The Telegraph
Sunday , January 6 , 2013
Since 1st March, 1999
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Carrot & stick to untie land knot
Exit policy to help idle factories

Patna, Jan. 5: The government’s proposed exit policy for closed or sick firms in various industrial areas of Bihar could fetch the state around 150 acres of land which could be used productively.

Altogether, 2,520 units have come up on the land given by Bihar Industrial Area Development Authority (Biada) on lease in various industrial areas, estates and growth centres across the state. Of this, 446 units, set up on around 150 acres of land, are lying closed.

In the absence of any exit policy — under which an entrepreneur can move out after getting a reasonable price from Biada — the land/plots have been completely blocked for any productive use. Had a policy been in place, these could have been utilised for setting up manufacturing or service sector units.

In order to address the shortage of land availability, the government is currently working on the exit policy, under which an entrepreneur, who has either been allotted land or has a closed/sick unit in industrial areas of the state, can return the land at a reasonable price. In turn, Biada would lease out the land to another entrepreneur.

“Currently, there is no provision in Biada’s regulation under which an entrepreneur (who is saddled with a closed/sick unit) can surrender his/her land to Biada and get back the money. But with the exit policy, the government wants to give them the option of surrendering their plots at a reasonable price,” Biada managing director Dipak Kumar Singh told The Telegraph.

Asked about the criteria for making payment to such entrepreneurs, Singh said the modalities are being worked out in association with industry bodies. The policy is likely to be placed before the board meeting of Biada this month.

At present there is a scheme under which entrepreneurs can either transfer their closed units or sell their plots to someone else. But the scheme is not cost-effective owing to the prevalence of a high circle rate, official sources said. Under this scheme, a person willing to buy out a closed/sick unit will have to pay the market rate of the land in an industrial area to the person transferring it besides paying 15 per cent of the circle rate of the area, the official explained.

The government, he added, is trying to make the exit policy attractive so that people come forward and return their land to Biada at a good price.

Industry bodies have welcomed the government’s move. “It is a win-win situation for both Biada and the entrepreneur. On the one hand, Biada would get the land at its disposal for giving it for productive purposes to a genuine entrepreneur while on the other, the person who wants to exit would get a fair amount of money on account of the enhanced price of assets,” Bihar Industries Association president KPS Keshri said.

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