Reasons for Industrial sickness in India: Suggest Remedies.

Situation of an industry in which its entire net worth is eroded, it has suffered cash losses for current and preceding financial year, equal to or exceeding its net worth, is the total of its losses, in explained as industrial sickness. The Sick Industries Companies (Special Provisions) Act 1985 deals with the sick industries.

The reasons for industrial sickness in India are found mainly can be divided into two categories:

(a) Internal causes

• Faults at the initial levels of planning and construction.
• Financial constraints.
• Labour and management problems.
• Defective, inefficient and age old machineries.
• Incompetence on the parts of entrepreneurs.
• Unskilled labours to work with modern technology.

(b) External causes

• Sudden changes in the government policies.
• Erratic supply of inputs.
• Non-availability of energy resources and raw-materials.
• Increased competition.
• Power cuts.
• Demand and credit restraints.

As suitable remedies for the sick industries, the government provides with liberal policies, financial assistance from banks and other institutes, exemption from taxes etc. Apart from the steps being taken by the Government, we can suggest the following remedies for the sick industries:

(a) Government policy of taking over the management under the provisions of the Industries Development and Regulation Act has not proved an effective instrument for revival of sick units.

(b) Banks grant various concessions to sick units to rehabitate them e.g.
(i) grant additional working capital facilities to overcome shortage of working capital.
(ii) Recovery of interest at reduced rates.

(c) Technological upgradation should be introduced and required assistance should be provided.
(d) Supply of power/energy, transportation, infrastructure, management can be made more efficient.
(e) Market zones for them can be created, export promotion can be provided by policy measures.
(f) Subsidies and availability of raw materials can be improved.

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