The bridge loan will be returned to the government from the proceeds of sale of surplus land held by some NTC mills after the plan is implemented.

Of the proposed amount, around Rs 2,000 crore is for a voluntary retirement scheme for about 80,000-90,000 workers displaced on account of the closure of around 84 unviable mills. The balance Rs 1,500 crore has been earmarked for modernisation. The VRS would be on the lines adopted by the Gujarat government for its sick mills.

Textiles minister Kashiram Ram told The Financial Express that the VRS had the support of labour unions and he was confident of obtaining Cabinet approval for the revival plan during the second or third week of June.

He said he saw no fund constraints as the government had already provided Rs 25,000 crore over a period of five years to implement the technology upgradation scheme for the textile industry, including the jute sector, from April 1, 1999.

Rana said NTC had so far accumulated losses amounting to about Rs 7,000 crore and idle wages of about Rs 500 crore was being paid to workers. The Board for Financial and Industrial Reconstruction (BIFR) had asked the textiles ministry to make an appraisal of valuation of assets of NTC mills, unit-wise, vis-a-vis the position two or three years ago.

Going by the 1995 revival package, the fund requirement for NTC update was estimated at Rs 3,2,205,72 crore. The increase of about Rs 1,300 crore follows the sharp increase in the number of workers who will be asked to opt for the VRS and the high cost of machinery and equipment for modernisation. The 1995 plan had envisaged revival of 79 mills.

In 1997, the textiles ministry came out with a plan for sale of surplus land held by some NTC mills in Mumbai for partly funding the Rs 2,205.72 crore turnaround plan of 1995.

The ministry had then expected the Maharashtra government to amend its land regulations in order to facilitate 100 per cent sale of surplus land held by mills in the state. But its hopes had been dashed.

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.