The new scheme which will be an alternative to the voluntary retirement scheme, is to be modelled on the lines applicable to sick mills in Gujarat.The move comes after preliminary discussions the textiles ministry had with the finance ministry on finding ways to fund the revised Rs 3,505-crore package for the ailing NTC mills.

Nearly 50 per cent of the funds estimated at about Rs 700 crore is to come from sale of surplus land held by NTC mills in Mumbai. As for the remaining half, funds are to be raised from banks.

The process of sale of surplus land and realisation of the proceeds are bound to take some time. Pending that, the textiles ministry has suggested that the government consider granting loans to cover the amount obtained from such sale. The package envisages revival of only 34 viable mills and closing the remaining 85 mills. Earlier, the package involved a total amount of Rs 2,205.72 crore. The revised estimate is the result of a sharp increase in the number of workers who will be asked to opt for the VRS scheme and the high cost of machinery and equipment required for modernisation. On the other hand, the 1995 turnaround plan drawn by the ministry had envisaged revival of 79 mills. The new plan if approved by the government, will also have to be cleared by the Board for Industrial and Financial Reconstruction. Mills belonging to the eight out of the nine NTC subsidiaries have already been referred to the Board.

In 1997, the Maharashtra government had refused to amend its land regulations in order to facilitate 100 per cent sale of surplus land held by NTC mills in the state under the 1995 turnaround plan. Its demand for a two-third share of the sale proceeds was turned down by the Centre.Subsequently, the Centre had made an offer to take the entire liability of NTC mills amounting to over Rs 4,321.78 crore, provided the state governments were willing to run and manage them.

But none of them came forward.

The result is that the net loss of NTC and its subsidiaries continued to mount every year. And the government pays around Rs 500 crore a year to over one lakh workers.