Committee recommendations to review Khadi Industries

The Central Government had constituted the following Committees to review the existing structure, functioning and performance of Khadi Village and Industries Commission(KVIC) to study the regulatory framework and to recommend any other measures considered necessary to revamp the KVIC.

1.      High Power Committee headed by late Prime Minister Shri PV Narasimha Rao

2.      Arthur Andersen Study

3.      Expert Committee under the Chairmanship of Shri. D.M. Sukthankar, former Chief Secretary Govt. of Maharashtra

High Power Committee (HPC) was constituted under the Chairmanship of late Prime Minister Mr. P. V. Narasimha Rao to review the performance, examine the issues and identify the problems faced by the KVI sector.

The Committee in its report submitted in 1994 made various recommendations. The key recommendations of the Committee were:

●       All apex financing Institutions and commercial banks to be advised to increase the flow of institutional credit to the KVI sector.

●       Rebate for Khadi may be replaced by ‘Market Development Assistance’ (MDA), calculated at 20% of production

●       Necessary legislative measures to protect “Khadi” and its use by KVIC certified Institutions;

●       Separate wing in KVIC to supervise the working of Sliver Plants; smaller economical sliver plants to be set up at the Institutional level

●       Village industries under the purview of KVIC to be considered on par with Government level village and small industries category for planning and development purposes.

●       Government to constitute a separate fund (Rs. 2000 crore) for rural industries to be administered by NABARD or a separate financial institution.

●       Focus on select industries for development where KVIC has expertise and experience

●       Development of the export capability of KVI Institutions; strengthening quality control, augmenting training (participatory funding scheme for KVIB and NGO run new training centres) and research facilities

●       Creation of a special cell at the KVIC headquarters to oversee and monitor the KVI programmes

●       Transition to Project Approach for financing (from Pattern Approach)

●       Commission to delegate day to day functions to the CEO and Financial Advisor and focus on developmental rather than regulatory activity

●       Measures for strengthening of KVIBs

Based on the recommendations of the High Power Committee the following changes were brought in the KVI Sector:

The REGP scheme was commissioned in 1995-96 with the objective of providing a formal channel for flow of funds from banking institutions to the KVI sector.

The Government of India framed a new scheme for KVIC to take online credit facility (Consortium of Bank Credit or “CBC”) of Rs. 1000 crore.

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