileCorporation (428); Scooters India Ltd., Lucknow (198);NEPA Ltd. At Nepanagar (195); Elgin Mills Ltd.,Kanpur (191); Tyre Corporation of India (139), andBharat Gold Mines Ltd. at Oorugun, Karnataka (100).

Pilot Project

Partly in recognition of the limitations of an industrialenterprise in providing the full range of rehabilitationservices needed by the outgoing workers and partlywith a view to evolve models of implementation uniqueto the different socio-cultural environments, the Depart-ment of Industrial Development set up five pilot projectsin different parts of the country as indicated in Table 7.

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Table 7

Location Nodal Agency

Ahmedabad Gandhi Labour Institute (GLI)Kanpur ASSOCHAMBombay Confederation of Indian Industry (CII) Calcutta National Small Industr ies Corporat ion

(NSIC)

Indore Small Industries Services Institute (SISI)

These nodal agencies were expected to set up anEmployee Assistance Centre to assist EmployeeResource Centres set up in the enterprises needingrehabilitation services. They were also expected toconduct a systematic survey of workers targeted forassistance, identify their training needs, and locatesuitable institutions to provide retraining in vocationalskills as were in demand in the local area. Given thesomewhat low levels of education among the outgoingworkers and their advanced age, training courses hadto be designed to impart practical skills. In practice, they

have taken the form of part-time courses spread overthree to five months. Workers not interested in vocationalskills were to be provided training in entrepreneurshipdevelopment to enable them to start small ventures oftheir own.

The action plans prepared by each of these nodalagencies were approved in early 1994 and the agencieswere provided funds in September 1994 to undertakecounselling, retraining activities, and provide escortservices to needy workers to obtain funds from banksfor their self-employment ventures.

As of October 1994, a total of 540 workers had been

provided training in voca tional skil ls andentrepreneurship development. The results achieved ineach pilot project are summarized in Table 8.

Each pilot project has adopted methods best suitedto the local area. Based on close contacts with the millsand labour welfare administration, the GLI, for instance,makes extensive use of awareness camps of workersheld in the mills and in labour welfare centres locatedclose to the residential areas of workers.

The NSIC at Calcutta has utilized consultancyservices, available in relative abundance in Calcutta, forsurvey and analysis of socio-economic data relating to

workers. It has also used its close relations with the SISIto offer entrepreneurship development courses. Thishas been especially useful as 31 per cent of the displacedworkers from 54 units surveyed had indicated a needfor assistance in entrepreneurship development.

The Kanpur project has concentrated on vocationaltraining in Fibre Reinforced Plastics on account of the

close association of this project with the Harcourt ButlerInstitute which has a well developed capability forimparting such training as a part of its normal activities.

The Indore Pilot Project has benefitted from SISI'sown strengths in vocational training and EDP trainingas also its familiarity in sponsoring cases of financialassistance to banks.

The Bombay Project started with strengths in theform of networking with employers. But the tasks ofidentification and survey of workers and sponsoringthem for training have posed some difficulties in theinitial stages. With increased interaction with tradeunions and research institutions engaged in labourstudies such as the Maniben Kara Institute and theMaharashtra Institute of Labour Studies and stateagencies such as the Labour Commissionerate and theDistrict Industries Centre, some of the initial hurdlesseem to have been overcome.

The National Productivity Council has recently

been chosen to undertake similar work in Bangalore butno information is available on the direction or extent ofwork done.

The Director General of Employment and Trainingin the Ministry of Labour and Employment has alsobeen recognized as a nodal agency. It has no geographicalarea allocated to it. It has been entrusted the task ofsupplementing vocational training facilities through itsnetwork of industrial training institutes and advancedvocational training institutes spread across the country.As of 30th September 1994, six advanced traininginstitutes and 15 industrial training institutes had beenidentified for participation in this effort.

Prospects

It would appear that the NRF has been largelyconcentrating on funding retirement benefits for a littleover 70,000 workers of central public sector enterpriseswho have chosen to leave the organization, before theirnormal retirement. The five pilot projects, no doubt,represent a more comprehensive package of servicesfor displaced workers; but, as of November 1994, onlya small start has been made in the direction ofidentification and survey of workers, providingcounselling, offering facilities for vocational training,

and entrepreneurship development. The record of about6,000 outgoing workers counselled by the enterprisesthemselves and about 540 workers provided vocationaltraining for self-employment seems to be somewhatmodest, given the far larger numbers identified assurplus and even larger numbers that might be involvedin implementing restructuring packages or other

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remedies evolved by BIFR or other agencies for sickenterprises.

Till now, state public sector enterprises and privatesector units have not been able to avail funds from theNRF and to meet the expenditure from VRS payments

to surplus workers. Given the magnitude of sicknessand the large numbers of surplus workers in thesecatagories of enterprises, it might not be appropriate tocontinue to leave them out for long. Pilot projectsprovide counselling and retraining facilities to all eligibleworkerswhether they come from central or statepublic sector enterprises or from the private sectorbut, as pointed out earlier, they have yet to attain theirfull potential.

The geographical coverage also seems to needconsiderable expansion. Given the wide dispersal ofenterprises with large numbers of workers needingrehabilitation, it is obvious that the efforts of five pilot

project areas would not be enough. The Department ofIndustrial Development is in the process of identifyingadditional Employee Assistance Centres in 20 morelocations; such an approach would also call for intensivetraining of key functionaries managing these nodalagencies in these locations as also orientation of majorstakeholders, such as, trade unions, training institutions,banks, and other promotional agencies towards thecommon goals and tasks involved in the process ofrehabilitation.

The question of coverage also involves anotheraspect relating to location of rehabilitation services.

Given the significant number of workers who leavetheir work sites after availing VRS to settle in rural areaswhere they come from, it also seems necessary to evolvesome package of assistance as might meet their needsand would also speed up the process of their re-absorption in the rural economy.

It is also necessary that the NRF moves in thedirection of its role as a catalyst in the process of

regenerating local economies. Among other things, thiswould involve stimulating thinking on area regenerationschemes that would augment opportunities for jobs andself-employment. Without this kind of initiative,additional infusion of vocational training or preparationfor entrepreneurship might not be effective. The

Department of Industrial Development has suggestedthat state governments should set up broad-based AreaRegeneration Councils so as to bring to bear theperceptions of key stakeholders in this effort.

While the need for imaginatively designed measuresfor retraining and redeployment of displaced workersand their families continues, it is necessary that we donot lose sight of wider goals in the context of providingsecurity in the process of industrial renewal occasionedby the new economic policy.

References

Ghosh, Abhik (1994). "National Renewal Fund: Impact, Issues,and Problems," paper presented at the 'Seminar on

Strategic Concerns of the Public Sector' organized by

the Department of Public Enterprises, ICPE and TCILheld at New Delhi on 28th and 29th October.

Ministry of Finance (Economic Division), Government of

India (1992-93).Economic Survey.

Ministry of Labour, Government of India (1993-94). AnnualReport: Part-I, Labour.

Ministry of Textiles, Government of India (1993-94). Annual

Report.

Murlidharan, S (1993). Handbook of Industrial Sickness. New

Delhi: Vidhi Publications.

Raja Ram, Bhure Lai (1994). Controlling Public Sector Sickness.New Delhi: Siddharth Publications.

Nirwan, Raj Singh (1994). "National Renewal FundImpact,

Issues, and Problems," paper presented at the Seminar

cited above.

Verma, Kush (1994). "The Role of National Renewal Fund inIndustrial Restructuring," paper presented at the

Seminar cited above.

14 Vikalpa

the national renewal fund: promise, performance, and prospects

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