Guwahati, May 2: The Assam government has kicked off the exercise of shedding flab by liquidating the assets of two loss-making public sector units — the Cachar Textile Mill and the Bijni Match Factory.

The state Cabinet took the decision following a suggestion by the committee on fiscal reforms that the state should do away with all loss-making PSUs to improve its fiscal health.

The government has worked out a financial package of Rs 1.6 crore to offer voluntary retirement benefits to the employees and clear other liabilities of the two PSUs, which have been defunct since 1995.

“The government and the employees have mutually agreed to do away with the PSUs by releasing salary arrears, which were pending for several years now,” minister of state for industries Ananda Ram Baruah told The Telegraph.

The textile mill at Badarpur has 35 employees, while the match factory in Dhubri has 44.

The government has already released Rs 20 lakh as the first instalment for the golden handshake scheme.

Another Rs 5.11 lakh has been mobilised by selling off machinery of the Cachar Textile Mill. Established in 1966, the mill was one of the oldest industrial units in the state.

Baruah said the government assessor had valued the machinery of the mill to be worth Rs 3-4 lakh. The process of assessing the value of the assets of the match factory will begin soon.

The textile mill became defunct because of mismanagement, while the match factory had to stop production as Wimco Match Company, for which it had been producing matchboxes and sticks, closed shop.

“The government had no option but to liquidate the assets of the two PSUs. These were not economically viable in the present scenario and no private party would come forward to take over the units. If the government had delayed in liquidating the assets, the net worth of the machinery would have come down further,” Baruah said.

Almost every PSU in the state — there are 49 — is facing bankruptcy. Accumulated losses are estimated to be Rs 4,060 crore and outstanding dues to financial institutions around Rs 1,500 crore. These loss-making units have about 54,500 employees.

The Committee on Fiscal Reforms has suggested liquidation of the assets of 16 PSUs and immediate disinvestment in 16 more.

The committee says inefficient financial management and control, lack of work culture, excessive overheads and overstaffing, poor support system and non-availability of working capital are some of the factors responsible for the state of affairs at present.

Making 200-odd recommendations, the committee made a case for qualitative rather than a quantitative approach to revival.