CHAPTER-IX Page 1 of 47 - Rajya Sabharajyasabha.nic.in/rsnew/summary_work/chapter10.pdfCHAPTER-IX...

CHAPTER-IX

COMMITTEE ON INDUSTRY I. Composition of the Committee 9.1 The Department-related Parliamentary Standing Committee on Industry for the year 2005 was constituted on 5th

August, 2005 under Rule 287 of the Rules of Procedure and Conduct of Business in the Council of States. The composition of the Committee was as under:— 1. Shri Santosh Bagrodia — Chairman

RAJYA SABHA 2. Shri K.B. Krishna Murthy 3. Prof. M.M. Agarwal 4. Shri Surendra Lath 5. Shri Suresh Bhardwaj 6. Dr. K. Malaisamy 7. Shri Pyarimohan Mohapatra 8. Dr. Vijay Mallya 9. Shrimati Sumitra Mahajan 10. Vacant

LOK SABHA 11. Shri Guharam Ajgalle 12. Shri Kailash Baitha 13. Shri Rajnarayan 14. Shri Swadesh Chakraborty 15. Shri Bapu Hari Chaure 16. Shri Subhash Sureshchandra Deshmukh 17. Shri Ram Singh Kaswan 18. Dr. Vallabhbhai Kathiria 19. Smt. Susmita Bauri 20. Shri Sunil Kumar Mahato 21. Shri Prakash Paranjpe 22. Shri Kishanbhai Vestabhai Patel 23. Shri Badiga Ramakrishna 24. Shri Gurjeet Singh Rana 25. Shri Sarvey Sathyanarayana 26. Smt. Rubab Sayeda 27. Kunwar Manvendra Singh 28. Shri Ganesh Singh 29. Shri Suraj Singh 30. Shri Giridhari Yadav 31. Shri Chandramani Tripathi

9.2 On 5th August, 2006 the new Committee has been constituted. The Committee consists of the following Members:-

1. Shri Santosh Bagrodia — Chairman

RAJYA SABHA 2. Shri G. Sanjeeva Reddy 3. Dr. (Smt.) Prabha Thakur 4. Shri Kalraj Mishra 5. Shrimati Hema Malini

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10/3/2008http://10.21.217.2/committeessum/2006/chapter_9_10.htm

6. Dr. K. Malaisamy 7. Shri Pyarimohan Mohapatra 8. Dr.Vijay Mallya 9. Shri O.T. Lepcha 10. Shri Rahul Bajaj

LOK SABHA

11. Shri Guharam Ajgalley 12. Shri S.K. Bwiswmuthiary 13. Shri Ajoy Chakraborty 14. Shri Swadesh Chakraborty 15. Shri Subhash Sureshchandra Deshmukh 16. Shri Ram Singh Kaswan 17. Dr. Vallabhbhai Kathiria 18. Dr. Prasanna Kumar Patasani 19. Shri Krishnabhai V. Patel 20. Shri P. Rajendran 21. Shri Badiga Ramakrishna 22. Shri Gurjeet Singh Rana 23. Shri Sarvey Sathyanarayana 24. Shri Rajnarayan Budholiya 25. Shri K.C. Pallani Shamy 26. Shri Ganesh Singh 27. Kunwar Manvendra Singh 28. Shri V.K. Thummar 29. Shri Giridhari Yadav 30. Shri Umakant Yadav 31. Shri Mohan S. Delkar

II. Constitution of Sub-Committee of the Committee on Industry Sl. Sub-Committee Subject Name of the Chairman/ No. Convener 1. Sub-Committee-I For Ministry of Agro Dr. Vallabhbhai Kathiria and Rural Industries 2. Sub-Committee-II For Ministry of SSI Shri Swadesh Chakraborty 3. Sub-Committee-III For Ministry of Heavy Dr.Vijay Mallya Industries and Public Enterprises

III. Subjects selected for examination 9.3 The Department-related Parliamentary Standing Committee on Industry selected the following subjects for examination: —

Sl. No. Ministry/ Department Subject1 Ministry of Agro and Rural

Industries

PMRY, REGP and KVI Schemes.

2 Ministry of SSI Credit flow; Cluster Development; problem and prospects of SSI sector; and availability of land to SSI units in upcoming of SEZ scheme.

3 Ministry of Heavy Industries and Public Enterprises

Dalmia Dadri Cement Ltd. (Acquisition and Transfer of Undertakings) Amendment Bill, 2006; Revival of HMT Ltd.; Professionalisation of Boards of Directors in different Sectors of CPSU and performance review of PSEs.

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IV. (A) Sittings of the Committee: Till December 2006 the Committee held 28 sittings lasting for about 60 hours. The

details of the meeting are given in Annexure IX.

(B) Sittings of the Sub-Committee: Till December 2006, 2 sittings of the Sub-Committee were held lasting for 03 hours 35 minutes. The details of the meeting are given in Annexure X.

V. Study visits: The Main Committee and Sub-Committees undertook study visits of various parts to have an in depth study of their respective subjects which are as under:

VI. Reports Presented: During 2006 the Committee presented the following 16 Reports to both the Houses:— Sl.No. Report No. Date of presentation/ laying in Subject Rajya Sabha Lok Sabha

Sl. No. Committee/ Sub- Committee

Dates Places of visits Agenda

1 Main Committee 8th July to 15th July, 2006

Kolkata, Chennai, Kochi, Bangalore and Mumbai

Availability of Bank Credit, Transport, Steel, Coal to SSI units in the States; revival under BRPSE; review of the status of HPF; and review the Unlocking the Assets to Ancillaries of HMT.

1. 178th 22.05.2006 Report on Unlocking of surplus assets of CPSEs to generate resources for revival and the status of ancillary Units of CPSEs: A case study of HMT Ltd.

2. 179th

22.05.2006 Report on Action Taken by the Government on the recommendations contained in Committee's One Hundred Sixty-eighth Report on Demands for Grants (2005-06) of the Department of Public Enterprises (Ministry of Heavy Industries and Public Enterprises).

3. 180th

22.05.2006 Report on Action Taken by the Government on the recommendations contained in One Hundred Sixty-ninth Report on Demands for Grants (2005-06) of the Department of Heavy Industries (Ministry of Heavy Industries and Public Enterprises).

4. 181st 22.05.2006 Report on Action Taken by the Government on the recommendations contained in One Hundred Seventy-first Report on Demands for Grants (2005-06) of the Ministry of Small Scale Industries.

5. 182nd

22.05.2006 Report on Action Taken by the Government on the recommendations contained in the One Hundred Sixtieth Report on the Tax Proposals affecting various segments of industries of the Ministry of Small Scale Industries.

6. 183rd

22.05.2006 Report on Action Taken by the Government on the recommendations contained in the One Hundred Seventieth Report on the Demands for Grants ( 2005-06) of the Ministry of Agro and Rural Industries.

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VII. Summary of the Reccommendations (a) 178th Report Industrialization by CPSEs 9.4 The Committee observed that since their inception the CPSEs had initiated a wave of industrialization in theiradjoining region. The CPSEs were direct mainstay for several small-scale ancillaries and suppliers and many more indirectly. These Units had thrived on the orders from CPSEs. The Committee was of the view that if the trend couldcontinue this would have benefited both parent company and the ancillary units. Resource requirement of the HMT for its revival

9.5 Considering the resource requirement of the HMT for its revival and the Committee’s consistent emphasis on need to encourage the CPSEs to generate their own resources to assume full autonomy, also appreciating the long association ofancillaries with their parent HMT Company and taking a view of their offer to purchase the sheds at the price ascertained by

7. 184th 22.05.2006 Report on Action Taken by the Government on the recommendations contained in the One Hundred Seventy- second Report on Demands for Grants (2005-06) of the Ministry of Agro and Rural Industries.

8. 185th

22.05.2006 Report on Action Taken by the Government on the recommendations contained in the One Hundred Seventy-third Report on Inter-Sectoral Strategic Co-operation to Promote Small Scale Industries of the Ministry of Small Scale Industries.

9. 186th

22.05.2006 Report on Action Taken by the Government on the recommendations contained in the One Hundred Seventy-fourth Report on Operational Effectiveness of PMRY, REGP and KVI Schemes in Bihar, Jharkhand, West Bengal and Maharastra of the Ministry of Agro and Rural Industries.

10. 187th

22.05.2006 Report on Action Taken by the Government on the recommendations contained in the One Hundred Seventy-fifth Report on Key concern areas of SSI in select states of the Ministry of Small Scale Industries.

11. 188th 22.05.2006 Report on Demands for Grants (2006-07) Ministry of Agro and Rural Industries.

12. 189th

22.05.2006 Report on Demands for Grants (2006-07) Ministry of Small Scale Industries.

13. 190th 22.05.2006 Report on Demands for Grants (2006-07) of Department of Heavy Industries (Ministry of Heavy Industries and Public Enterprises).

14. 191st

22.05.2006 Report on Demands for Grants (2006-07) of Department of Public Enterprises (Ministry of Heavy Industries and Public Enterprises).

15. 192nd 23.11.2006/24.11.2006 Report on the Dalmia Dadri Cement Ltd. (Acquisition and Transfer of Undertakings) Amendment Bill, 2006 (M/o HI&PE)

16. 193rd

23.11.2006/24.11.2006 Report on Action Taken Report on the 178th report of the Committee on the Unlocking of Surplus Assets of CPSEs to generate resources for revival and the status of ancillary Unof CPSEs: A case study of HMT Ltd.

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State Government agency TECSOK as against the market price which is demanded by the HMT, the Committee recommendsthat the CMD of the HMT, in exercise of the powers vested in him, on taking a lenient and favourable view on demand of theancillary owners, constitute a sub-Committee in the Board of Directors to review the issue in consultation with stakeholders within the parameters of Company’s financial requirements. Such sub-Committee should furnish its report to the Board of Directors of the Company, within a time frame who may then take a final view on the issue in its earliest meeting. 9.6 The Committee also recommended that the Government should formulate a common policy for the CPSEs for disposal of their surplus assets in a way to maximize the returns. (b) 179th Report Purchase Preference Policy 9.7 The Committee felt that Purchase Preference Policy could be treated only as an interim arrangement.

Such an arrangement contributes practically nothing to the Consolidated Fund by way of earning from market. ThePSEs must be increasingly encouraged to diversify in the open market and re-align themselves with the emerging market through Joint Ventures and global marketing alliances instead of relying solely on Government/PSEs fororders. Though the Policy provided a cushion for PSEs, they must take benefit of current buoyancy in the market.

Notification to repeal SICA 9.8 The Committee observed that pending the notification to repeal SICA, the linkage between the two bodies BIFRand BRPSE remains undefined. The Committee, therefore, recommended that the Government should decide on linkagebetween BIFR and BRPSE at least, till such time a final decision on BIFR is taken by the competent Court.

9.9 The Committee also noted that management development courses are the main benefit of DPE’s

membership of ICPE, which had been availed by only 76 executives in last three years with DPE paying an annualmembership fee of US $ 75000. The Committee may be apprised of the items included under this contribution. TheCommittee could also like the DPE to take a fresh look into the cost benefit ratio of such membership and justify thesame of next year’s Demands and inform the Committee accordingly.

Support to PSEs in achieving the targets in MoU 9.10 The Committee would like to know the nature of such support to PSEs in achieving the targets in MoU. The Committee observed that the number of PSEs earning favourable ratings is increasing while those getting ‘Poor’ rating have decreased. Keeping this in view, the Committee also observed that the number of PSEs entering the MoU has been falling from 108 in 1999-2000 to 96 in 2003-04. The Committee wondered, if the PSEs having poor ratings are being excluded from the MoU system. If that is true, is it safe to construe that the Government’s support under MoU system is practically not available to the loss making PSEs. The Committee would like to know if there is a policy to exclude such PSEs from signingthe MoU. If so, the Committee would like to know the rationale behind such policy.

Boards as Independent Directors 9.11 Despite elaborate policy intentions to include persons of proven expertise in the Boards of PSEs, the Committeeobserved that former bureaucrats, serving representatives of autonomous organizations under government, representatives ofsubsidiary companies have been included in the Boards as Independent Directors in addition to Functional and Official Part-time Directors. In several cases retired bureaucrats are reappointed as Independent Directors. The Committee felt that such anarrangement does not fall in the spirit of the policy of appointing Independent Directors on the Boards of Directors of thePSEs. The Committee also expressed reservation on the practice of renewing the tenures of existing Directors in some cases.The Committee urged the department to ascertain that the implementation of the policy is in consonance with its trueobjectives and bring to the notice of this Committee any dilution in the “Professionalisation” of Boards.

9.12 The Committee was of the opinion that there should be uniformity in the qualification, selection and mandate of Non-Functional Part-Time Directors, as too many categories within the Board may affect its efficiency and autonomy. The Board must be defined in terms of its mandate and the interest of the Company and not by the categories of its Directors. TheCommittee would like to have Government’s comments on the need for uniformity in Part-Time Directors.

9.13 The Committee was constrained to observe that the information provided by the DPE was not only evasive but alsoinsufficient and incomplete. The Committee observed that DPE has not reacted to the criteria of “Independent Directors” as elaborated by the Naresh Chandra Committee. Similarly the DPE has not responded to the Narayan Murthy Committee’s recommendation on “Nominee Directors”.

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9.14 The Committee be apprised of the reasons on which is recommendation to extend the benefits of CRR scheme tofamily members was refused by the Planning Commission. The Committee reiterates its recommendation as contained in its150th Report in this respect, and recommends a re-look into the issue as it will increase the family income of the VRS optees.

9.15 The Committee observed that distinct preference was given to serving officers from the Armed Forces in

the Board level appointments in the PSEs under the Ministry of Defence, on the plea that Armed forces werepremier customers of these PSEs. The Committee wondered, if such an arrangement reduces PSEs as a captiveCompany instead of an autonomous commercial entity. The Committee was of the view that the products of thesePSEs have a large civilian market too. The Committee felt that if the private sector is being involved in the defencesector, why cannot the defence related PSEs harness potential in civilian and export market with their duel-use products and technology.

9.16 The Committee felt that the maximum age for Independent Directors too should be appropriately reduced tomaintain uniformity in the Board of Directors.

(c) 180th Report

Technology upgradation to secure high-end market

9.17 The Committee apprehended that despite robust growth in capital goods sector, the PSEs find difficult to secure orders and in several cases to execute the orders due to lack of working capital and other constraints. The Committee, accordingly, recommended that efforts should be made by the PSEs to utilize current opportunities in the market. As the capital goods market is essentially technology-intensive, PSEs must undertake the technology upgradation to secure high-end market. Linkage between BIFR and BRPSE

9.18 The Committee recommended that the Government should decide the on linkage between BIFR and BRPSE atleast, till such time a final decision on BIFR is taken by the competent Court.

9.19 The Committee observed with concern that multiplicity of agencies even in deciding the revival may and hasresulted in different opinions, successive appeals and costly delays. Even after deciding, the revival packages have failed in several cases. The Committee apprehended that in the process of analyzing the cases the BIFR has assessed the Techno-Financial feasibilities of individual PSEs prepared by expert agencies. Yet the appeals are filed in AAIFR and High Courts/Supreme Court and now these may further will be referred to new BRPSE for appraisal before a final decision is takenby the Cabinet. The entire process is time consuming and costly. The cost of delay had been immense in terms of rising liabilities that have eaten up the net worth of the PSEs. It may be an effort in duplication. Long-term objectives 9.20 The Committee noted that DHI was unable to commit on firm and tangible long-term objectives in quantitativeterms that could be a benchmark against which the performance is assessed. On most of the long-term issues Department’s reply has been elusive. The Committee observes that despite huge financial liabilities all the major decisions are still left toBRPSE. Pending its recommendations being approved by the competent authority, the Department is taking measures that are ad-hoc window-dressing of depleted worth of PSEs. The Committee was of the opinion that scarce resources cannot belost endlessly amidst huge liabilities of PSEs. A lasting solution has to be found urgently and accountability must beaccordingly fixed for which it is necessary to determine the benchmarks of performance.

9.21 The Committee observed that while the aggregate growth in PSEs under DHI compares well with the capital goodsgrowth, but this level of growth is mainly contributed by one PSE namely Bharat Heavy Electricals Ltd. (BHEL) whichshowed a growth of 15% during this period. Most of the PSEs have shown a negative growth mainly due to financial,marketing and technological constraints. Generation of internal resources 9.22 The Committee observed that cement and non-metallic industries are not able to generate extra-budgetary support in the engineering and consumer industry sector only BHEL and HPC are able to garner extra budgetary support to somesignificant level. Whereas the generation of resources by rest of the companies, is nominal. This is certainly not an acceptable situation. The DHI should come out with concrete proposal so that not only the number of companies whogenerate the internal resources increases but also these Companies generate substantial resources.

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9.23 The Committee noted that while the PSEs in the heavy engineering and capital goods category are facing theconstraints due to lack of orders mainly from Government and competition from foreign companies due to opening up ofdomestic market. Heavy wage bill, inability to generate internal resources or extra budgetary resources due to huge liabilitiesand previous NPAs, over reliance on the budgetary support even for working capital and also for the orders, inability toupgrade the produce line according to market needs, technological drawbacks, lack of corporate dynamism, inability to createnew niche in the market or locate new market are the major constraints for any sustainable revival of the PSEs.

9.24 The Committee recommended that certain companies in capital goods sector are critical for development of heavy engineering and infrastructure sectors irrespective of their financial condition. These companies in any case rely heavily on the Government’s investment in huge infrastructure projects. While they can be encouraged to generate their internal resources through innovative corporate strategies like global tie-ups and JVs. Government must at the same time support such facilities.

9.25 The Committee recommended the allocation for the renewals/replacements, additions and modifications, etc.should be judicious and should be justified by the objectives it is likely to achieve. Allocations should not be for mere token symbolism as it may amount to blocking scarce resources, which the country can only ill-afford. The Committee was informed that such allocations were necessary for the technical requirements of budgetary process. The Committee feels that such small amount obscures the entire scope and scenario of prospective expenditure. The Department may avoid blocking such amounts in future. Lump-sum allocations for Plan-Capital expenditure 9.26 The Committee further observed that there are too many lump-sum allocations for Plan-Capital expenditure that have not been sufficiently elaborated. The Committee has been further informed that these allocations are liable to be raised at the subsequent stages. The Committee shall be apprised if such unexplained expenditure that cannot be estimated, could at all be Planned-Capital expenditure.

9.27 The Committee also noted that of the seven companies, five have been referred to BIFR. Of the seven companiesonly Bridget and Roof is earning profit. Appeals against BIFR’s decision in respect of R&C and TSL are pending before AAIFR. The Committee also noted that the companies under BYNL group are being placed before BRPSE in phases. The Committee hoped that BRPSE would expedite the matter.

Budgetary scheme 9.28 The Committee observed that the Budgetary scheme and explanatory notes on expenditures do not give sufficient explanation/details of the allocations. There is always a possibility of duplication of expenditures through multiple Heads. The test criterion of the budget is clarity and transparency instead of ambiguity. The objective of the parliamentary scrutiny of budget was to know efficacy of the objective and efficiency of expenditure to achieve the objective. Expenditures are split into classes and sub-classes, thereby preventing a clearer picture of expenditure for a particular objective. The Committee also liked to know the rational necessity and objective criteria of the classification of diverse expenditures under one categoryand Budget Head instead of the details of allocations. The Committee felt that the DHI should take up these issues forconsultation with the Ministry of Finance.

(d) 181st Report Appropriation of Non-Plan Expenditure for NSIC in the year 2004-05 9.29 The Committee considered the reply of Ministry of SSI and further recommended that the matter of budgetary support to NSIC to meet out expenses on VRS must again be taken up with Ministry of Finance so that the NSIC is givenopportunity to rationalize the manpower.

9.30 Institutional arrangement made in North Eastern Areas for promotion of SSI in the region. The Committee recommended that the progress in opening of offices of the NSIC should be geared up by the Ministry so that it could take upthe programmes to increase its reach in the Region.

Strengthening of Small Industries Development Bank of India (SIDBI) for extending financial and support services to SSIs

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9.31 The Committee agreed with whatever steps had so far been taken by the SIDBI through Ministry or itself for extending direct credit to SSI at the same time Committee recommended that RBI could be approached again forcefully andimplementation in this direction if any could be shared with the Committee so that the issue could be taken with higher ups ofRBI/Ministry of Finance.

(e) 182nd Report

Level playing field to the domestic industry 9.32 The Committee noted that the Government had extended a variety of fiscal incentives for promoting the SmallScale Industries, however, this Committee felt that the Advisory Committee, constituted under the Chairmanship of Member(Central Excise), Central Board of Excise and Custom (CBEC) to advise the Government on the extent of abatement for both excise and Service Tex, should also examine the issue of the requisite period for which such fiscal incentive is required topromote the SSI units. The said Advisory Committee might also examine the issue of extending the central fiscal incentives to SSI units engaged in the SSI activities to the select region of the country in such a way that it might ensure the balancedindustrial distribution and development and prevent the shifting of the industries from one region to another due toaberration in the tax-incentives.

9.33 The Committee observed that since the medium enterprises were emerging out of the SSI units and they were onthe move towards the consolidation stage, therefore, the Advisory Committee might also consider the issue of examining as to whether the emerging MEs required central fiscal incentives for the rapid promotion and proliferation and catching up withthe global pace of growth.

Import duty on the raw materials 9.34 The Committee understood the need for obviating the inverted customs duty in order to maintain the differentialduty-structure on the raw-materials and the finished products. The Committee agreed with the reply of the Government that the output of one industry might be the input of another industry therefore, it might not be possible to remove the duty-structure in all cases. However, the Committee was of the view that tax-structure could not be on the random basis, it had to be based on certain reasons and principles that identified products were the finished products and from those which could beused still as raw-material. Such identification and its classification had to be on rational basis to avoid the double-taxation and to maintain the accepted general principle of taxable that the import duty on the raw-material has got to be lower than the duty structure on the finished products. The Committee’s concern was that the end-users could get the solace from the rational duty structure. Government would also not be under any revenue loss from the intermediate user of products whichstill remained as the raw materials. Paint and Coating Industry 9.35 The Committee agreed with the Ministry for not accepting the recommendation of Task Force for reducing the exemption-limit below Rs.1 crore, which in fact needed to be raised keeping in view the general inflation and need for giving adequate space to SEs to grow into MEs, which was a proclaimed policy of the Ministry of Finance, itself. 9.36 The Committee agreed with the Ministry for raising the eligibility limit for SSI exemption from Rs.3 crore to Rs.4crore which could certainly lead to expansion of SSI units. Increase in the excise exemption to new and existing SSI units in rural and urban areas 9.37 The Committee reiterated its recommendation for increase in the excise exemption to new and existing SSI units inrural and the urban areas and urged the Government to have a favourable view in the matter.

Incentives to facilitate exports by the small enterprises

9.38 The intention of the Committee’s recommendation for extending the incentives to facilitate exports by the smallenterprises was meant for providing such incentives also to other SSI units than the 100 per cent Export Oriented Units(EOUs) engaged in the manufacture or production of any article.

Lowering the customs and increasing the excise duty

9.39 The Committee desired that the Government could provide protection and encouragement to the SSI units till those

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units got consolidated and resilient enough to face the on-slaught of the MNCs. Accordingly the Government could place the taxation system.

Peak (most common) rate of custom duty

9.40 The Committee was of the view that the Government could also take into account the need to protect the domestic SSI industry while deciding the customs duty structure, which might be upto WTO-bound rate before comparing the customs duty structure closer to that of our East Asian neighbours. Duty differential of at least 5 per cent between raw materials/components 9.41 The Committee was of the view that the Government could sympathetically consider the plight of enterprises which intended to earn profit where there was not even a duty differential of at least 5 per cent between raw materials/components and finished products. (f) 183rd Report

Allocation of more funds for R&D in the Khadi field

9.42 The Committee observed that a provision of Rs. 1.50 crore for S&T Head during 2005-06 was too meager amount keeping in view the vastness of the Khadi sector and the national ethos attached with the Khadi. To make the Khadi globally competitive, the Committee felt that the Government could enhance the budgetary provision for R&D in Khadi sector. Matching of allocation and releases for the village industries 9.43 The Committee understood that unutilized allocation had to be surrendered as there was no way out to keep the unutilized allocation in any other account or making expenses in other Head unless the permission to do so was expressly sought. But surrendering of unutilized allocation could not be made the usual and regular practice just to ensure that fundswere used within the financial year itself. If the allocation remained unutilized it could be said to be “used as such” under any accounting practice. Rather, the practice would cast apprehensions on the effective implementation of scheme and theefficacy of the Ministry of ARI. The Committee impressed upon the Ministry to ensure the utilization of allocation withinthe respective financial year. This would not only ensure timely implementation of the projects/schemes but would also setup model accounting practice.

Strengthening of Co-operativisation Scheme 9.44 The Committee was of the considered view that the strengthening of Co-operative Scheme for coir industries would lead to promotion of coir industries not only in coir traditional zones like Kerala and Karnataka but would result into proliferation of the coir industries in the on-traditional zones as well. The Committee therefore, desired that the Ministry and the State Governments of both traditional and non-traditional State co-ordinate and promote co-operative activity in the coir industry so that the Centrally sponsored scheme becomes instrumental in coir production. 9.45 The Committee observed that the Government extended adequate attention to the rural sector, especially the Agro and Rural Industries. So far so good. The Government also appreciated the need to tackle the twin problem of unemployment and poverty with focused and co-ordinated approach. The Committee welcomed the observation and approach of the Government as this is a positive thinking on the part of the Government. But where the apparatus of the Government failed was the mode of implementation of its positive thinking i.e. converting its thought into action. The Committee, therefore,impressed upon the Ministry to take appropriate steps in this regard. (g) 184th Report

Role of Coir Board in the overall development of coir industry 9.46 The Committee appreciated the continued efforts of the Coir Board in the promotion of coir industries in the coirproducing States and proliferation of the coir industries in the non-traditional zones, however, the Committee would like to be apprised of the empirical facts and figures pertaining to increment in the production, consumption, exports of coir productsand the consequent employment generation as result of the efforts of Coir Board. Technology Upgradation (R&D) effort

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9.47 The Committee agreed with the views of the Ministry of ARI that there existed considerable scope for mechanization and modernization of technology in all the segment of the coir industry, therefore, the Committeerecommended that the Coir Board could renew its efforts for introducing the appropriate technology in the identified areas of coir industry in association with concerned research organization. Popularisation of eco friendly dyeing effluent treatment plant 9.48 The Committee agreed with the proposal of Coir Board to transfer technology starting from fibre-processing to manufacturing of products to at least one model agency in each coconut producing states and providing adequateinfrastructure facilities for implementing the technologies, however, the Committee desired that the intended technologycould be done in stipulated time-frame and the Committee be accordingly apprised of. (h) 185th Report Functional and operational impact on the provision of SEs and MEs 9.49 The Committee was of the considered view that the institutional provisions of CDC (SME) at the Central level andthe Small Industries Services Institute (SISI) in each State level might have functional and operational impact on theprovision of SEs and MEs at the field level. Such institutions had to play the pro-active role in combating the problems being faced by SEs and MEs so that their empirical impact felt in terms of the facts and figures and their contribution observed in the economic growth and development of the nation.

Enactment of SMED Bill 9.50 The Committee recommended that the Government should expedite the enactment of SMED Bill as the same would usher a new era for the better tomorrow of SEs and MEs in the country. The Committee desired that the role of CDC (SSI) could be completely re-designed to as to make it relevant and functional in the fast changing global scenario unleashed due to liberalisation and globalisation process. The Committee understood that the suggested CDC (SME) might play the role of catalyst in the adoption of Global Best Practices (GBPs) for injecting and enhancing competitiveness in India’s SEs and MEs working through decantation and dissemination of information pertaining to global policies and practices at fieldlevel.

Key areas of massive action for revitalization of SEs 9.51 The Committee was of the view that re-designing of the scheme of Technology Upgradation and Management Programme (UPTECH) as Small Industry Cluster Development Programme (SICDP) would lead to holistic development of clusters in various States in general but the massive impetus must be given in those States where there was the absence of thelarge scale industrial units so that industrial development and exploration of new-avenues of employment-generation might be undertaken in these States as well. The Committee would like to know the success rate of SICDP in Bihar, Orissa, Jharkhand and Uttar Pradesh, which lay behind of other States.

9.52 The Committee was pleased to know that under Vender Development Programme (VDPs), SISIs have beensuccessful in providing marketing assistance to small entrepreneurs to sell their produce to large scale organizationPSVs/Defence Sector. The Committee would like to know the total sale of various products in term of value and quantity to large scale organisation PSUs/Defence Sector under (VDPs) during last two years and its projection for such sale in nextthree years along with the steps being undertaken/envisaged to be undertaken to promote sale under VDPs to GovernmentDepartments like Defence (Army, Navy and Air Force), Paramilitary Organizations, Public Sector undertakings and Star Exports Houses.

Closer cooperation between large and small scale sector 9.53 The Committee was of the view that encouragement to anciliarisation would not only open avenues foremployment generation but would also foster integrated industrial development through giving impetus to SMEs. Therefore,it was required that Sub-Contact-Exchange as operated by SISI must play the pro-active role in dissemination of information with the purpose of promoting functional bonds between SEs and MEs. The Committee felt that the issue might be taken upon priority-basis in the meetings of Plant Level Committees by the Directors of SISI. The Committee desired the progress atempirical level in the field on this count.

Optimum capacity utilization

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9.54 The Committee, while agreeing with the argument advocated by the Ministry of Small Scale Industries that the issue of ensuring power supply at reasonable rates etc. came under the purview of State/UT Governments, recommended thatthe Ministry of Small Scale Industries could act as facilitation by liaising with the representation of the concerned State Governments/UTs so that Small Scale Unit was not prevented from utilizing their full capacity due to power-shortage. The role of DC (SSI) is appreciated in this regard. However, the Committee felt that the Ministry of SSI, could also interact withthe Ministry of Power to explore the possibility for framing special guidelines to State/UT Government for ensuring timelyand adequate power supply at reasonable rate to SSI units. Human Resource Development for SMEs 9.55 The Committee was abreast of the fact that Small Scale Industries Service Institute (SISI) was playing the role ofimparting training to the emerging SME entrepreneurs on various topics such as Information Technology (IT); FashionTechnology; food and fruits processing etc. The Committee, however, was of the view that SISI is not pro-active in discharging its intended role in every districts of the country. Testimony to the fact was the data, as furnished by the Ministry of SSI itself that only 1000 to 1530 workers from SSI are being trained annually under Skill Development Courses; the figurewas too meager, keeping in view the population of the country.

Garment industry 9.56 The Committee appreciated the contribution of the National Institute of Fashion Technology (NIFT) in extending support to the apparel industry so far the design, technology and overall management was concerned, however, theCommittee would like to know the outcome of efforts undertaken by the Ministry of SSI towards exploring the possibilitywith the CSIR and the SIDBI for providing specific R&D support to the SSI units engaged in the garment industry.

Processed foods

9.57 The Committee was of the view that the office DC (SSI) should chalk out Action Plan in collaboration with Ministry of Food Processing Industries to promote processed Food Industry in SME Sector based on the distribution of raw-material and in coordination with the concerned authority to provide adequate and timely capital and other basicinfrastructure viz. transport, cold storage and marketing.

9.58 The Committee was also of the view that all out efforts could be made to explore the potential of food processingindustry in SME sector in those States where the heavy industries could not have made inroads.

Chemical and chemical products 9.59 The Committee observed that the Drugs and Drug Intermediate Industry was on the up-swinging mode, therefore, little assistance on the part of the Government could boost the industry to the considerable extent. The inclusion of bulk drugsand intermediates among the approved technologies under the Credit Linked Capital Subsidy Scheme (CLCSS) was a welcome step, which enabled SSI units to avail of capital subsidy for technology upgradation under the Scheme, however,the committee viewed that the National Research Development Corporation (NRDC) needed to popularize its activities forthe proliferation of the benefits of R & D activities and the technical know-how at reasonable cost. Jute industry

9.60 The Committee note of the SWOT-analysis of the jute industry, expressed its pleasure that recommendations of the Committee found a place in the National Jute Policy. However, the Committee desired that keeping in account the SWOT- analysis of jute industry the Government could chalk out development strategy by overcoming the weakness and treats tojute industry and taking advantages of its strength and opportunities ahead. The wide spread sickness in jute industry as outof 78 jute mill, 38 are sick and most of them have been referred to BIFR is matter of concern for the Committee. Rehabilitation of sick jute mills in India 9.61 The Committee, expressed its deep concern over the widespread sickness in the jute industry and desired that the Government could guide the existing institutions intended to support and promote jute mills and implement the variousscheme in letter and spirit as chalked out by the Government for promotion and proliferation of the jute industry under the overall working of the National Jute Policy.

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9.62 The Committee welcomed the formation of National Jute Policy, 2005 which was in line with the recommendation of the Committee. However, the Committee hoped that the Government could leave no stone unturned to implement theschemes and programme as enshrined in the Jute Policy in order to achieve the objectives of Compound Annual Growth Rate (CAGR) of 15 per cent per annum as set in the Policy.

Ganguly Committee Report 9.63 The Committee took note of the recommendations of the Ganguly Committee on flow of credit to SSI Sector, asaccepted by RBI and commended to the banks for implementations. The Committee hoped that the banks would implementthose guidelines in letter and spirit and the Banking Division would monitor the implementation- machinery working in order to boost the domestic SEs to grow into MEs. (i) 186th Report Working of Prime Minister Rozgar Yojana (PMRY) 9.64 The Committee Constrained to express its concern over the performance of PMRY in the States of Jharkhand, Bihar, West Bengal and Maharashtra as there had been huge gap in target set for financing under the scheme and applicationsdisbursed by the banks despite the widespread unemployment in these States. The Committee was of the view thatGovernment should strengthen the monitoring – mechanism in these States to make PMRY successful in these states. Bihar an industrially backward State 9.65 The Committee was pleased to find that KVIC had been directed to make special effort for revival of khadiindustries in the State of Bihar including revival of khadi centres at Kajha and Ranipatra in Purnea, Tassar Silk in Banka andBhagalpur district and commercial marketing of Madhubani paintings, however, the Committee needed to know the actualprogress made in this regard. The Committee was of the considered view that the Government needed to make seriousefforts to promote and proliferate SMEs in the State as there was no Large Scale Industries in the State and that was why theCommittee had strongly recommended that the Ministry of ARI and SSI could come together in chalking out district-wise Development Strategy, based on availability of raw material, for promotion and proliferation of agro-rural industries and SMEs in general and Khadi industries in particular so that the State may come out of its present status and contribute to thenational economy. The Committee desired that the Government should come out with strategy to promote SMEs in the Statekeeping in view that facts as revealed in para 4.10.8 of 174th Report of the Committee. (j) 187th Report

A paradoxical picture of poverty amidst plenty 9.66 The Committee, keeping in view the prevailing economic standard in Orissa and more specifically the backward districts like Koraput, Bolangir, and Kalahandi, reiterated its view point that Orissa is yet to be put on Industrialdevelopment track by harnessing the available raw material in each district under integrated economic planning systems , ifthe vision as spelt out in the cherished charter of planning commission “to combine a rapid rise in the Standard of living of the people by efficient exploitation of the resources of the country, increasing production and offering opportunities to all foremployment in the service of the community”, had to be realized . Promotion and proliferation of SMEs 9.67 The Committee was of the considered view that the Government should have taken the issue of promotion andproliferation of SMEs on the priority basis in economically backward regions like Bihar, Jharkhand, West Bengal and Orissa in order to tackle twin problems of unemployment and stark poverty prevailing in these States. The impact of thevarious training programmes, Market Development Assistance schemes, credit facilities and the integrated infrastructuraldevelopment scheme would be felt in real terms only when people of the States dwells in peace and prosperity. Implementation of the credit linked capital subsidy scheme 9.68 The Committee was of the view that the Small Industries Development Bank of India (SIDBI) and the NationalBank for Agriculture and Rural Development (NABARD) could have played pro-active and effective role in implementing the credit linked capital subsidy scheme (CLCSS) for ensuring its success in the States of Bihar, West Bengal, Uttar Pradesh,Orissa, Jharkhand, Maharashtra and Gujarat where the scheme had to be implemented for producing positive results. The

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Committee would like to know the response of the SIDBI, NABARD and SISIs in regard to the suggestion of SIDO for taking up the follow up action to implement the recommendation of the Committee.

Export Potential of SSI products 9.69 The Committee felt that the process and product development was the essential link in any business, be it small or big, therefore, opening of six center for process and product development in mid sixties in SSI sector was a good startbut confining the same number in 2006 in vast country like ours , it seemed that proper and timely attention had not beenpaid to the principle of management for organizing SSI sector in India, particularly in the scenario of intense global competition.

Working of Credit Linked Capital Subsidy Scheme 9.70 The Committee expressed its apprehension on the working of Credit Linked Capital Subsidy Scheme for technology upgradation ( CLCSS) as no SSI units had been covered under the scheme in the States of Gujarat and Jharkhandand number of SSI units covered under the scheme in West Bengal, Orissa and Bihar i.e. one each in these States was quite on the lower side , therefore, the prevalence of sickness in SSI sector would not be surprise , if such situation exist. (k) 188th Report Economic philosophy behind the budget proposals 9.71 The Committee agreed with the economic philosophy behind the budget proposals of the Ministry of ARI for the year 2006-07 i.e. the Poverty alleviation and employment generation as the keystone of the economic policy. TheCommittee was of the view that fast growing India might invest in society, therefore, the purpose and policy of budgetingcould be aimed at widening the social safety net, as higher the economic development of a nation the greater the need for asafety net. Welfare measures and meeting the social obligation 9.72 The Committee took note of the economic philosophy of budgetary provision for this year aimed at empoweringthe people specially the poor. The Ministry had not yet indicated what special measure they were likely to take to give aboost to their philosophy. The increase in allocation for 2006-07 did not however give any indication to that effect as it remained, more or less the same and it was in 2004-05 and 2005-06. The Committee desired that the Ministry might explain about this to the Committee. Gender Sensitisation Programme 9.73 The Committee believed that the proclaimed policy of the Government for empowerment of women could not happen unless they were provided with adequate income generating activities, through wage and self-employment. The Committee desired that the Ministry of ARI might ensure gender commitment into budgetary commitment by emphasizingRural Employment Generation Programme (REGP) and Prime Minister’s Rozgar Yojana (PMRY) the same way. Prime Minister’s Rozgar Yojana. Details of targets set for Tenth Five Year Plan 9.74 The Committee noted that the Ministry was making provision in the budget for clearing the backlog of claims as per RBI’s advice. The Committee desired to know the reasons for such backlog and by when it could be cleared. The Committee impressed upon the Ministry to ensure that such backlog is avoided in future. 9.75 The Committee observed that Tenth plan target as fixed was to generate employment for 1.65 million persons. Three years of Tenth plan were over and the number of jobs created upto January, 2006 is 7.5 lakhs (number of casessanctioned) i.e. less than half of the target. The Government was yet to do a lot to achieve targets set up in Tenth Plan. Withthis rate of achievements, The Committee apprehended that the Tenth Plan targets would not be achieved. The committeemight be apprised as to how the Ministry was going to meet the targets and achieve the much proclaimed mission of theMinistry to generate employment in the ARI Sector. Status of recovery of loans under PMRY 9.76 The Ministry had already conceded that rate of recovery of loans under PMRY had been around 35% in the lastthree years. The committee was deeply concerned about this lower rate of recovery. From the information provided by theMinistry, the Committee gathered the impression that steps taken by Government and RBI have not been adequate enough to

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enhance the rate of recovery. The Committee calls for information, State wise for the last three years clearly indicating theprogress made owing to steps taken by Government in this regard. Causes of rejection of applications for loan 9.77 The Committee felt that steps taken by the Ministry for minimizing the rejection of applications and also forstoppage /delay of disbursement had not yet started giving the results. In the year 2005-06 less than 50% were accepted by the Banks and of which 43% could not be disbursed the loan under the scheme. It was an indication that both the evilpractices were widely continued. The Committee therefore impressed upon the Ministry to take up the issue with the StateGovernments/banks vigorously to eliminate these malpractices. (Para: 13.9.6)

Modification in the existing criteria of PMRY scheme 9.78 Keeping in view the inflation and general increase in the income level and also the fact that some States like West Bengal, Gujarat, Pondicherry etc. were running their own self employment schemes with better subsidy provision as compared to PMRY, the Committee felt that the following modification in the existing criteria of PMRY scheme might beconsidered. 9.79 Enhancement of the eligibility criteria of family income from Rs. 40,000/- per annum to Rs. 1,50,000/- per annum. Enhancement in project cost ceiling under the scheme might be enhanced from Rs. 1,00,000/- to Rs. 2,00,000/- for business sector and from Rs. 2,00,000/- to Rs. 5,00,000/- for service & Industry sector. 9.80 Enhancement in subsidy from Rs. 7,500/- per beneficiary (except for NER, J&K, Himachal Pradesh & Uttaranchal) to Rs. 10,000/- per beneficiary other than NE States, J&K, Himachal Pradesh & Uttaranchal. In case of NE Statesincluding Sikkim, J&K, Himachal Pradesh & Uttaranchal, the subsidy ceiling is already on the higher side i.e. Rs. 15,000/-per beneficiary. 9.81 The Committee agreed with the suggested modifications for improvement in PMRY. The Committee had already recommended for raising the eligibility criterion of family income. The Committee impressed upon the Ministry toimplement the scheme with the modifications for its betterment. Khadi and Village Industries 9.82 The Committee hoped that the financial assistance provided under khadi sales rebate and Interest Subsidy would continue to boost the khadi sector to maintain its performance during the year 2006-07. The Committee was quite hopeful that the introduction of the new scheme for repair/renewal of obsolete and outdated implements (charkhas/looms) couldenhance the Khadi production and open up further the scope for employment–generation opportunities. KVI as a mega source of employment generation 9.83 The Committee suggested that an Action Plan might be envisaged to make KVI as a mega source of employmentgeneration and poverty alleviation programmes. KVIC could cover larger size of employment in rural areas thereby help toalleviate poverty provided larger flow of budgetary support in the form of margin money coupled with the willingness ofbanking sector to channelise required level of loan funds. There was a good response from the field for REGP. As such,KVIC was in a position to generate about 10 lakh employment per year. But for achieving this mega target it was necessaryto enhance the REGP target by providing required level of margin Money fund, including funds for forward and backwardlinkages. National Khadi Revolution 9.84 The Committee was of the view that the re-vamped and restructured KVIC could take care of Mission of popularizing the Khadi with reduced cost, better design and quality of Khadi products making them the dresses not only ofrich and leaders but of poor masses also. The Committee hoped that Various efforts viz. organizing exhibitions, taking part in international trade fair, tie-up arrangements with National Institute of Design, National Institute of Fashion Technology, improved design input and packaging, etc. could lead to popularization of Khadi. Potential of generating woman employment in coir industries 9.85 The Committee finds that coir industry has the scope for women employment, therefore, the committee recommends that the Government should enhance the budgetary allocation for Mahila Coir Yojana Scheme so that the

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scheme may be popularized not only in the coir producing States but also in the non-traditional zones.

Co-operativisation Scheme 9.86 The Committee founds that the Co-operativisation Scheme of the coir Board was proving a non- starter. The Ministry had been releasing funds to the State Governments under the Integrated Coir Development Project, themodernization component of the Co-operativisation Scheme, but there had been no response from the State Governmentsunder this scheme which was a pathetic situation. The committee was of the view that either the Government couldencourage the Co-operativisation Scheme in the coir sector with result-oriented approach or might think of winding up of the scheme altogether. Rural Employment Generation Programme (REGP) 9.87 The Committee was of the view that the Rural Employment Generation Programme (REGP) was the Key programme of the Government for generating employment in the Rural Industry Sector. However, the committee felt thatthere was need for making REGP more effective by ensuring relatively larger units under REGP, and enhancing thecapital investment level per worker. In this regard, the committee reiterated its recommendation as made in its 177th Report on the Khadi and Village Industries Commission (Amendment) Bill, 2006, that this limit might be raised from existing Rs. 50,000/- to Rs. 1 lakh in general and Rs. 1.5 lakh for hilly areas. Working of REGP 9.88 The Committee noted with pleasure that REGP had been a successful scheme which had been popular both with the Banks and the entrepreneurs. This Statement was however, not absolutely correct if the States like Bihar, Jharkhand,Karnataka, Kerala, Gujarat and Goa and other States which had not performed well were taken into account. The Committeeimpressed upon the Ministry and KVIC to make special drive in the States where it was not so successful.

National Programme for Rural Industrialisation 9.89 The Committee was of the view that National Programme on Rural Industrialisation was a unique programme aimed at boosting up the rural economy by creating more employment avenues for the rural youth in the non-farm sector, and arresting the migration of the rural artisans to towns/cities, however, the performance under the NPRI Scheme has notbeen very satisfactory due to meagre financial assistance of Rs 5.0 lakh per cluster for cluster-wise interventions, fill-in-gaps arrangements, non-availability of credit-linked subsidy component, inadequate synergy with the Ministries/departments withtheir own schemes in this area etc and the same has been subsumed with the new Scheme of Fund for Regeneration ofTraditional Industries (SFURTI). The Committee desired that the National Programme on Rural Industrialisation could havecontinued with its set objectives, however, the Committee would wait and watch the success of the new Scheme of Fund forRegeneration of Traditional Industries (SFURTI).

Khadi Industries in NER and Sikkim 9.90 The Committee noted that there were just 32 Khadi Institutions in NER and Sikkim. The Committee was also surprised to note that the States of Sikkim and Tripura were yet to have Khadi Institution. The Committee felt that the number of Khadi Institutions needed to be enhanced. The KVIC had to make special efforts in that direction The Committeehoped that the growth of such institutions could result in harnessing the potential in the region. Rural Infrastructure Development Fund (RIDF) 9.91 The present UPA Government had announced revival of the Rural Infrastructure Development Fund (RIDF) with a corpus of Rs. 8000.00 crore. The Committee understood that there was enormous scope for the proliferation and setting upof new units of agro rural industries during 2004-05 and 2005-06 because of the aid coming out of the revival of the RuralInfrastructure Development Fund (RIDF). The committee recommended that the Ministryof ARI should chalk out massivecourse of action to be undertaken during the year 2006-07 for the promotion and proliferation of ARI units in the country. (l) 189th Report Proposal of re-christening of the Ministry of SSI into the Ministry of Small and Medium Enterprises (SME) 9.92 The Committee was of the considered view that keeping in view the overall global scenario, it was mostappropriate and desirable to adopt the nomenclature suggested by the ERC and accordingly change the nomenclature of the

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Ministry of SSI to that of the Ministry of Small and Medium Enterprises and that also to implement the objectives,achievements and targets of Indian SMEs as set by Finance Minister in General Budget 2006-07 and the years to come .

Action Plans set for the Ministry for the year 2006-07 9.93 The Committee was of the considered view that Science and Technology, Research and Development was very much beneficial for any industrial activities so far as the cost-reduction, product-development, product-design etc. was concerned, therefore, reducing the budgetary –allocation against the projected demand by the Ministry of SSI would amountto cutting the R&D activities, thereby, the margin of the profits . Proposals/targets set by the Ministry of Small Scale Industries for 10th Five Year Plan Establishment bill and wage bill 9.94 The Committee agreed with the views of the Ministry of SSI that the role of the Office of DC (SSI) should be reoriented, broadly on the following lines in the changing scenario of liberalization and globalization:- (a) It was necessary to treat the small and medium enterprises (SME) as a composite sector therefore the Office of the DC(SSI) would need to be equipped and strengthened, without losing the focus on the need for generation of employment aswell as the specific developmental/promotional requirements and inter-linkages of each distinct component of the composite sector and the products and services produced by them. (b) To address the issues of liberalization and globalization, the Ofiice of DC (SSI) need to widen and continuously update itsknowledge base regarding global trends in policies and Government interventions as well as ascertain ‘best practices’ in this field, within the country and abroad, and appropriately adopt them. (c) It would need to strengthen its linkages with the State Governments, other Central Ministries/Departments andassociations of SMEs to achieve the objectives more effectively. (d) Finally, it would need to forge stronger links with the relevant international institutions and bilateral organizations formore effective cooperation so as to derive full advantage of the comparative strengths of the Indian SME sector. National Small Scale Industries Board in facilitating co-ordination and inter-institutional linkages 9.95 The Committee hopes that the “National Small and Medium Enterprises Board” as conceived in the Small andMedium Enterprises Development Bill, once constituted would play pro-active role in facilitating and co-ordinating the inter institutional linkages among the Organisations of Central/State Governments for the growth and development of SEs andMEs in India. Comprehensive Social Security Scheme for widening the social safety nets 9.96 Since the Inspector Raj is causing severe harassment to Small Scale Units, therefore, the provision made in the proposed legislation to wipe out the tyranny of Inspector Raj. Formulation of National Policy for Small Scale Industries 9.97 The Committee felt that there was the need for Comprehensive National Policy for strengthening the Small Scale Sector, although the process had already started since 1991 in the sporadic manner, the need was to consolidate and streamline the national policy. Keeping in view of the dynamic situation of the Indian SSI sector vis-à-vis domestic & international industrial & economic environment, the Committee felt that that SSI policy might have been revisedincorporating components viz programmes for infrastructure development, technological upgradation, marketing support,easier access to credit and scientific management for inter-sectoral cooperation for ensured promotion and proliferation of SMEs.

Development of clusters 9.98 The Committee appreciates the announcement of the Finance Minister made in his Budget Speech (2006-07) that the Cluster Development Model can be usefully adopted not only to promote Manufacturing but also to renew industrialtowns and build new Industrial Township. The Committee also makes note of the decision of the Prime Minister to constitute an Empowered Group of Ministers to lay down the policy for cluster development and oversee theimplementation, and strongly believes that these announcement would have definite bearing on the growth and development

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of SSI sector. Creation of Infrastructural facilities and institutional support 9.99 The Committee viewed that NSIC could play the pro-active role in the creation of Infrastructural facilities and institutional support to the SSI units. Comparative study of Small Scale Industries in regard to comparative Competitiveness of Indian Small ScaleIndustries 9.100 The Committee recommended that efforts could be made to combat the barriers to competitiveness of Indian Small Industries viz. the large scale technological obsolescence, an antiquated mind set which insulates the industry from globalmarket trends, lack of a technology strategy and lack of structured business plans and absence of networking between smalland large industries. The committee would like to know the outcome of the efforts undertaken in this regard. Working of Central Institute of Tools Design 9.101 The Committee desired for opening of more branches of Central Institute of Tool Design to facilitate the services all over the country for providing services to SMEs in their respective regions. National Manufacturing Competitiveness Council (NMCC) 9.102 The Committee welcomed the announcement of the Finance Minister in his Budget Speech (2006-07) that “the National Manufacturing Competitiveness Council (NMCC) had finalized a five year National ManufacturingCompetitiveness programmes. The Committee noted the Ten schemes which had been drawn up including schemes forpromotion of ICT, mini tool rooms, design clinics and marketing support for SMEs. The Committee hoped that the implementation of these schemes in PPP model, and the consequent financing during the course of the next year wouldboost the upcoming SMEs .

Rural Infrastructure Development Fund 9.103 The Committee was pleased that the present UPA Government had revived the Rural Infrastructure DevelopmentFund with the corpus of Rs. 8000.00 crore and thus consolidating the rural economy. The Committee was of the view thatdeveloped rural infrastructure would be helpful in proliferation of Small Scale Industries in rural areas, therefore, in order tohave co-ordinated and focused approach for rural and industrial development, the Ministry of SSI should liaise withNABARD to impress upon that of appropriation of RIDF must prove helpful for Integrated Infrastructure DevelopmentProjects for SSI Sector . Integrated Infrastructure Development projects for SSI Sector 9.104 The Committee desired that Central Government could invite and induce the state proposals on Integrated Infrastructure Development projects specially from economically backward regions like Bihar, Orissa, Chhattisgarh etc and efforts could also be made for Public Private partnership for the accelerated promotion of Integrated InfrastructuralDevelopment.

Development Strategy for promotion of SMEs 9.105 The Committee was of the view that since the Small and Medium Enterprises (SMEs) could make an significant contribution to the national economy of India, therefore, the committee desired that the Government might take consciousefforts towards facilitating the promotion and development and enhancing the competitiveness of Small and Mediumenterprises in the country.

SENET Project: promotion and development of Small Scale Industries 9.106 The Committee appreciated the role of SENET project in facilitating the networking amongst the informationseekers, which concerned the development of the small scale sector, including the Central/state Governments, Governmentagencies engaged directly or indirectly in the promotion and development of the SSI sector, national and state level industryassociations, NGOs , however, its contribution to SSI could further be enhanced by promotion of ICT tools in SME sectorand deployment of more delivery mechanisms such as information Kiosks, involving more SSI associations in popularizingusage of IT tools, ERP solutions etc. The Committee, therefore, recommends that the SENET project may incorporate these

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activity and financial assistance accordingly be enhanced.

Comparative study to assess the Export potential of SSI Sector 9.107 The Committee desired that the Government could take benefits of the Comparative study undertaken by M/s. A.C.Nielsen to assess the Export potential of SSI Sector and increase the export potential of SSI sector. The Committee desiredthat the Ministry of SSI might apprise the committee of the outcome of the strategy for increasing the export potential of SSIsector as per the findings of the study undertaken.

The Chinese challenge

9.108 The Committee observed that our market was fluxed with Chinese products manufactured in Small Scale segment, therefore, there was urgent need for taking corrective steps for cost reduction, design, and process-modification and production diversification to make the India SSI product more competitive to combat the Chinese challenge. Working of Small Industries Development Organization (SIDO) 9.109 The Committee appreciated the working of Small Industries Development Organization (SIDO) as an apex body in the Ministry of Small Scale Industries so far as the formulation of the policies and programmes for SSI Sector wasconcerned, however, role of SIDO could be strengthened in the promotion and development of SMEs by emphasizing onsensitization programmes, which included sensitization programmes on WTO, Intellectual Proprietary Rights (IPR),information and encouragement sunrise industries, cluster development and modernization and technical up-gradation. 9.110 The Committee observed that one of the main objectives of the Credit Guarantee Scheme was to generate more employment opportunities spreading across length and breadth of the country, therefore, the CGTSI might prove instrumentalin creating new job opportunities. The beneficiaries under the Scheme might cover the tiny sector comprising of ruralartisans, self-employed entrepreneurs etc. so that the credit guarantee fund scheme be able to tackle the twin problem ofunemployment and poverty.

National Commission on Enterprises in the Unorganized/Informal Sector 9.111 The Committee, while welcoming the setting up of National Commission on Enterprises in the Unorganized/Informal Sector and taking notes of terms of references of the Commission, hoped that in pursuant to the termsof reference, the National Commission would examine the problems confronting the enterprises in the unorganized/informalsector. The NCEUS would make appropriate recommendations to provide technical, marketing and credit support to theseenterprises that would be helpful in promoting this sector.

Lump sum provision for projects/schemes for the benefit of the North Eastern Areas and Sikkim 9.112 The Committee is of the view that the North Eastern Region and Sikkim have abundant natural resources and potential for small and tiny units which can be utilized for industrial development. Despite the several steps taken toaccelerate the setting up of SSI units, the absence of motivated entrepreneurs has hampered the promotion and rapidindustrialization and the growth of small scale industries in the North Eastern States including Sikkim has not kept pacewith the growth of SSIs in other parts of the country, therefore, the Committee views that concerted efforts should be madefor promotion and proliferation of SMEs in the region. Central/State incentives or exemption from taxation in setting-up of small scale industries in NER or Sikkim 9.113 The Committee observes that despite the several Central/State incentives or exemption from taxation in setting-up of small scale industries in NER or Sikkim due to the locational disadvantages or the situational problems prevailing in theregion, the region has not seen the light of industrial development at the expected pace, therefore, the Committee,recommends that Ministry of SSI in tandem with states Government should induce setting the setting up of SSI units.

Small Industries Service Institute (SISI) in NER 9.114 The Committee is of the considered view that the institutions in the NER and Sikkim must provide the latest state of the art technology to clusters and the Government should provide adequate Fund for technology Development and

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modernization of existing infrastructure in the region. Training Institutions - DC (SSI) 9.115 The Committee is of the view that in the absence of training Institution under the umbrella of DC (SSI), the existing 4 SISIs one each in Guwahati (Assam), Imphal (Manipur), Agartala (Tripura) and Gangtok (Sikkim) must provideentrepreneurship/managerial/skill development training, consultancy, project profiles, extension services and commonfacilities to the small scale entrepreneurs for its ensured promotion . Trade related Entrepreneur Development for Women (TREAD) 9.116 The Committee approves the fund for Trade related Entrepreneur Development for women (TREAD) as thescheme is in consonance with the national priority to empower the women and shift towards gender – sensitazation programme. The Committee is however, of the view that NGOs be permitted to conduct the training programmes under theScheme as the same would enable the women entrepreneurs from the NER including Sikkim, to take the benefits of the scheme. Sub-Contracting Exchange for Ancillary Development 9.117 The Committee approves the provision for the common fund for Sub-Contracting Exchange for Ancillary Development and Vendor Development Programme ( VDP) and hopes that the provision so made would lead to proliferation of industrial activities in the backward areas of NER and Sikkim by motivating large, public and private sectorunits and other organizations to get their requirement of spares/sub-assemblies and other items from the small scale units resulting into ancillary development. Tool Room in NER including Sikkim 9.118 The Committee hopes that the Tool Rooms providing the technological support services to SMEs in the NorthEastern Region by precision quality toolings and trained manpower in the area of tool engineering would go a long way inthe promotion and proliferation of SMEs in NER including Sikkim. Marketing Assistance Scheme and Export Promotion 9.119 The Committee is of the view that Government should undertake marketing Assistance to SSI Entrepreneur in NER and Sikkim and chalk out marketing strategy for NER and Sikkim. The Ministry of SSI may identify the products which are being exported from NER and including Sikkim to the market share of products from NER and Sikkim which has been only 0.70 per cent of the total export of the nation during 2001-02 as per Third Census. Integrated Infrastructure Development Scheme (IIDS) 9.120 The Committee understands that the IID Scheme primarily aims at improving the infrastructure and facilitating the setting up of small/tiny units. Since the Scheme, is demand driven and State Governments have to submit suitable problems,the Committee recommends that the Ministry of SSI should not only encourage the States in NER and Sikkim to prepare theprojects but also render assistance in preparing viable projects .

Collection of Statistics of SSIs 9.121 The Committee understands that the main objective of the Collection of Statistics of SSIs is to collect, maintainand update the data related to SSI Sector for conducting sample survey, diagnostic survey, Index of Industrial Production(IIP) data collection and census. The Committee finds that the collected data provide considerable details on variouseconomic parameters like growth in the number of SSI units and their production, employment, investment, etc. and thereforewould be of considerable importance for policy-formulation.

Credit Guarantee Scheme for SSI Sector 9.122 The Committee is pleased to know that guarantee fee for all proposals received from NER has been reducedfrom 2.5% to 1.5% for stepping up credit to Small and Medium Enterprises, however, the Committee would like to know theimplication of the provision on the Credit Guarantee Scheme for SSI Sector in the region.

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Micro Finance Programme 9.123 The Committee finds that the funds under PRF are utilized for security deposit requirement of the loan amount from the MFIs/NGOs in the hitherto underserved States including North-Eastern States and Sikkim.The Committee desires that the Government should undertake the needed measures viz. capacity- building of micro finance institutions for covering larger number of beneficiaries of the NER; and training of prospective and existing micro entrepreneurs for making themcompetitive for improving the status of micro units in NER and Sikkim .

Credit linked capital subsidy 9.124 The Committee wonders that under the Credit linked capital subsidy funds amounting to Rs1.2 crore, Rs. 0.61 crore and Rs. 2.0 crore was earmarked for NER including Sikkim during the last three years, i.e 2003-04, 2004-05 and 2005-06 respectively, but no units under the CLCSS was assisted in NER including Sikkim during last three years. The Ministry ofSSI may explain the situation and the reasons for making the provision under Credit linked capital subsidy year after yearwhen no case has been covered under the scheme in NER including Sikkim during last three years. Other Grants—NSIC 9.125 The Committee recommends that a study may be undertaken with respect to activities of various organisationsengaged in the promotion of industrialization in North-East region and the problems being faced by the entrepreneurs of NERto evaluate the role of NSIC for for rapid promotion of SMEs in the region. The Committee feels that the role of NSIC could be that of nodal agency for the procurement of the requirements of all the Government bodies including PSUs. This wouldgreatly help NSIC in assessing the total requirement of the products being met from outside NER and the need to increasecapacities of SSIs of NER. Outlook of unorganized /informal sector in NER including Sikkim 9.126 The Committee finds that the enterprises based in the NER and Sikkim are predominantly handlooms and handicraft based and also relate to activities in food processing industries. The Committee is in agreement with the Ministrythat through the intervention of Growth Poles as proposed by the NCEUS there is large scope to increase the productivity ofthese enterprises and give a fillip to skill formation and growth in SSI sector. In addition, there is a section of the informalsector that are home based workers, services sector etc. The Committee feels that the complementarities that are proposed tobe built up as a result of intervention in the Growth Pole would benefit the unorganized/ informal sector as a result offorward and backward linkages in productive activities .

Investments in Public Enterprises 9.127 The Committee recommends that NSIC must be guided by the Principle of Management by Objectives (MBO) .The Committee feels that in order to ensure smooth credit flow to small enterprises, NSIC should enter into strategicalliances with commercial banks to facilitate long term / working capital financing of the small enterprises across the country. 9.128 The Committee feels that NSIC must be able to implement the strategy of "Focused Sectoral Approach" i.e. up-grading identified sectors in terms of the projects, business applications of the new technologies, quality control, packagingmarketing and linking to the global markets in order to meet the twin challenges of growth and competition of SMEs withhuman face.

Tiny and Micro Enterprises

9.129 The Committee is of the view that concrete steps may be taken to strengthen and streamline the tiny sector and in order to give tiny sector an organized outlook. The Committee finds that Small Scale Industries (SSIs) including tiny units inthe country have enough competitive strength to withstand the impact of free imports and intense global competition. Government should launch awareness programme of the WTO provision and international environment for preparing thesmall scale sector including tiny sector to meet the challenges of globalization. Government should constantly monitor theimpact of the removal of QRs and WTO Agreements on the economy including the SSIs in the country. The Committee isaware that the removal of QRs have exposed the SSIs to a greater competition, yet the SSI sector including tiny sector isbound to grow. Mechanism of institutional arrangement

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9.130 The Committee is in agreement with the the Finance Minister who has recognized the small scale industries as the engine of growth. The Committee is also of the view that finance to SSI must be treated as financing to SME in orderto give the SSI units to grow into Medium Enterprises, therefore, recommends that concerted efforts step must be undertakento meet the requirement of Small and Medium Enterprises (SME). Adequate steps must be taken to promote and proliferatethe Medium Enterprises. And due incentive and exemption be granted required for each the Small scale industries and theMedium enterprises. Institutional support in rehabilitation of Sick SSI units 9.131 The Committee is however, of the view that all for effective rehabilitation of Sick SSI units and promotion of SSI Sectors all the Regional Offices of RBI should ensure that meetings of State Level Inter-Institutional Committee SLIICs are convened at regular periodical intervals and the meetings are attended by the senior officials of banks/financial institutions soas to serve the desired objective. The representatives of the local SSI Associations should also be invited to the meetings ofSLIIC, which should play a major role in rehabilitation of sick units. SLIICs should address the issues regarding delay incarrying out viability studies and initiating nursing programmes of viable units as also progress in revival of units, whichhave been placed under the nursing programme. Further, the issues relating to the progress made in implementation of therevised guidelines issued by the RBI based on the recommendations of Kohli Working Group must be addressed to ensurethat the banks strictly follow these guidelines for detection of sickness at an early stage and take remedial measures forspeedy rehabilitation of sick SSI units identified as potentially viable. Sunrise industries in the SMEs sector 9.132 The Committee desires that suitable steps may be taken to identify / address the problems being faced by the sunrise industries and enhance the prospects of the sunrise industries in the SMEs sector e.g. Information Technology (IT),Biotechnology (BT) Pharmaceuticals and Nanotechnologies alongwith IT enabled services . The Committee desires that suitable steps must be undertaken to reinforce appropriate policy regime to promote sunrise SMEs industries which have thepotential to be the winners of tomorrow. The Committee directs the Government that the issue such as IPR protection andmanagement of rapid up-scaling of operations should be taken up on priority basis.

Working of SME Development Fund 9.133 The Committee understands that SME Development Fund promoted by SIDBI/banks with a corpus of Rs.500 crore aims at funding export oriented and high technology SME. The Committee advises the Ministry of SSI to examine whether there is the need to enhance the said corpus fund to proliferate the SMEs, and if yes, the strategy/ mechanism to supportSMEs in knowledge-based industries such as Pharma, Bio-tech. and I.T. to this fund. The Committee would like to know theprogress made in this regard during 2005-06 and the steps which may further be taken during the year 2006-07 contributing to the accredited cluster which can play catalytic role in the advancement of SME sector. Credit rating system for SSI unit or group of SSI units during the year 2006-07 9.134 The Committee welcomes the Credit Rating Agency for SMEs namely, SME Rating Agency of India Ltd. (SMERA) which aims at providing affordable, credible and independent ratings to the SMEs, and thus would helpenhancing their credibility and standing. Towards Technology upgradation 9.135 The Committee understands that the technology upgradation of SSI units is the most urgent requirement to do business in a competitiveness environment. In this regard, the Committee welcomes the announcement of the FinanceMinister in his Budget Speech (2006-07) that the “new thrust is towards up-scaling the size and technological upgradation”, therefore, the Committee desire that the Ministry of SSI should undertake to achieve the intention of Finance Minister in linewith the recommendation of the Committee.

Linkages between large and small enterprises 9.136 The Committee is of the view that the concrete steps may be undertaken to accelerate and strengthen the partnership approach to develop linkages between large and small enterprises. Steps may also be taken for revitalization andregeneration of existing organization and revamping of existing organization and revamping of the mechanism fortechnological upgradation. The Committee would like to know the Status of R&D in technology upgradation further stepsrequired for designing and Outcome of efforts towards cost-reduction in consequent to the technological upgradation andsteps being taken towards avoidance of waste and non-value adding activities.

The Policy of Reservation

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9.137 The Committee notes the stand of the Government that the Policy of Reservation discourages investment competition and Technology upgradation in the small sector. The Committee also takes note that dereservation of 180 items,as announced in the Budget (2006-07) would help the small scale sector to meet the demand for technological upgradation,encourage research and development and make the sector competitive to face the domestic and global competition. TheCommittee would like to be apprised of the overall impact of the dereservation of reserved items.

Working Group on rehabilitation of Sick units 9.138 The Committee views that banks should carry out specialized studies to ascertain the reasons for sickness so thatsuitable rehabilitation measures can be drawn up for sick SSIs units. Sickness in SSI sector 9.139 The Committee takes note of the information from the RBI data on sickness in SSI sector, that the number of sick units amongst SSI has declined marginally from 1,38,811 in 2004 to 1,38,041 in 2005, however, the Committee observes thatvery little has been achieved in regard to rehabilitations process , therefore, concrete steps are required to be taken. Implementation Status of A.S. Ganguly's recommendations in regard to credit flow to SSI sector by pubic sectorBanks 9.140 The Committee desires that the Government should implement the A.S. Ganguly's recommendations in regard tocredit flow to SSI sector by pubic sector Banks to facilitate additional capacity generation, expansion of existing units andimproving the capacity utilization, diversification of products and to enhance competitiveness of SSI sectors. Popularizing the venture capital funding to SSI units 9.141 The Committee is of the view that to encourage Venture Capital funding to SSI units, the banks must be guided by the RBI that investment in venture capital will be eligible for inclusion in priority sector lending. Credit Policy Package as announced by the Finance Minister on 10th August 2005 9.142 The Committee welcomes the announcement of the Government for ‘Policy Package for stepping up of Credit to Small and Medium Enterprises’ whereby the Public Sector Banks have been advised to fix their own targets for funding SMEs in order to achieve a minimum 20% year-on-year growth in credit to the SME sector. The Committee notes that under policy package although objective is to double the flow of credit from Rs.67,600 crore in 2004-05 to Rs.1,35,000 crore to the SME sector by 2009-10, i.e. within a period of five years, the Committee feels that the Government needs to do more in this regard to ensure the adequate credit to the SME sector. Measures for SMEs friendly tax regime 9.143 The Committee, while taking note of the fiscal concessions being extended by the Government to facilitate thesector in growing and providing large scale employment. The Committee, however, is of the view that to give a boost to thegrowth of the small enterprises sector to generate employment at faster rate, the under-metioned tax-related measures may further be taken : 9.144 The Committee is in agreement with the Government policy in the post QRs phase, to provide protection to theindustries in the form of raising custom duties upto the bound levels, imposing anti-dumping duties, taking safeguards measures in case of surge in imports which would protect the domestic industries from the on- slaught of MNCs.

Raising equity participation from the existing 24% to 49% (FDI) in SSI sector

9.145 The Committee desires that the Government may consider the proposal for raising equity participation from the existing 24% to 49% (FDI) in SSI sector for better technology transfer and further FDI can be encouraged for sizeableinvestments towards larger returns give for space to grow SEs out MEs. Country’s Model of SSI Sector Stand today vis-a-vis model of SSI sectors 9.146 The Committee is of the view that in the context of globalisation there is a growing trend to boost the SME sector,therefore, country should not lag behind in boosting the SMEs. There is the urgent need to provide adequate space for SSIsto grow into Medium enterprises. Country should recognize the lower end of the industrial and enterprise segment of theeconomy as consisting of the SME sector as one distinct entity requiring almost similar policy interventions.

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Policies for SME 9.147 The Committee is of the view that there is the need for undertaking the initiatives like Small & Medium EnterprisesFund of SIDBI, strengthening the institutional back up to be able to suggest, formulate, coordinate and ensureimplementation of policies and programmes for small and medium enterprise (SME) Sector. There is the need to providesensitization programmes in respect of the fast changing economic scenario and ensure dissemination of information, clusteroriented Infrastructural development, trade specific measures, market assistance and simplification of rules and regulations.Such concrete initiatives must intends for promotion and development of the SME Sector, Service enterprises, fast growingtrades like IT, pharma, biotechnology, etc., needs special attention. Recognizing SMEs in the service sector 9.148 The Committee welcomes the announcement of the Finance Minister in the Budget (2006-07) and treating the small scale enterprises in the services sector on par with the small scale enterprises in the manufacturing sector. TheCommittee would like to know the impact and implication of recognizing SMEs in the service sector. Promotion of SMEs during the financial year 2006-07 9.149 The Committee would like to know as to what steps are being envisaged to promote SMEs during the financial year 2006-07 in regard to strengthening credit delivery system and support services agencies; net percentage of credit to Small Scale Industries vis-a-vis the large Scale Industries and the details of NPAs of SSI sector in comparison to large ScaleIndustries for last five years; Progress made in regard to Restructuirng of State Financial Corporations (SFCs); Steps revisedto be taken for securtisation of debt to enhance flow of additional credit for SSI sector; Reinforcing Technology Bank forSME upgradation to facilitate technology transfer project evaluation, risks management etc.; Modalities of re-orienting the role of Regional Rural Banks (RRBs) for extending credit flow to rural Small Scale Industries; Programme for introducingand encouraging Laghu Udyog Credit Cards during the year 2005-06 ; Status and financial assistance extended to Self Help Groups and Initiative for the promotion of Micro – Finance.

(m) 190th Report

Revival Plans

9.150 The Committee observed that greater part of BRPSE approved Revival Plans includes waiver or conversion ofprevious loans and interest liabilities into equity and Government’s Guarantee for raising fresh loan. However such Revival Plans do not elaborate other components that would be critical for sustainable revival like technology upgradation andabsorption, enhancing marketing network, manpower training etc. It may be recalled that previous revival efforts toopertained to similar cosmetic restructuring of financial liabilities and fresh assistance without realigning the PSEs to newmarket realities. As such previous revival plans could not ensure the sustainability of revival. The Committee doubtedwhether these packages would be sustainable. The Committee impressed upon the Ministry of HI & PE to examine theinclusion of these vital components in the revival packages so that the Companies come out of protected regime and operatein the new market realities. 9.151 It however was the considered view of the Committee that the revival plans pertained largely to financial reconstruction, and technology and marketing aspects are not contained in the revival plan approved by the Government. Asthe nodal Department the DHI must monitor with the management of PSEs on these aspects of revival. The Committee would like to be informed of the steps taken by the DHI in this regard. 9.152 The Committee cautioned that DHI should bear the previous experiences in mind while assessing and ensuring the sustainability of revival. DHI should address the comprehensive restructuring of other critical factors that have bearing overperformance of a PSE. The Committee also suggested that the respective PSEs should be given financial targets to beachieved within a time-frame.

Planned capital expenditure

9.153 Moreover, in view of the details furnished by the DHI of the Planned capital expenditure, the Committee wondered that such meager infusion as the part of revival plan, would at all be sufficient to carry out technological upgradations and to realign market network. The DHI may offer its comments on the issue. 9.154 The Committee strongly felt that the Government should come out with a transparent policy for unlocking of

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surplus assetss by the PSEs. The Committee felt that such a policy need to be uniform in respect of all the CPSEs which fallunder various Ministries/Departments of the Government of India. If necessary the concerned State Government may beconsulted before the formation of the policy on this issue with a view to have broad consensus. The Committee consideredthat in absence of a transparent policy, it would be difficult for the PSEs to generate resources by unlocking the surplus assetsas it may involve administrative issues and avoidable litigations. 9.155 The Committee observed that considering that the Planned Capital expenditure is vital for a sustainable revival,and survivability of the PSEs, of the total required outlay of Rs. 1350.22 crores, a Budgetary support of only Rs 450 crores has been given in the BE 2006-07. The Committee wondered whether the PSEs would be able to generate the remaining Rs.950.22 crores from non-Budgetary sources. The Committee also wondered if the BRPSE has identified the potential sources to generate balance funds from extra Budgetary sources. The Committee liked to have the DHI’s comments on the possibility of such shortfalls in budgetary allocations which may result in derailing the recommended revival of the PSEs.

9.156 The Committee observed that of the total BE ( 2006-07) of Rs. 905 crores, Rs 455 crores are Non-Planned expenditures meant for committed expenses. Of this Rs. 400 crores are meant to settle VRS and statutory dues, salaries andwages. Though these were loans to begin with but the Committee also notes the abysmal record of PSEs in respect of LoanRepayment. The Committee found it alarming that this situation has remained for years. Even during the FY 2005-06, it is evident that while the Planned expenditure was enhanced only by Rs. 94 crores, the Non-Planned expenditure was enhanced by Rs. 116 crores. The non-Planned expenditure was increased to meet the salary dues of the PSEs.

Revival packages 9.157 The Committee was constrained to note that in the several revival packages offering non-planned budgetary support for wages, salaries, VRS and other statutory dues did enable the loss making PSEs to turn around but only marginallyand temporarily. This could have been due to faulty and partial implementation of lop-sided revival plans. The Committee therefore cautions the Government to ensure the viability before approving the revival plan and also strictly monitor itsimplementation. The Committee should be apprised of monitoring mechanism and the additional measures for successfulimplementation.

9.158 The Committee observed that the Non-Planned expenditure has been higher than Planned Expenditure for last several years. Meaning thereby that the expenditure is much higher on the committed liabilities as compared to newdevelopmental and capacity-building initiatives under Government sponsored schemes. Even the committed liabilitiesreflected under Non-Planned expenditure, the majority of expenditure has been going to meet on year to year basis thefinancial obligations incurred by PSEs. In view of the definition of Capital expenditure as provided by the DHI, theCommittee only wonders if the lumpsum allocations of Rs 400 crores to support to clear VRS dues and salary dues to theworkers could at all be termed as Capital expenditure. The Committee desired that DHI may clarify the position.

Public private partnership 9.159 To consider the Cess as private sector’s contribution would be misrepresentation of fact. The Committee liked to know the initial mandate for which Cess was levied, and if the NATRIP is covered within that mandate? The Committee wasnot in agreement with the DHI’s assertion calling NATRIP a joint project by public and private partnership. As is evidentfrom the presentation given by the DHI, out of the total investment of Rs. 1718 crores only Rs 118 crores would becontributed by the users from industry within three years, rest of the investment is to be made in one form or the other. TheCommittee feels that the participation of industry should have been substantial to justify the public private partnership.

9.160 The Committee took note of elaborate but protracted decision making procedure. However the DPR, as submitted in January 2006, broadly indicates the extent of expenditure to be incurred in the project. Considering the relevance of thetechnology demonstrator project, requisite finances should have been earmarked in the BE 2006-07. Here again the Committee found priorities of DHI flawed. The Committee accordingly considered that such R&D projects must be cateredwith long-term committed finances instead of piecemeal allocations based on expeditious requirements.

9.161 The Committee however noted that the efforts in the revival plans is to gradually reduce the losses and turn these companies into viable enterprises. To improve the Net worth of the PSEs the debt/loan liabilities are being restructured as apart of revival plan. The Committee noted if such a pattern of assistance is sustainable for longer term and if it puts hugepressure on Government’s finances. The Committee desired the DHI to find the way out.

SWOT Analysis

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9.162 The Committee observed from SWOT analysis that the PSEs consider increased competition in market as a majorthreat also the technological drawback and inability to diversify the product profile are major constraining factors. The PSEsstill do not have marketing network so vital to retain the market niche and also to harness emerging. In absence of marketingnetwork and strategy, the PSEs continue to rely on Government and PSEs for orders, and have not been able to exploit newbusiness opportunities in private sector and export market. In order to face the increased competition, the PSEs have beenasking for consolidation, merger or Joint Ventures with other PSEs. However, these aspects have not been included in therevival plans, whose focus is confined to the financial restructuring of the PSEs by infusion of fresh capital or waiving off orrestructuring the previous liabilities. Except for HEC, no other PSE has been asked to garner resources from internal sourcesby unlocking surplus assets. As a result the Government had to make huge investment for the revival of these PSEs, who inturn have assured to earn a rather modest profit over next five years.

(n) 191st Report

9.163 The Committee reiterated its recommendation that the DPE should use its IT resources to collect the updatedinformation on its Guidelines, various programmes and policies that are applicable to all the CPSEs. The DPE should alsoprovide linkages from its Website to the Websites of other CPSEs. DPE’s Website should be enriched with the linkages with relevant Websites, Executive Development Programmes, Research Studies and Media Reports on the CPSEs, ParliamentaryQuestions and the Acts that are relevant to the CPSEs. The Committee recommended if possibility should be explored tocreate an IT Network among CPSEs with DPE as its hub.

Role of BRPSE

9.164 The Committee felt that the BRPSE was set up as a specialized body mandated to look into the possibilities and ways of the revival of the PSEs. It is irrelevant if it is a part time or full time body, till such time it is delivering on itsmandate. Though it was empowered to seek independent advice, yet in practice the BRPSE is relying on the inputs given bythe concerned administrative Department. The Committee liked to know about the cases where the BRPSE has consulted anindependent expert. The Committee wonders that devoid of independent advice, if BRPSE’s role is only to ratify the inputs given by concerned administrative Department. 9.165 The Committee had in a few cases observed that other stake holders like the State Governments, municipal authorities or ancillaries units too had claims on the surplus assets like land. In absence of a clearer policy, the process ofnegotiations among these stake holders could be protracted and prolonged, resulting in avoidable delay in disposal of surplusassets like land and its consequences for the concerned PSE. The Committee therefore impresses upon the DPE to takeinitiative to formulate a uniform policy on the issue and if required, consult the State Government and other stakeholders. Technological upgradation, marketing and human resource development

9.166 In the revival plans as approved by the Government for the PSEs, it has been observed by the Committee that the emphasis is more on the financial restructuring and not much stress is laid on aspects like technological upgradation, marketing and human resource development. Given the fact that Government had been making major investment is eithersettling the VRS dues or on CRR schemes, the Committee considered it only prudent to upgrade the skills of humanresources with respective PSEs. Therefore human resource planning and development should have been an integral part ofthe revival strategy of the PSEs.

9.167 The Committee observed that maximum Excellent and Very Good Ranking PSEs belonged to Schedule A and thenumbers gradually come down in successive Schedules. The Committee liked to have the comment of DPE if the MoU performance of the PSE is directly linked with the factors like investment, capital base, net sales and profits etc. according towhich the PSEs are categorized in Schedules by the DPE and if there was any system of relocating the Schedule of a PSEaccording to its MoU performance.

9.168 The Committee observed that of the PSEs recommended for revival maximum 16 cases belonged to PSEs underadministrative control of DHI, three PSEs under Department of Chemicals and Petro Chemicals, two PSEs each ofDepartments of Textiles and Fertilizer, and one PSE each from the Departments of Coal, Mines, Shipping, Scientific andIndustrial Research and M/O Water Resources. The Committee hoped that the administrative Ministries/Departments of thesePSEs will ensure that the revival packages are implemented in earnestly and comprehensively as approved by theGovernment and that the targets as promised are achieved. The Committee desired that as the administrative Ministry ofBRPSE, the DPE should pursue and coordinate with the concerned administrative Ministries/Departments.

Objective of the CRR scheme

9.169 The Committee noted that the objective of the CRR scheme is to provide training to VRS optees so as to align themto the job market for a gainful employment. A comparison between number of VRS optees and those actually redeployed

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after the being trained under CRR, reveals that the scheme has not been effective in meeting this objective with only about10% of the VRS optees actually getting redeployed. In such a scenario, manpower rationalization can only lead to wide-spread unemployment. Despite the fact that the Government is spending huge amount to settle the VRS and other statutorydues of the rationalized employees, the entire process of man power rationalization appears to be precipitating socialinsecurities and unemployment among a productive section of the society.

9.170 Furthermore, the Committee wanted to know if the core competencies, skills and expertise of the personnel areconsidered before selecting the nodal agencies. Given the poor performance in redeploying the trainees, the Committeeapprehended that these critical issues are perhaps not given due importance while selecting the nodal agencies. Bearing suchpossibilities into consideration the Committee had been impressing upon the DPE the need for some policy guidelines forregular skill upgradation and mid-career training for the supervisory staff and below. Such training will not only benefit the PSEs but shall also enhance the professional prospects of its employees in case of VRS. The Committee seeks DPE’s comments on these issues.

9.171 The Committee made that recommendation in view the abysmal performance in redeploying the CRR trainees. The Committee reiterated its recommendation and is not convinced with the nuances as explained by the Planning Commission.The Committee noted that as the CRR scheme is being financed by the Planned allocation, as per the guidelines 30% of theallocation should be meant for women participants. Accordingly the Committee liked to know the participation of women in the CRR scheme. And if the spouse or female dependent of the VRS optee could be considered under such provision. TheCommittee asked the DPE to apprise the Planning Commission of the current performance of the CRR scheme regardingredeployment of trainees and also the views Committee seeking inclusion of dependents of the VRS optees into the CRRscheme. The Committee required the DPE to obtain the opinion of the Planning Commission in view of the facts referred toabove.

(o) 192nd Report Implementation of the revival scheme 9.172 The Committee took serious view of the massive cost of delay in implementing the revival scheme. The revival which could have cost only Rs. 41.60 crores in 1998, has now swollen to Rs. 1577.05 crores in 2006. This cost will rehabilitate only three of the currently operational units. For six years the losses and liabilities have been allowed to accumulate whereas assets have eroded during the same period. With a negative networth of the Company, a major part of the sale proceeds of the seven units are likely to be used in settling the old duesinstead of funding upgradation and expansion of the remaining units. This fact is corroborated by the representatives of theCCI, who confirmed that only Rs. 141.11 crores will be used for expansion and modernization out total Rs. 617.76 crores asprobable sale proceeds. And only 0.25 lakh MT of additional capacity will be added to the three operational plants. Theremaining fund that could have been used for capital expenditure will be used in settling the dues that have mounted due todelay. On the other hand, as a part of rehabilitation, the Government will be required to infuse another Rs. 30.67 crores forcapital expenditure and shall have to waive its dues worth some Rs. 1250 crores. The Committee found it alarming waste of resources. It is alarming that this wastage took place despite the fact that the Government held 100% of equity stake in theCompany. In view of the Government’s ownership of the CCI, the Committee specifically asked the Ministry about the viewsand opinions of the Government Directors on the Board of CCI during the loss making years. However no specific reply wasprovided by the Ministry on this specific query. Neither any accountability had been fixed for such situation.

9.173 The Committee recommended that the Government must take into account the current trends and prospects incement sector and also factor above mentioned facts while disposing off the seven non-operational units of the CCI and should try to maximize the sale proceeds of these units. 9.174 The Committee also recommended Asset Sale Committee should re-assess the valuation of the plant and the land of the Dalmia Dadri Cement Ltd. In context of prevailing price of land in that region and the current growth in the Cementsector.

9.175 The Committee recommended at the Government may consider these observations of the Committee while disposing of Dalmia Dadri Cement Ltd. Under the provision of proposed Amendment Bill.

(p) 193rd Report

Industrialization by CPSEs 9.176 The Committee observed that since their inception the CPSEs had initiated a wave of industrialization in theiradjoining region. The CPSEs were direct mainstay for several small scale ancillaries and supplies and many more indirectly.

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These Units had thrived on the orders from CPSEs. The Committee was of the view that if the trend could continue thiswould have benefited both parent company and the ancillary units.

Resource requirement of the HMT for its revival 9.177 Considering the resource requirement of the HMT for its revival and the Committee’s consistent emphasis on need to encourage the CPSE to generate their own resources to assume full autonomy, also appreciating the long association ofancillaries with their present HMT Company and taking a view of their offer to purchase the sheds at the price ascertained byState Government agency TECSOK as against the market prices which is demanded by the HMT, the Committee recommends that the CMD of the HMT, in exercise of the powers vested in him, on taking a lenient and favourable view on demand of the ancillary owners, constitute a sub-committee in the Board of Directors to review the issue in consultation withstakeholders within the parameters of the Company’s financial requirements, such sub- committee should furnish its report to the Board of Directors of the Company within a time frame who may then take a final view on the issue in its earliestmeeting. VII. Secretariat 9.178 The Committee on Industry Branch headed by a Committee Officer constituted the Secretariat of the Committee. AJoint Secretary, Deputy Secretary and Under Secretary remained in charge of the Branch. 9.179 To assist the Committee in its work, the material received from the Ministries/Departments/various non-official organizations and individuals was studied from which points were called out and questionnaires for written replies/evidenceprepared for the use of the Committee. The Secretariat collected material from on-the-spot studies and prepared study reports. 9.180 The work relating to drafting, consideration and approval of draft reports by the Committee along with their presentation, laying, printing and distribution was undertaken. The Secretariat dealt with the work relating to the scrutiny ofaction taken notes received from the Ministries concerned on the recommendations contained in the Reports of theCommittee and preparation of Draft Reports of the Committee on the Action Reports. 9.181 The Secretariat also studied materials like Parliamentary Debates, answers to Parliamentary Questions, Budget Estimates, Five Year Plan Documents, Books, Journals, Newspapers etc. relevant to the subjects under examination of theCommittee.

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Annexure-IX(See Para IVA)

9.182 Details of the sittings of the Committee on Industry during the year 2006

Sl. No.

Date of Meeting

Duration Hre-Mts

Agenda

1. 04.01.2006 1-40 -Delay in approving the supplies from SSI units by RDSO. -Problems being faced by SSI, Rural Industries and Heavy Industries set up in rural areas in availability in booking of wagons. -Delay in environmental clearance to SSI and rural industries by the concerned authorities.

2. 16.01.2006 1-20 Meetings with representatives of M/o Power, SSI & ARI and the State Govts. of Delhi, Rajasthan, Gujarat, and Haryana to review the issue of supply of power to Small Scale and Agro and Rural Industrial Units.

3. 25.01.2006 1-20 To hear representatives of M/o Coal, Steel, SSI and ARI to review the supply of Steel and Coal to SSI and ARI Sectors.

4. 07.02.2006 2-00 -Meeting of Sub-Committee-II to hear representatives of different SSI Associations from the region of Ghaziabad, Khurja, Delhi, Bulandshahar and Moradabad to review the status of credit delivery mechanism to the SSI Sector. -Meeting of Sub-Committee-II to hear Bankers to review the status of credit delivery mechanism to the SSI Sector in the region of Ghaziabad, Khurja, Delhi, Bulandshahar and Moradabad. -Meeting of the main committee with the representatives of Ministries of Defence, HI & PEs, Finance (Banking Division) and Public Sector Enterprises on professionalisation of Boards of Defence PSEs.

5. 21.02.2006 1-10 -To hear the representatives of HMT (Bearing), and M/o HI & PE.

6. 06.03.2006 1-30 To hear the representatives of M/o SSI & ARI, Finance (Banking Division) and CMDs of the select Public Sector Banks on the issue of Financing of SMEs and RBI guidelines on NPAs of such Industries.

7. 28.03.2006 1-20 To interact with the delegation of Economical Committee of Czech Parliament.

8. 12.04.2006 1-20 Demand for grants in respect of Ministries of SSI & ARI and HI & PEs for the year 2006-07.

9. 21.04.2006 1-40 -To interact with representatives of M/o Petroleum & Natural Gas and PSUs in Oil sector to discuss professionalisation of Board of Directors. -To interact with representatives of M/o Railways to discuss delay in approving the supplies from SSI Units by RDSO and RITES.

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10. 16.05.2006 1-20 Adoption of Committee Reports.

11. 31.05.2006 1-30 To interact with the representatives of M/o Civil Aviation on the issue of professionalisation of Boards of Directors of the PSEs in Civil Aviation Sector.

12. 09.06.2006 2-00 -To interact with the representatives of M/o Power on the issue of professionalisation of Boards of Directors of the PSEs in Power Sector. -To interact with the representatives of M/o Communication and Information Technology on the issue of professionalisation of Boards of Directors of the PSEs in Telecommunication Sector.

13. 23.06.2006 1-30 Meeting with Ministries of SSI & ARI and Urban Development and Poverty Alleviation and representatives of DDA and NCT Delhi on the issue of constraints faced by Micro, Small and Medium Enterprises in availability of space

14. 26.07.2006 2-00 -Meeting with Ministries of HI & PE and Civil Aviation on the issue of professionalisation of Boards of Directors of the PSEs in Civil Aviation Sector. -Meeting with Ministries of SSI & ARI and Urban Development and Poverty Alleviation and representatives of DDA on the issue of constraints faced by Micro, Small and Medium Enterprises in availability of space.

15. 04.9.2006 1-00 Introductory meeting.

16. 20.9.2006 1-20 Meeting with representatives of M/o DHI & PE and M/o Chemicals & Fertilizers, and M/o Shipping on the issue of professionalisation of Boards of Directors of the PSEs in M/o Chemicals & Fertilizers, and M/o Shipping sectors.

17. 28.09.2006 1-20 Meeting with representatives of M/o DHI & PE and M/o Railways on the issue of professionalisation of Boards of Directors of the PSEs in Railways Sector.

18. 04.10.2006 1-20 Meeting with the representatives M/o SSI, Govt. of Punjab, Haryana and UT Chandigarh and SSI Associations of respective States/UT on the issue of availability of Land, Power and Credit to Micro and Small Scale Enterprises.

19. 16.10.2006 1-20 Meeting with representatives of M/o DHI & PE and Cement Corporation of India Ltd. on Dalmia Dadri Cement Ltd. (Acquisition and Transfer of Undertakings) Amendment Bill, 2006.

20. 23.10.2006 1-20 Meeting to hear representatives of M/o HI & PE, Bharat Bhari Udyog Nigam Ltd. and Railway Board on the issue of procurement of Wagons and supply to railways on lease.

21. 02.11.2006 1-40 -Review the schemes and performance of PMRY and REGP.- Meeting to hear representatives of M/o SSI & ARI, M/o Steel, National Small Industries Corporation Ltd. (NSIC), Steel Authority of India Ltd and Rastriya Ispat Nigam Ltd. on the issue of supply of Steel to SSI and Rural industries.

22. 09.11.2006 1-20 -Clause-by clause consideration of the Dalmia Dadri Cement

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Annexure-IX (See Para IVB)

9.183 Details of the sittings of the Sub-Committee on Industry during the year 2006

Ltd. (Acquisition and Transfer of Undertakings) Amendment Bill, 2006.

23. 20.11.2006 1-40 Consideration & adoption of 192nd draft Report on “The Dalmia Dadri Cement Limited (Acquisition and Transfer of Undertaking) Amendment Bill, 2006”; and 193rd draft Reports on Action Taken on the Hundred and Seventy-eighth Report of the Committee on “The Unlocking of surplus assets of CPSEs to generate resources for revival and the status of Ancillary Units of CPSEs: a case study of HMT Ltd”.

24 29.11.2006 1-30 Meeting with representatives of M/o DHI & PE and Chairman, Railway Board on the issue of supply of electric locomotive manufactured by BHEL to Indian Railway.

25 05.12.2006 1-30 Meeting with the representatives of Ministries of SSI & ARI and Commerce and Industry (Dept. of Commerce) on the issue of scope of SMEs in upcoming Special Economic Zones (SEZs).

26 07.12.2006 1-30 Meeting of the main committee with the representatives of Ministry of Defence and Dept. of Public Sector Enterprises, M/o HI & PE on issue of review of professionalisation of Boards of Defence Sector.

27 18.12.2006 1-20 Meeting of the main committee with the representatives of M/o HI & PE and Ministry of Railways on issue of supply of electric Locomotive manufactured by the BHEL to Indian Railways.

28 19.12.2006 1-20 Meeting of Sub- committee-I to stock of the facts & figures relating to policies and programme of the M/o ARI.

29 27.12.2006 1-30 Meeting with the representatives of Ministry HI & PE and M/o Petroleum and Natural Gas to review the status of professionalisation of Boards of Directors of PSEs in Petroleum and Natural Gas Sector.

Sl. No.

Sub-Committee

Date of Meeting

Duration

Hre-Mts

Main Agenda

1. Sub-Committee-II

07.02.2006 2-00 -Meeting of Sub-Committee-II to hear representatives of different SSI Associations from the region of Ghaziabad, Khurja, Delhi, Bulandshahar and Moradabad to review the status of credit delivery mechanism to the SSI Sector. -Meeting of Sub-Committee-II to hear Bankers to review the status of credit delivery mechanism to the SSI Sector in the region of Ghaziabad, Khurja, Delhi, Bulandshahar and

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CHAPTER-X

COMMITTEE ON SCIENCE & TECHNOLOGY,

ENVIRONMENT & FORESTS

I. Composition of the Committee

The Parliamentary Standing Committee on Science & Technology, Environment and Forests was constituted on 5th

August, 2005 and again reconstituted on 5th August 2006. The total number of Members of the Committee was 31 out ofwhich 10 Members were from Rajya Sabha and 21 Members from Lok Sabha. 10.2 The Committee consisted of the following Members: –

COMMITTEE ON SCIENCE & TECHNOLOGY, ENVIRONMENT & FORESTS (Constituted on 5, August, 2005)

1. Shri P.G. Narayanan –– Chairman RAJYA SABHA

2. Dr. Prabha Thakur 3. Shri Dilip Singh Judev 4. Shri Nand Kishore Yadav 5. Shri Ravula Chandra Sekar Reddy 6. @ Shri Jabir Husain 7. Dr. Barun Mukherjee #8. Shrimati Viplove Thakur

9. Shri Moinul Hassan Ahamed *10. Shri Suryakant Bhai Acharya LOK SABHA 11. Shri Sukhbir Singh Badal 12. Shri Jasubhai Dhanabhai Barad 13. Dr. Sujan Chakraborty 14. Shri Pankaj Choudhary 15. Shri Mohan S. Delkar 16. Shri Francis Fanthome 17. Shri Anantrao Gudhe 18. Shri Babubhai K. Katara 19. Shri A. Venkatesh Naik 20. Shri Brahmananda Panda 21. Smt. Neeta Pateriya 22. Shri Adhalrao Shivaji Patil 23. Shri Bachi Singh ‘Bachda’ Rawat 24. Shri K.C. Singh “Baba” 25. Shri Rakesh Singh 26. Shri Kirti Vardhan Singh 27. Dr. Ramlakhan Singh 28. Smt. Jayaben B. Thakkar 29. Shri D. Venugopal 30. Shri Sita Ram Yadav 31. Shri Aruna Kumar Vundavalli

Moradabad.

2. Sub- committee-I

19.12.2006 1-20 Meeting of Sub- committee-I to stock of the facts & figures relating to policies and programme of the M/o ARI.

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COMMITTEE ON SCIENCE AND TECHNOLOGY, ENVIRONMENT AND FORESTS (Constituted on 5, August, 2006)

1. Shri P.G. Narayanan — Chairman

RAJYA SABHA 2. Dr. Prabha Thakur #

3. Vacant 4. Shri Suryakantbhai Acharya 5. Shri Bhagirathi Majhi 6. Shri Kamal Akhtar 7. Shri Saman Pathak 8. Shri Jabir Husain 9. Shri Ravula Chandra Sekar Reddy 10. Dr. Barun Mukherjee

LOK SABHA 11. Shri Jashubhai Dhanabhai Barad 12. Dr. Sujan Chakraborty 13. Shri Thupstan Chhewang 14. Shri Pankaj Chaudhary 15. Shri Francis Fanthome 16. Shri Babubhai K. Katara 17. Shri A. Venkatesh Naik 18. Shri Brahmananda Panda 19. Smt. Neeta Pateriya 20. Shri Jaysingrao Gaikwad Patil 21. Shri Pratik Prakashbapu Patil 22. Shri Bachi Singh ‘Bachda’ Rawat 23. Shri K.C. Singh “Baba” 24. Shri Kirti Vardhan Singh 25. Shri Rakesh Singh 26. Shri Aruna Kumar Vundavalli 27. Smt. Jayaben B. Thakkar 28. Shri Akhilesh Yadav 29. Shri Mitrasen Yadav 30. Shri Sita Ram Yadav *31. Shri Rampal Singh

II. Subject selected for examination 10.3 The Committee deliberated on the various aspects of the functioning of the different Ministries/Departments underits purview. The Committee in its meeting held on 8th September, 2006 identified the subjects viz., (i) Functioning of Central Pollution Control Board; and (ii) Science & Technology Application for Rural Development & Upliftment of weaker sections, for examination and report.

III. Status of Work Done (a) Sittings of the Committee

10.4 During the year 2006, the Committee held 22 sittings lasting for 35 Hours and 55 minutes. A Statement showing the dates of sittings of the Committee held during the period under review, the duration of the sittings and the subjectsdiscussed are given in Annexure-X.

(b) Study Visits

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10.5 The Committee Undertook on-the-spot study visits to various Institutions/Bodies/Centres falling under the purviewof the Ministries / Departments. The following table shows the study visits undertaken in 2005, the places visited and date ofvisits: ––

IV. Reports Presented 10.6 During 2006, the Committee presented the following reports to the House:-

Sl. No.

Dates of Visits Place Visited In Connection With (Subjects)

1.

10th to 17th June, 2006

Jammu and Leh

To examine the working of the different/institutes/dies/centers etc., falling within the administrative control of the Departments of Science & Technology and Scientific and Industrial Research to acquaint itself with their functioning and also to analyse problems being faced by them.

Sl. No. Report No. and Date of Presentation / Laying Rajya Sabha Lok Sabha

Subject

1. 153rd 20.03.06 20.03.06

Action Taken by the Ministry of Environment & Forests on the recommendations contained in the one hundred forty-sixth report of the department-related Parliamentary Standing Committee on Science and Technology, Environment & Forests on the Demands for Grants (2005-2006) of the Ministry of Environment & Forests.

2. 154th 20.03.06 20.3.06

Report on the Wild Life (Protection) Amendment Bill, 2005.Committee on Science & Technology, Environment & Forests on the Demands for Grants (2004-2005) of the Department of Science & Technology.

3. 155th 18.05.06 18.05.06

Demands for Grants (2006-2007) of the Department of Science and Technology

4. 156th 18.05.06 18.05.06

Demands for Grants (2006-2007) of the Department of Scientific & Industrial Research

5. 157th 18.03.06 18.03.06

Demands for Grants (2006-2007) of the Department of Biotechnology

6. 158th 18.05.06 18.05.06

Demands for Grants (2006-2007) of the Ministry of Ocean Development

7. 159th 18.05.06 18.05.06

Demands for Grants (2006-2007) of the Ministry of Environment & Forests

8. 160th 18.05.06 18.05.06

Demands for Grants (2006-2007) of the Department of Atomic Energy

9. 161st 18.05.06

Demands for Grants (2006-2007) of the Department of Space

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18.05.06 10. 162nd

14.12.06 14.12.06

Drugs and Pharmaceuticals research programme including herbal medicines.

11. 163rd 14.12.06 14.12.06

Action Taken by the Government on the Recommendations contained in the one hundred sixtieth report of the department-related Parliamentary Standing Committee on Science and Technology, Environment & Forests on the Demands for Grants (2006-2007) of the Department of Atomic Energy

12. 164th 14.12.06 14.12.06

Action Taken by the Government on the Recommendations contained in the one hundred fifty eighth report of the department-related Parliamentary Standing Committee on Science and Technology, Environment & Forests on the Demands for Grants (2006-2007) of the Ministry of Ocean Development (Renamed as Ministry of Earth Sciences)

13. 165th 14.12.06 14.12.06

Action Taken by the Government on the Recommendations contained in the one hundred sixty first report of the department-related Parliamentary Standing Committee on Science and Technology, Environment & Forests on the Demands for Grants (2006-2007) of the Department of Space.

14. 166th 14.12.06 14.12.06

Action Taken by the Government on the Recommendations contained in the one hundred fifty ninth report of the department-related Parliamentary Standing Committee on Science and Technology, Environment & Forests on the Demands for Grants (2006-2007) of the Ministry of Environment & Forests.

15. 167th 14.12.06 14.12.06

Action Taken by the Government on the Recommendations contained in the one hundred fifty seventh report of the department-related Parliamentary Standing Committee on Science and Technology, Environment & Forests on the Demands for Grants (2006-2007) of the Department of Bio-technology.

16. 168th 14.12.06 14.12.06

Action Taken by the Government on the Recommendations contained in the one hundred fifty fifth report of the department-related Parliamentary Standing Committee on Science and Technology, Environment & Forests on the Demands for Grants (2006-2007) of the Department of Science & Technology.

17. 169th 14.12.06 14.12.06

Action Taken by the Government on the Recommendations contained in the one hundred fifty sixth report of the department-related Parliamentary Standing Committee on Science and Technology, Environment & Forests on the Demands for Grants (2006-2007) of the Department of Scientific and Industrial Research.

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10.7 Minutes of meetings of the Committee on Science & Technology relating to various Reports were prepared andpresented to the House along with the relevant Reports.

V. Important recommendations made by the Committee in its reports.

(a) 154th Report

Setting of a Wild Life Crime Bureau

10.8 The protection of tigers has reached a very critical state and if the issue is not addressed effectively there is apossibility of this species getting extinct. To address the issue of poaching and illegal trade in wild life, the Task Force hasrecommended immediate setting up of an effective Wild Life Crime Bureau. It strongly believed that if crime bureau had tobe set-up, it should work effectively on different level, one, to strengthen the enforcement at the State level; two, to investigate international trade links; three, to break the crime of large poachers. Task Force had suggested two-tiered approach: set-up a Wild Life Crime Bureau at the Central level, with nodes in each tiger range state in which there will be a capacity to both investigate and follow up on the crime. The Committee, therefore, felt that there was an immediate need toset up a Wild Life Crime Bureau as a statutory body under the Wild Life (Protection) Act, 1972 to make it effective andcontrol the crime relating to wild life. It accordingly, recommended that this should be done on a priority basis at the earliest.

(b) 155th Report

Bose Institute, Kolkata

10.9 The Committee was of the opinion that the Department should draw a long-term time schedule and accordingly make long-term investments in the institutions rather than doing it in an ad-hoc manner. It, therefore, strongly recommended to the Department to undertake studies of individual institutions to find out areas where they can excel and make investmentsaccordingly rather than following piecemeal approach.

Research and Development Support, Science and Engineering Research Council

10.10 The committee noted the steps taken by the Council to further basic research. The Committee was of the opinion that technological advances cannot be made without path-breaking research in basic sciences, which, in-turn, need world class laboratories and quality human resource. The Committee took note of the various scholarships and fellowships beinggiven by the Council and was hopeful that the present gap between the requirements of quality human resource and its supplywill be abridged in the near future.

Technology for Bamboo Products

10.11 The Committee felt that the objective of producing wood substitutes to reduce pressure on our forests is of utmostimportance. Given the amount of de-forestation that had taken place over the years and the rising demand of urban material culture which took heavy toll of our limited natural resources, alternate arrangements to meet the demand of modern timeswithout doing ecological damages have to be evolved. The Committee emphasized that such technologies should also bedisseminated to spread awareness among the masses and raise their sensitivities towards natural environment to a level,which can make modern life-styles sustainable. 10.12 The Committee had been informed that there was a shortage of programmes during 2005-2006 and this resulted in reduced grants at R.E. level. The Committee strongly recommended that assessment of ready for implementationprogrammes should be done at the B.E. stage itself so as to reflect realistic budgeting. The Committee desired that theDepartment should study the reasons for shortage of programmes during 2005-06 and take suitable remedial measures in that regard. Science and Technology Communication and Pupularization/National Council for Science and TechnologyCommunication

10.13 In a country where efforts had been made during the last fifty years to achieve total literacy, spreading scientific awareness, remove superstition and inculcate scientific thinking, the success has been modest. Beyond the success islands ofnew India, which are generally metropolitan, there is an India on the other side of the digital divide that is largely rural,backward, steeped in regressive social values and superstitious thinking. The challenge before the Department is to take theoffensive against backwardness in this part of India, which has not been able to keep pace with the rest of the country. The

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various awareness programmes run by the Department should not only continue but, in-fact, increase and cover different parts of the country. What is also required is to keep track of the results achieved by way of feedback mechanism so thateffectiveness of such programmes could be evaluated from time-to-time. National Centre for Medium Range Weather Forecasting

10.14 The Committee recommended that the upgradation of computing and infrastructure facilities, visualization, networking, I.T. infrastructure should be done as soon as possible. Since the objectives of the Centre is to generate locationspecific forecasts for providing weather based agro-advisory services to farmers, and NWP guidance to other useragencies, including India Meteorological Department and Defence, upgradation of existing technologies is the need of thehour. Weather forecasting needs constant improvements both in technology as well as expertise. The Country still hassubstantial number of farmers caught in the vagaries of unpredictable monsoon and other natural phenomenon. Theycan immensely benefit from better forecasting in the future.

Synergy Projects

10.15 Given the limited amount of funds available for research and technology development and the need to initiate research studies in various emerging fields, the need for synergizing and proper networking of various projects is of utmostimportance not only to avoid duplication but also for appropriate channelising of scarce resources. As these projects relate tonational development or national security, they acquire much more importance. The Committee felt that formulation ofNational Energy Map, providing direction to face the challenges of emerging international patent regime and coordination ofmission oriented projects should be undertaken with the seriousness they deserve, as they will determine the emergingcontours of future development. 10.16 The Committee recommended to the Department to explore the prospects of introducing a full-fledged Science Channel on T.V. to increase awareness about scientific development among the masses. This Channel can also help bringingmasses to the fold of the mainstream and build their potential to participate in national development and get benefited bythem. (c) 156th Report

National Laboratories

10.17 The Scientific research in various fields is mainly dependent on the availability of modern environment and major research facilities. With the global competitiveness in different fields there was a need to focus on the issues relating tomodernization of our national laborites. The Committee in its 142nd Report had recommended building of new infrastructureand renovation of the existing ones should be taken up in right earnest. The Committee reiterated the same and would like tosee renovation carried out as early as possible. The Committee recommended that the Council should draw a time-frame for such programme and should finish the task within the prescribed time-limit. Since the CSIR laboratories ware located all over the country, having people's interface in a much better way, the Committee recommended that there was need for setting-up a special Technology Dissemination Cell in all the CSIR laboratories so that the technology support can be given to SMEs also.

Research Schemes, Scholarships and Fellowships

10.18 The Committee felt that there was a need to improve quality of science education in the country. The start had to bemade right at the school level. Quality of science education should not only generate keen interest in children but also be ableto fire their imagination in order to make them stick to the science stream. A holistic 'start- to-finish 'approach is the need of the hour, where children once initiated in science are not left confused after their schools but are provided a link to higherresearch institute via universities. Improving quality of research courses in Universities and their affiliation with researchinstitutes, can be followed according to our own requirements. The Committee was of the opinion that an ambitiousprogramme, which caters both to the supply of rich human resource right from the school level at the lower end to richdividends produced in the market by way of intellectual property finally is what should be aimed.

CSIR Diamond Jubilee Invention Award for School Children

10.19 In a world where a substantial share of wealth produced is intellectual and a major portion of economy is knowledge-based, definition of wealth and property has undergone a sea change. India, being a fast-growing knowledge economy with a huge human resource potential, is well poised to be a leader in such a scenario. Property is no longer justnatural and physical but increasingly intellectual. To exploit the huge intellectual capital we would have to ensure certainfundamentals like awareness and an understanding of market mechanism so that we do not lose out to other competitors in anenvironment of patents and copyrights. The Committee appreciated the good work done by the Department and hoped more

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results would follow in the future.

New Millennium Indian Technology Leadership Initiative

10.20 Progress of human civilization is based on innovation of one kind or the other. Material civilization progresses onlywith the progress in technology. Innovations require 'out-of-the box thinking', flexibility and an enabling environment. TheCommittee felt the above programme was a step in the right direction. It was of the opinion that there was a need to take careof grass root innovations as small beginnings have big results. Beside this, in an era of intellectual property, innovations andwealth were necessarily linked and, therefore, the stress on innovation cannot be over emphasized.

Non-conventional Energy Sources

10.21 The Committee was of the view that the research on alternative source of energy is still at infant stage. Where success had been achieved commercial feasibility is a big problem. Given the volatile situation of fossil fuels; spiraling prices of crude oil; environmental concerns and expensive nature of nuclear nature, sooner or later the country would have to turn tonon-conventional energy sources for it's future needs. The efforts made in this direction may be a good start but there is alongway to go. A non-conventional source of energy, which is commercially viable and environment-friendly capable of changing the present pattern of fuel consumption, is the only solution in the longer run.

Setting up a World Class Drug Research Institute

10.22 A country still not free from diseases which acquire epidemic proportions, a research programme for drugdevelopment cannot be overemphasized. Given the fact that major chunk of people suffering from such diseases are the oneswith least purchasing power makes the challenge doubly complex. Government funded research institutes, not being solelydriven by profit motive, are not left with a choice but to shoulder the responsibility, alongwith other departments of theGovernment, of providing affordable drugs as no multi-national company will venture into an area where rich returns are notpossible. The Committee was of the view that what is required is a close coordination between different arms of theGovernment as individual departments cannot be expected to bring down the cost of drugs below a level. The Committee feltthat innovative ways like distribution of cost by providing cheap insurance for diseases to people have to be devised, as costof manufacturing of drugs cannot be brought down below a point.

Indian Institute of Chemical Biology

10.23 In pursuance of the statement of the IICB and also in view of the discussion it had with the management of IICB atKolkata, the Committee strongly recommended that since cancer is the most difficult disease to treat in medical science anddifferent types of cancer require different types of medicines, the Institute should put optimum effort to develop this moleculeof paan to a final drug stage as soon as possible so that it could be passed on to the pharmaceutical sector for production inthe near future thereby transmitting a lot of benefit to medical sector in treating chronic cases of CML

(d) 157th Report

National Brain Research Institute

10.24 The Committee noted the efforts made by the Institute in the areas of stem cell biology, molecular neuroscience etc. The Committee was hopeful that the Institute would do its best to develop human embryonic stem cell lines and furthertranslational research by transplanting embryonic stem cell lines in animal models of spinal cord and brain injury. Theknowledge derived from the above is extremely important considering its impact on clinical situations. 10.25 The Committee further noted the importance of research in areas of computational neuroscience, system and cognitiveneuroscience, developmental neurobiology and basic research towards understanding of neurological and psychiatricdisorders, as such cases are on the rise in the country owing to the stressful demands of the modern civilization which takeheavy toll of psychological well-being. National Institute of Immunology 10.26 The Committee felt that the development of new vaccines is extremely important. New vaccines and immunodiagnostic kits would be required by the country to check spread of bacterial and viral diseases which either havebecome immune to old vaccines or are still un-tackled.

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Centre for DNA Fingerprinting and Diagnostics

10.27 The Committee was of the opinion that automated DNA sequencing, comprehensive in silico modeling studies andmicroarray based approaches, which have already been initiated, should be brought to their logical conclusion. TheCommittee also felt that Data bases of genetic disorders prevalent in India and of the pathogen that causes TB should becompleted as soon as possible as they can serve as an important referential source for further studies and research.

Biotech Facilities, Centre of Excellence and Programme support

10.28 The Committee was of the opinion that the Department had taken steps to carry toxicological evaluation of genetically engineered products and development of protocols/guidelines to evaluate various GM products for itstoxicological aspects. A state of the art facility for generating toxicological data necessary for the certification and bio-safety approval of all GM products and to aid research labs and Industry in evaluating the biotech products in the country has beencreated. The Committee felt issues of genetically modified seeds and their impact on agriculture in general and on farmers inparticular were profound and had to be taken seriously. Environmental issues and other externalities had to be taken intoaccount before agriculture bio-technology was allowed fully in the field. Besides this, the frequency of toxicologicalevaluation of drugs, vaccines, and other pharmaceutical and GM products would increase in the future and would requireoptimum utilization of these facilities . Human Resource Development 10.29 The problem of inadequate supply of quality researchers for scientific research was dangerously growing to a level where it can severely hit scientific progress. Given the fact that metropolitan centres were no longer happy hunting groundsto enroll science students, as business studies and information technology provide more lucrative careers, potential scientistswere to be found in small centres and then appropriately groomed. The Committee strongly recommended improved qualityof science teaching in small centres and exposing talented students from such centres to the bigger world of innovation anddiscovery.

Bioprocess and Product Development

10.30 The advent of new molecular and cellular techniques of genetic modifications of micro organisms had led to thecontinuing emergence of products including organisms of bio-technology that promises substantial benefits and importanceto the quality of life. These techniques were available but to be safely and effectively used, they must be applied according toa number of priniciples and with the support of a National Bio-safety Information Network and Advisory Service. The Committee was of the opinion that since newly introduced organisms have the potential for trans-frontier impacts, there was an urgent need to develop national code of conduct/practice to establish a general frame work and guidelines to ensure safetyin research, development, production, trade and use of these Genetically Modified Organisms (GMOs). The Committee feltthat with the development of Comprehensive Code of Conduct and Guidelines for Bio-safety, the safe application of bio-technology in orderly manner would be possible.

(e) 158th Report

Polymetallic Nodules Programme

10.31 The Committee noted that the delay in availability of Research Vessel for demonstration of mining system resulted in delay in Phase-II of the Mining Programme. The non-availability of Research Vessel, led to reduced ship days under the Polymetallic Nodules Programme. The Committee felt that such eventualities result in non-utilisation of the budget in fruitful manner and should be avoided.

Ocean Observation and Information Service

10.32 The Committee noted with satisfaction that the programmes under the Ocean Observation Information Service hadbeen progressing in the right track. However, the Committee felt that the National Centre for Ocean Information Services(INCOIS), being the nodal agency for providing coastal and ocean data and value added products to the users should monitorits performance and work-mechanism to process and disseminate ocean data and data products to user communities like

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fisheries, weather, climate, ports, shipping etc. on a regular basis so that ocean weather forecasting was timely and precise.The Committee hoped that the High Performance Computing System at INCOIS, Hyderabad would be in place at the earliest for which a budgetary allocation of Rs. 10 crores had been made for the year 2006-07.

Marine Research and Technology Development

10.33 The Committee felt that the Ministry should also focus its efforts in assisting Universities to create infrastructurefacilities and building up a skilled human resource base in Marine Sciences. Besides, the Ministry should also participate andshowcase its activities in national and international level exposition, exhibition, fairs etc. from time to time. Inter-active computer generated information on Ocean Science and Technology could perhaps help educate the public on the ocean andits resources.

10.34 The Committee observed that the sea's potential as a medicine storehouse remains largely in the realm of experimentation. It commended the Ministry’s ongoing efforts towards transferring the technology to pharmaceutical industry for commercialization of the products. The Committee recommended that under this programme, the extraction anddevelopment of other potential drugs and chemicals from the depth of the ocean should be the priority of the Ministry.

National Institute of Ocean Technology

10.35 The Committee observed that Ocean Thermal Energy Conversion (OTEC) had a rich potential to provide pollution free renewable energy to meet the power needs of coastal region as well as island groups. Therefore, it recommended to theMinistry to build energy plants of higher capacity as this might lessen the demand on fossil fuel for power generation.

Gas Hydrate Exploration and Technology Development for Exploitation

10.36 The Committee was of the view that Fossil Fuel reserves were continuously depleting and would not last long. However, Gas Hydrates have the potential of providing energy security to the country, as it is an alternative source of energy.The Committee was however, constrained to observe that budget that was allocated under this programme was not fullyutilized. The Ministry should encourage excellence in national laboratories to focus on niche areas of hydrate research withspecial emphasis on resource extent evaluation and environmental impacts and development of technology for detection ofgas hydrates in sediments. The Committee, therefore, felt that this programme should be a high priority area for the Ministryin the years to come. (f) 159th Report National River Conservation Plan

10.37 The Committee was of the view that the Ministry, in coordination with the State Governments of Uttar Pradesh, Haryana and Delhi, should plan a strategy for augmentation of water resources in the upper stretches of the Yamuna and forconserving water, both for domestic and irrigation purposes. 10.38 Cleaning of all major polluted rivers by 2007 was one of the important targets of the Ministry. The Committee,however, found that the Ministry had not been able to meet the proposed targets under this programme and with the presentpace, it would not be possible to achieve the target of cleaning all the polluted rivers by 2007. It’s the final year of Tenth Five Year Plan and the Ministry was not in a position to name a single river where the requisite results had been achieved.This reflected the lackadaisical approach and inadequate measures adopted by the Ministry on such a major issue. TheCommittee expressed serious concern in this regard and recommended that all the phase-wise programmes needed to be monitored and the Measure of Performance (MoP) would be introduced to review the cleaning activities on urgent basis.

Prevention of Air and Water Pollution

10.39 The Committee was of the view that that Central and State Pollution Control Boards should had a more systematicapproach to measure ambient air-quality with a source-wise inventory and local concentrations. The information should becollected on a regular basis, standardized for Metros and for all urban centres and should be regularly displayed publicly. TheCentral and State Pollution Control Boards should also monitor the local impact of air pollution on health by commissioningepidemiological studies and create a comprehensive database for toxic effects of each of the emitted gases.

Gregarious flowering of Muli Bamboo

10.40 The gregarious flowering of muli bamboo is a natural ecological phenomenon having high social and economic implications. The Committee, therefore, felt that the Ministry of Environment and Forests should collaborate with the StateGovernments to gear up for the impending catastrophe, since the magnitude of the disaster could be very large. The

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Committee recommended that the focus areas in this regard should be harvesting, regeneration of the area and rodent control. Wild Life Preservation

10.41 Keeping in view the aforesaid observations made by the Tiger Task Force in its Report, it was observed that thebasics of the wild life conservation demand for extremely devoted, trained and high quality of staff alongwith strong lawenforcement

10.42 Another factor, which the Committee felt was very important, was to provide special package for staff, amenitiesand incentives like arduous area allowance, free rationing etc. for the forest protection guards combined with provision forbasic infrastructure, such as wireless sets, cell phones, vehicles etc. so that these could be effective incentives to boost wildlife conservation. Fast track courts for quick judicial settlements of wild life crime cases, in the opinion of the Committee,could also do great justice towards conservation of endangered species in India like Tigers, Elephants, Rhinos, etc.

10.43 For mitigation of human- tiger conflict, the minimisation of livestock killings is an effective countering methodtowards socio-ecological constraints which may stand in the way of wild life conservation. To minimise the ill-effects of livestock killings on people, education and awareness programmes related to ecology and behaviour of tiger, genesis of tiger menace, possible mitigation strategies, need to be framed for the villagers in the important areas with a package foreffective and quick compensation in genuine cases and effective participation of the village populace at the ground levelwhich can immensely contribute for wild life conservation of endangered species. (g) 160th Report Nuclear Power Projects

10.44 The Committee noted with satisfaction that the Unit-4 of the Tarapur Atomic Power Project attained criticality on6th March, 2005 and started commercial operation from September, 2005, which was five months ahead of the approved date of commercial operation. The Committee appreciated the maturity and capabilities of the Nuclear Scientists specially in viewof the fact that the unit was fully indigenous with design matching international standards. The Committee also appreciatedthe progress of work for the Kaiga Atomic Power Project Units -3&4, Kudankulam Nuclear Power Project Units -1&2, Rajasthan Atomic Power Project Units-5&6, Prototype Fast Breeder Reactor, BHAVINI, Kalpakkam, which were keeping up with the approved date of commercial operation and were being regularly monitored.

Indo-United States Joint Civilian Nuclear Energy Agreement

10.45 The Committee hoped that the agreement would take care to protect the indigenous progress made by India in thisfield that there would be no infringement upon our independent ability to do further research and develop technologies in thefield of Nuclear Science. The Committee also hoped that the commitments from the United States regarding supply of nuclear fuel would lead to increase in nuclear power, which would eventually solve the acute power crisis faced by thecountry. The Committee also hoped that in future the country would not be constrained to build future nuclear facilitieswhether civilian or military as per our national requirements.

Nanotechnology and its Role in Prevention of Cancer

10.46 Since cancer had long been a challenging disease before the medical science, particularly its curative aspects, theCommittee desired to know about the unexplored areas of research which TMC felt was very important and requiredimmediate attention. TMC informed that some newer areas had been identified by TMC where research needed to bedeveloped as per its opinion. One such area which they pointed out was the exploration of the nano medicine. TheManagement stated that this was an unexplored area of research of the Institute and it had initiated preliminary work in thefield. It was working on nano particles as vectors to deliver genes into the tumour cells and also to make cancer cells moresensitive to treatment. The projects on nano medicines were being developed in collaboration with the scientists in Franceand in India at National Chemical Laboratory inPune.

10.47 Keeping the aforesaid in the background, the Committee highlighted the importance of nanotechnology in thetreatment of this dreaded disease. Since detection of cancer at an early stage was a critical issue in designing cancertreatment, the detection and diagnosis of the disease usually depends on changes in cells and tissues which were extremelyimportant to be understood at a preliminary stage. Nanotechnology as per the information given to the Committee is uniquelypromising tool for early detection of cancer for many reasons. Nanotechnology enables the screening of the disease faster andis cost efficient. Nano tubes also help in identifying earlier DNA changes associated with cancer. 10.48 The Committee, therefore, strongly recommended that TMC in collaboration with NCL and other important

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scientific institutes in the country like Agarkar Research Institute, Sree Chitra Memorial Institute and Bose Institute couldframe an extensive treatment plan in nano medicines for cancer and could develop projects that might help oncologists todesign earliest detection and precision treatment mechanism for delivery of nano medicines with precision in the field ofcancer so that this dreaded disease could be controlled to a large extent which was currently a challenge with theconventional therapy and treatment before medical science.

Tata Institute of Fundamental Research

10.49 In pursuance of the TIFR’s indication that proper understanding of mis-folding of protein can help in designing strategic therapies for controlling many type of incurable brain diseases, the Committee strongly advocates that the greaterchunk of R& D resources by TIFR needs to be targeted towards researches in the protein mis-folding and protein chemistry so that in near future, a suitable answer towards incurable neuro-degenerative diseases could be found. The Committee had been told in response to a written query before a meeting with the scientists on 5th February, 2005, regarding the anylysis of crystals structure of protein by the scientists of the Bose Institute, Kolkata that the Institute had developed protein data bankand through which they had analysed physico-chemical features of different proteins.

10.50 The Committee, therefore, recommended that TIFR in collaboration with other important Neuro Research Centres under the control of Ministry of Science & Technology like Brain Research Institute, Gurgaon, etc. Bose Institute, Kolkata,could jointly undertake research in the field to develop strategic treatment design for controlling such type ofdiseases.

Chlorotoxin and the Treatment of Gliomas

10.51 The Committee felt that Hafkiane Institute of Mumbai which was mainly researching in scorpion poison can alsoadvise ACTREC research wing in the matter by supplying scorpions so that by effectively managing cholorotoxin this mostdifficult form of cancer, i.e., cancer of brain could be treated with large amount of success. The Committee felt that unlesssuch new drugs were ventured into, no permanent solution to the successful treatment of cancer of the brain could beachieved in the near future. The Committee, therefore, recommended TMH to consider its suggestions and collaboratefunctionally with Hafkiane Institute to design an effective drug against brain cancers. (h) 161st Report Indian Lunar Mission—Chandrayaan-I

10.52 The Committee commended the role of the Indian space scientists in mastering a frontier space technology, whichhad brought the country close to the threshold of launching lunar spacecrafts and hoped that the technologies developed inthis mission would be fully exploited in the future for embarking on planetary missions with well thought out scientificobjectives. The Committee also hoped that the mission would expand the scientific knowledge about the origin and evolutionof moon, upgrade India’s space technological capabilities and provide challenging opportunities to the young scientists working in planetary sciences.

Cartosat-I—Remote Censing Satellite

10.53 The Committee appreciated the role of space scientists and the Department of Space in devising the IRS system,which was the largest civilian remote sensing satellite constellation in the world. The Committee hoped that the Departmentwould formulate plans to sell the imageries obtained from the IRS satellites, worldwide on a commercial basis on a largerscale, which would ensure generation of internal resources to fund future projects and popularization of the achievements ofthe space scientists throughout the world.

HAMSAT

10.54 The Committee felt that HAMSAT was India’s contribution to the international community of Amateur RadioOperators and an effort to bring ISRO’s satellite services within the reach of the common man and popularise spacetechnology among the masses. The Committee also felt that this satellite would play a valuable role in the national andinternational scenario by providing a low cost readily accessible and reliable means of communication during emergenciesand calamities like floods, earthquakes, etc. The Committee recommended that the Department should popularize the HAMRadio technology through seminars and organising demonstration programmes in the Universities, schools etc. to stimulatetechnical interest and awareness among the younger generation by providing them with an opportunity to develop theirtechnological projects.

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EDUSAT

10.55 The Committee was of the view that Satellites, such as the EDUSAT, could establish the connectivity betweenurban educational institutions with adequate infrastructure imparting quality education and the rural educational institutionsthat lack the necessary infrastructure. By doing so, we could help, to a considerable extent, in meeting the aspirations of therural students. The Committee therefore, recommended that the Department of Space should formulate plans in coordinationwith the Ministry of Human Resource Development to spread education through the EDUSAT to all parts of the country.

Village Resource Centre

10.56 The Committee felt that there was an urgent need to bridge the gap between the rural and urban population interms of facilities available and the only means to accomplish the task was through technology. The concept of the VillageResource Centres (VRCs) was an excellent effort in this direction by the Department, which had the potential of transformingthe socio-economic condition of rural India. The Committee, therefore, recommended that the Department should expedite its efforts towards establishing VRCs throughout the country, specially in the inaccessible and under-developed regions of the country in a planned manner, so as to cover the entire country within a fixed period. (i) 162nd Report

Adverse Drug Reactions

10.57 In response to a written query during the Committee’s visit to RRL Jammu, it was informed, on adverse drugs reaction and monitoring of the same, that the physician should take into consideration the genetic make up of the patient andprescribe the drug accordingly. ADR can be monitored using molecular biology tools. They also stated that they had developed major programme on bioenhancers and bioefficacy enhancers and the objective of the study was to reduce the drugintake by increasing the bioavailability of drug by increasing its bioefficacy of drug. In either condition, the drug intake would reduce thereby reducing the Adverse Drug Reaction (ADR).

10.58 When asked about the role of comprehensive Adverse Drug Reaction (ADR) Pharmaco Vigilance MonitoringProgramme in reducing the number of cases relating to illness and deaths among patients, the RRL Jammu replied thatPharmaco Vigilance Programme was absolutely necessary to monitor ADR since it was a process of keeping strict watch on a drug released after Phase III studies for human use. Adverse Drug Reactions, reported or noticed were properly studied by clinicians and scientists together to properly document such adverse activities and were passed on to the regulatory agenciesfor further necessary action.

Nano Technology and its Role in Drug Development and Research

10.59 The Committee during its meeting with Agarkar Research Institute at Pune on 28th September, 2005, inter-alia held discussions on the role of nanotechnology and its usefulness in the development of various drugs. The Committee was apprised that an important research work was being done in the Institute in this connection and the results of nano technologywas also being confirmed regarding the extent of its usefulness for drug development. Apart from this, certain otherInstitutes like Sree Chitra Tirunal Institute of Medical Sciences, Bose Institute and National Chemical Laboratory were alsoundertaking considerable research in the field of nanotechnology and a detailed plan was also being developed to harness thebasic usefulness of nanotechnology in various fields.

10.60 The RRL Jammu while responding to a written query of the Committee on the role of nano-technology for drug research and development, replied that Dip-pen nano-lithography can create arrays of antibodies that retain their ability to bind to their biological substrates. Nano-structured hydrophobic Active Pharmaceutical Ingredients (APIs) hence improveoral bioavailability in vivo models to assess the formulability of engineered powders to improve the chances of clinicalsuccess and commercialization of poorly soluble new chemical entities (NCEs) and APIs. Nanoscale constructs can serve as customizable, targeted drug delivery vehicles capable of ferrying large doses of chemotherapeutics and thereby reducingundesirable toxicities of chemotherapeutic agent.

10.61 The Committee drew the attention of the Department of Science & Technology to the important role of nano-technology in the field of drug development and research. The Committee strongly felt that under the aegis of the Department of Science & Technology, Institutes like Agarkar Research Institute, Bose Institute, Advanced Research Centre and Powder Metallurgy and New Materials, Sree Chitra Tirunal Institute of Medical Sciences and RRL, Jammu should try todevelop, in joint collaboration, national nano-missions so that the basic tools of nanotechnology could be beneficially

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exploited and utilized in a productive way for developing new drugs with precision technology. Drugs to fight common Diseases 10.62 The Committee was of the opinion that central focus of drug research should be to develop drugs mainly to fight common diseases like tuberculosis, leprosy, kalazar, malaria, diarrhoea, dysentery, stress related disorders, thoracic diseases,cholera, etc., particularly prevalent among poorer sections of society lacking purchasing power. The Committee felt that strategic public investment by Government in the field would be the right answer since such investment in drugs wouldprimarily be undertaken with the objective of providing drugs to the poor at low cost without profit motive.

Research 10.63 The Committee was informed that development of a new molecule involves about US $1 billion and 10-12 years time, with lot of uncertainties. So, considering the current pharmaceutical scenario, strategies must be designed to havemedicines for common diseases within a short time span and for this Government should concentrate on developing newmolecules as a long-term strategy.

10.64 On herbal research, as a short term strategy, there is a need to develop medicines to combat most prevalent diseases like Gastric problems, Arthritis, Diabetes, Stress Related Disorders, Thoracic Diseases, etc., for which a well thought strategyrequires to be evolved. Time bound research on herbal drugs may be a suitable option. It was informed that a large number of ISM drugs were being used for a long time, having no acute toxicity. But long-term toxicity on these drugs must be established. A few more experiments could be done in scientific manner to make it more meaningful. Public sector unitsmay be utilized for production of these drugs for mass consumption.

10.65 Compilation of a compendium & conducting clinical trial, which was a long term strategy, must also be evolved. Although work was progressing in different parts of India, in a bid to search and isolate effective plant medicines, there was alack of co-ordination among the groups. This often led to many miscommunications, work repetitions, use of different contradictory methods of study, and missing out on important information. By having good networking among these groupsmuch time, effort and cost could be saved. For this, there was a need for a standard data bank on the study conducted ontraditional medicine and information gathered. It would be useful to compile a compendium of plants and herbs of traditionalmedicinal value for easy reference and standard data. More emphasis should be given on herbal research focusing ondevelopment of drugs for the diseases commonly prevailing in the country.

10.66 On the Non Herbal research, isolation of a new lead molecule and designing of Novel Drug Delivery System (NDDS) could be done. Also, the classical methods involving extraction, isolation, identification, characterization, pre-clinical & clinical trials could be considered. As a short term strategy, Developing NDDS is the easiest way to compete in the present patent regime involving low capital investment. Patent expired drugs could be considered for developing NDDSto enhance its bioavailability, safety and efficacy. It would take lesser time than that of developing new molecule.

Herbal Preparations—Quality Control

10.67 The Committee was concerned about safety of herbal preparations as far as their metallic components and toxicitywas concerned. The problem of standardization and validation of drugs had not been resolved till then. This needed to bedone as early as possible so as to avoid recent instances which highlighted that some of the Indian medicines, samples ofwhich were collected in foreign countries, contained metallic contents above permissible limits. Such instances underline theimportance of regulatory mechanism and genuine certification.

10.68 Quality control of raw materials is the prime concern in manufacturing herbal products. Quality control of finishedproducts especially polyherbal products is a great concern, which requires to be resolved. Quality of medicines of herbalorigin mainly depends on quality of raw materials. Presently, a major part of the raw materials are procured from wild origin,having almost no control on parameters of cultivation, collection and content of active constituents etc. Controlled cultivationcould be a crucial parameter of the quality control. If Good Cultivation Practice & Good Harvesting Practices are developedand implemented raw materials of good quality can be ensured. European Guidelines for Good Agricultural Practice (G.A.P.)of Medicinal and Aromatic Plants, Good Agricultural and Collection Practice for Medicinal Plants (GACP), Japan, Good Agricultural Practice for Traditional Chinese Medicinal Materials, People's Republic of China etc. have been published forthis purpose. Recently World Health Organization has also published Good Agricultural & Collection Practice (GACP)which could be practised in case of cultivation and collection of medicinal plants.

10.69 The Committee was of the view that quality control of herbal drugs had not been developed sufficiently, especiallyfor combination product. Research on developing standardization methods involving modern instrumentation was urgentlyrequired. Though a few attempts had already been made, more emphasis was required in this area. Monographs of more

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plants require to be incorporated in the existing Ayurvedic Pharmacopoiea. More stringent specifications, including use ofsophisticated instruments, were to be incorporated. Research & development of marker compounds & Metabolomics werethe order of the day and stress must be laid in this area.

Registration and Standardization of Herbal Drugs

10.70 The Committee also felt that ISM products were generally compared with herbal products from abroad. The Committee was of the opinion that lack of adequate scientific data had been a serious lacuna in the field of such comparisons.Hence, there was a need, in the opinion of the Committee, for developing comprehensive database for providing a strongimpetus to promote research in ISM plants and raw materials as finished products. The Department of Science and Technology, therefore, should initiate a plan to control the quality and rigours of such work so that the standard of ISMmedicines could be sufficiently raised to bring them in a comparable position with the herbal medicines from abroad andcould be popularised in the Indian pharmaceutical market.

10.71 The Committee was further given to understand that a number of countries like Germany, France, Canada, U.S.A.and China were registering standardised plant extracts of proven clinical efficacy and safety option from natural source asherbal drugs or dietary supplements. However, in spite of the fact that India has a vast resource of drugs of natural origin, thecountry is unable to tap effectively the vast world market primarily because it is not having a satisfactory system of qualitycontrol and registration of ISM and herbal drugs. The Committee was, therefore, of the opinion that on account of theincreasing number of herbal drugs, multiple procedures and practices including registration of the patenting, etc., it might benecessary to create a separate division/cell to regulate the quality of such drugs and provide proper focus on related aspects ofdrug development. The Committee, therefore, recommended that a proper system of registration with acceptable standardsand quality control needed to be put in position in order to derive the maximum benefit from herbal drugs.

Development of New Drugs—Use of Animals for Research Purpose

10.72 The Committee observed that with the introduction of patent laws, the Indian pharmaceutical companies and research organizations had been prompted to speed up their research activities for development of new drugs. However, there were complaints from the scientific community regarding restrictions on the use of animals for research purpose. With the inordinate delay and unrealistic demands in the process of getting clearance for animal experimentation, the researchactivity had become a victim of animal activism. The guidelines laid down by the Committee for the Purpose of Control andSupervision of Experiments on Animals (CPCSEA) had in some cases stalled major research in the field. While some of the institutes and private pharmaceutical companies have done their studies abroad at higher cost, the government fundedinstitutes found it difficult to pursue their research. The CPCSEA should initiate steps to provide quick approvals and make the system more transparent. The Committee hoped that this would be effective in checking irrational delays and savingprecious man-hours of quality research.

10.73 The Committee also recommended that if the above-mentioned guidelines were found effective, they should be incorporated in the Prevention of Cruelty to Animals Act and in the relevant rules thereunder. The Committee also felt thatthe scientific community needed to be adequately informed about the new guidelines so that projects which had been hangingin balance for want of approval could be taken up in right earnest. Moreover, it was reported to the Committee that restrictionon the use of animals was putting inordinate delay in research activities. The Committee, therefore, felt that there was a need for rethinking about the composition of CPCSEA. More representatives from scientific community needs to be inductedwhich can lead to finding a rational solution of eliciting maximum scientific results with minimal animal specimen usage considering animal welfare.

10.74 The Committee felt that in-vitro experimentations should be encouraged more to avoid testing of drugs on animalsand use of 3-D computer graphics by downloading lead molecule structures from protein data bank and then modifying thesame accordingly to the software to design new treatments through new drugs should be given more emphasis so thatminimum number of animals are used for drug testing. The in-vitro method and computer simulation could be taken as a preliminary test for drugs prior to their confirmation on animals.

10.75 The Committee, therefore, concluded that since thousands of animals suffer and die during drug development testing every year and while experiments on animals could not be 100 per cent relied upon to produce valid results,particularly about the toxicity effects on humans, the drug testing policy needed to be reviewed in such a manner as to devotemore attention and resource to alternative forms of drug testing instruments like in-vitro experimentation. Drug Delivery System 10.76 The Committee while agreeing with the observation of Regional Research Laboratory (RRL) Jammu on Drug

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Delivery System felt that knowledge in the field of Proteomics, Genomics and Bio-Technology should be harnessed in such a manner that could be designed for developing impressive drug delivery mechanism with precision. Drug Delivery Techniquecan enable patients to derive optimum benefits from different drugs administration. The Committee felt that innovative DrugDelivery System would not only increase the safety and efficacy level of the drugs but it could also improve the overallperformance of a drug. The precision drug delivery system can offer additional advantages, such as easy administration ofdrugs, increased patient compliance, decreased side effects and considerable reduction in the cost of the development ofdrugs. The Committee was of the opinion that emphasis should be given on developing Novel Drug Delivery Systems(NDDS) e.g., Nanotechnology, Liposome, Transdermal Drug Delivery System (TDDS) etc. which was a feasible area forIndia to play in the Global market in the new patent regime, apart from its therapeutic advantages.

10.77 The Committee felt that following two things needed to be done to deal with the adverse drug reaction cases:- A comprehensive Adverse Drug Reaction Pharmaco Vigilance Monitoring Programme should be formulated and

should be implemented under capacity building project; and the Adverse Drug Reaction Monitoring should be of highquality, done through a special unit manned by experts.

VI. Secretariat 10.78 The Committee Section (S&T) headed by a Committee Officer constitutes the Secretariat of the Committee and anAdditional Secretary, an Officer on Special Duty, a Deputy Secretary and an Under Secretary remained in-charge of the Branch.

10.79 To assist the Committee in its work, material received from the Ministries/Departments/various non-government organizations and individuals was studied from which points were culled out. The questionnaires for written replies/evidence were also prepared for the use of the Committee. 10.80 The work relating to drafting, consideration and approval of draft reports by the Committee along with their presentation, laying, printing and distribution was undertaken. The Secretariat also dealt with the work relating to the scrutiny of action taken notes received from the Ministries concerned on the recommendations contained in the Reports of theCommittee and prepared the Draft Action Taken Reports of the Committee on it.

10.81 The Secretariat also studied materials like Parliamentary Debates, Answers to Parliamentary Questions, BudgetEstimates, Five Year Plan Documents, Books, Journals, CAG reports, newspapers etc. relevant to the subjects underexamination of the Committee.

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Annexure-X(See Para 10.4)

Details of the sittings of the Committee on Science & Technology, Environment & Forests during the year 2006

Sl. No.

Date of Sittings Duration Hrs.-Mts.

Subject Discussed

1. 10.01.2006 1-10 Oral evidence of the Secretary, Ministry of Environment & Forests regarding experimentation on animals for medical research & aspects relating to conservation of medicinal plants.

2. 30.01. 2006 1-30

Oral evidences by the Drugs Controller General (India) regarding aspects related to Drugs & Pharmaceuticals Research, including Herbal Medicines.

3. 10.02. 2006 2-55 Oral evidences by the Director General, Indian Council of Medical Research on the aspects related to Drugs & Pharmaceuticals Research, including Herbal Medicines and internal discussion regarding Wile Life (Protection) Amendment Bill, 2005.

4. 21.02. 2006 2.00

Oral evidence of the Secretary, Ministry of Environment & Forests regarding Wild Life (Protection) Amendment Bill, 2005.

5. 22.02. 2006 1-00 Oral evidence by Dr. R. Sukumar, Centre for Ecological Studies, Indian Institute of Science, Bangalore, (Chairman). Oral evidence by Ms. Sunita Narayain (Director), Centre for Science & Environment, New Delhi.

6. 23.02. 2006

1-00 Oral evidences by Dr. Asad R. Rahamani, Director, Bombay National History Society.

7. 01.03. 2006

2-00

Clause by Clause consideration of the Wild Life (Protection) Amendment Bill, 2005 by the Committee.

8. 07.03. 2006 1-00

Clause by Clause consideration of the Wild Life (Protection) Amendment Bill, 2005 by the Committee.

9. 17.03.2007 0-20 Adoption of Reports 153rd and 154th of the Committee. 10. 03.04. 2006 3-45 Oral evidence of Secretary, Department of Bio-

technology, Department of Atomic Energy on Demands for Grants 2006-07.

11. 04.04. 2006 4-05 Oral evidence of Secretary, Ministry of Environment & Forests and Department of Space on Demands for Grants 2006-07.

12. 05.04. 2006 3-45 Oral evidence of Secretary, Ministry of Ocean Development and Department of Scientific and Industrial Research on Demands for Grants 2006-07.

13. 07.04. 2006 2-00 Oral evidence of Secretary, Department of Science and Technology on Demands for Grants 2006-07.

14. 15.05. 2006 1-20 Consideration and adoption of Reports 155th to 161st of the Committee.

15. 22.05. 2006 0-55 To decide its future programme. 16. 05.06. 2006 0-55 To decide its future programme. 17. 26.07. 2006 2-15 Discussion on the Mattos of mutual interest in the fields

of Environment and Forests with delegation of the Committee on Agriculture, Lands and Natural Resources of the Republic of Kenya

18. 08.09. 2006 0-45 To decide its future programme.19. 27.09.2006 0-40 Consideration and adoption of 162nd Draft Report on

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@ Nominated w.e.f. 2.6.20006 vice Shrimati Kum Kum Rai. #

Nominated w.e.f 2.6.2006 vice Prof. Saif-ud-Din Soz.

* Nominated w.e.f. 24.6.2006 vice Dr. Chhattrapal Singh Lodha. #

Smt.Viplove Thakur ceased to be a Member of the Committee w.e.f. 30th November, 2006

* Shri Rampal Singh Nominated to the Committee w.e.f. 8th December, 2006.

Drugs and Pharmaceuticals Research Programme including Herbal Medicines.

20. 16.10.2006 1-05 Consideration & adoption of 162nd Draft Report on Drugs and Pharmaceutical Research Programme including Herbal Medicines.

21. 06.11.2006 1-45 Consideration and adoption of 162nd Draft Report on Drugs and Pharmaceutical Research Programme including Herbal Medicines.

22. 12.12.2006 0-40 Consideration and adoption of Reports 163rd to 169th of the Committee and to decide its future programmes.

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