It also recommended the need for a separate Act of the Parliament solely for facilitating rehabilitation of sick co-operatives on the lines of the existing sick industrial companies Act. A National co-operative rehabilitation agency should be set up under the proposed Act and should consist of representatives from co-operatives, administration, banking and NCDC should be the nodal agency.
The 5-member expert panel was set up the sole funding agency for the co-operatives, namely National Cooperative Development Corporation (NCDC).
The panel surveyed 125 sick co-operative sugar factories and suggested a Rs 4,510 crore rehabilitation and operation package for 100 identified ones. It said that while Rs 2,270 crore would be needed solely for rehabilitation, Rs 2,240 crore would be for providing cheaper working capital for its operation.
For rehabilitation while the co-operative society would contribute Rs 200 crore, the NCDC would give financial support of Rs 600 crore and Rs 1,200 crore would be extended from the sugar development fund (SDF). The government would render a interest subsidy of Rs 270 crore. The NCDC would also provide Rs 2,000 crore as cheaper working capital, for which the central government would render a subsidy of Rs 240 crore.
Similarly the Patil panel has suggested a corpus of Rs 3,051 crore as rehabilitation and operation package for 60 identified co-operative spinning mills, out of which Rs 2,043 crore would be for rehabilitation and Rs 1,008 crore for providing cheaper working capital for its subsequent operation.
For rehabilitation while the co-operative society would put in Rs 90 crore, the NCDC would extend Rs 810 crore as term loan and Rs 540 crore as investment loan.
The government would provide Rs 360 crore as capital subsidy and Rs 243 crore as interest subsidy. The NCDC would also provide Rs 900 crore as a term-loan for meeting the needs of working capital and the government would render Rs 108 crore as interest subsidy.
The panel said rehabilitation of co-operative spinning mills should be spread over two years and the cotton growers mills should be declared as marketing yards for facilitating market linkage.
Weavers mills should tie up with growers mills and ginning units for procurement of cotton from market yard. Six to eight months requirement of cotton should be procured for the benefit of farmers. Wind mills should be installed, wherever feasible, to reduce the cost of power.
The panel identified 373 co-operative units out of a total 457 sick units in other sectors like plantation, oilseeds, foodgrains, coir, fruits and vegetable for rehabilitation. It estimated a total rehabilitation and operation package of Rs 457 crore, out of which Rs 163.30 crore would be for modernization and Rs 294.50 crore would be for working capital.
The rehabilitation scheme would include 45% term-loan, 30% investment loan, 20% capital subsidy and 5% co-operatives share for modernisation, balancing equipment, expansion in capacity to a viable size and need based working capital.
With a view to encourage state governments to participate in the equity of processing units, NCDC should provide interest free investment loans.