Panel for conditional recap via bonds for co-ops

New Delhi, Jan 7: The joint committee on revitalisation support to ailing cooperatives on Monday proposed a conditional 60:40 financial assistance by the Centre and the states, which is likely to exceed Rs 10,000 crore.

"The recapitalisation package was initially pegged at Rs 10,000 crore. It may be more than that or less than that depending on financial position of cooperatives," committee chairman and minister of state for finance Balasaheb Vikhe Patil said after presenting the report to the finance minister Yashwant Sinha here.

He said the committee recommended that the Centre should provide 60 per cent of the assistance while states would have to bring in the remaining 40 per cent.

The government is likely to announce the package in the Budget after considering the committee’s recommendations.

The committee proposed that the assistance should be provided by the Centre and the states by subscribing to cash-neutral 10-year bonds with a moratorium period of three years.

"The interest on the bonds would be paid to the ailing cooperatives as part of the assistance," Mr Patil said.

The government’s assistance to cooperatives has been linked to several conditionalities including amendment to the State Cooperative Act, granting autonomy and introduction of commercial audits. Mr Patil said the cooperatives would be taken up on a case-to-case basis to determine the recapitalisation amounts.

"The assistance would be provided to cooperatives that can be revitalised. Unviable units would have to be closed down," he said.

— PTI