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December 23, 1997


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Estate War again as accord over Bombay's sick textile mills flounders

Kishori Gopalakrishnan in Bombay

It was one of the boldest decisions of the Shiv Sena-Bharatiya Janata Party coalition government in Maharashtra, going against the wishes of trade unions -- to allow sick textile mills in Bombay to sell their surplus land. Yet, the present political uncertainty in New Delhi has once again cast a shadow on the decision.

The textile mills were Bombay's industrial backbone and the workers played a stellar role in the Freedom Struggle. The mills, with their 250,000 workers employed within its precincts in the early 1980s, defined the cultural pulse of the city and gave the city its Maharashtrian ethos. Bombayites around the mill areas were said to set their clocks, and their lives, to the wailing of the sirens from the textile mills.

Yet today, an eerie silence greets a visitor to most of the city mills, which have been shut from the early to mid eighties, crippled by strikes and mismanagement. The first major strike in 1982 saw the numbers of those employed by the mills dwindle to a disastrous five-digit figure, and in the bargain, shattering the dreams of thousands of retrenched workers. While governments over the years have cared little for their plight, the three-square-kilometre land which the mills occupy became the focus of attention of the mill owners and property developers.

The mills are located in south-central Bombay, a prime area in the city reputed to have the most expensive real estate prices in the world. With south Bombay saturated and unable to accommodate more offices, builders have been eyeing the vast mill lands to construct new office space. What is at stake is an estimated Rs 500 billion locked away in these sick textile mills in terms of land and capital, and the rehabilitation of the thousands of workers who are idle today.

Of the 58 sick mills in the city, the present state government has taken over 26 of them, including those earlier taken over by the National Textile Corporation in the mid and late 1980s in the hope of restarting them. The remaining 32 mills remain with the private sector.

While the common perception is that labour problems were at the root of the mills closure, the fact also remains that almost 40 per cent of these mills closed down due to internal mismanagement. As a consequence, the sick mills owe more than Rs 10 billion to various financial companies, money loaned for modernisation and ineffectively used.

The Congress government, led by Sharad Pawar in the late 1980s and early 1990s, framed a set of Development Control rules for the sale of mills' land in Bombay. As per this set of rules, one third of the land was for the Bombay Municipal Corporation to be used as public open space; one third for the Maharashtra Housing and Development Authority for housing needs, and the remaining for to be developed by the owner to be used either for commercial or residential purposes as permitted. However, faced with opposition from the workers, the Congress government was unable to implement its policy. It was ousted from government after it lost the 1995 state assembly elections.

The new Shiv Sena-BJP government received many complaints of unplanned and haphazard development within the mill lands already sold. The state government appointed a committee in February 1996 under renowned Charles Correa to prepare an integrated development plan for these textile mill lands.

The committee faced three main questions:
i) whether the sale of surplus land be permitted hereafter in principle;
ii) if allowed, for what purpose should the land be used; and,
iii) in what manner should the profits accruing to the developers be used for rehabilitation of the displaced workers.

While the committee reflected, the state government stalled the sale of the mill land on one pretext or the other, showing little concern for the the textile industry whose condition continued to deteriorate.

Finally, the government's reluctance in going ahead with the politically volatile decision (the move risked angering thousands of workers) cracked under the intense pressure from textile mill owners and orders from the Board for Industrial and Financial Reconstruction. After dragging its feet for over two and half years, the Shiv coalition government came out with a new draft policy concerning the sick textile mills' surplus land.

A modified version of Shared Pa war's formula, the new draft suggested a division instead of a split. One-fourth each would be given to to the mill owner, MHADA, BMC, and the mill workers for their residential quarters.

The new draft policy also allowed the surplus land developer to use his transferable development right, granted under existing urban development regulations, within the island city itself (southern Bombay) instead of the suburbs as was mandatory earlier.

While the new policy included a workers' share, ostensibly "to protect the interests of the affected mill workers,'' the various trade unions were unimpressed and have repeatedly threatened to agitate to prevent the surplus land sale. Their attitude queered the pitch several times, as did the murder of Sunit Khatau -- who sold the surplus land in the complex of Khatau Mills.

The crisis faced in implementing the Khatau Mills' rehabilitation package is a preview on what could befall Bombay's textile mills hoping to make a turnaround by selling the the surplus land on their complex. The Khataus' plan to sell 40 acres of the company's surplus land in north Bombay was stuck since the purchaser, diamond merchant Bharat Shah, refused to pay the amount agreed to two years ago. He had reportedly paid an advance of Rs 100 million but reneged on the subsequent instalments, maintaining that since real estate prices had fallen, he was entitled for an equivalent concession on the original price.

Moreover, the Girni Kamgar Sangharsh Samiti, representing the workers, alleged that the Board for Industrial and Financial Reconstruction-sanctioned sale was nothing but "commercial profiteering" by the company's management which had no intention of either reviving the mills or providing employment to the displaced workers.

Samiti President Gayatri Singh said that the government had supported the mill's proposal to sell 10,457 square feet of land for commercial development before BIFR gave its approval on June 14, 1996.

Similarly, the unions have alleged that no rehabilitation proposal was in fact implemented nor is it being done so. In the case of Sriram Mills, the recognised union -- the Rashtriya Mill Mazdoor Sabha -- has pointed out that the mill was allowed to sell 120,000 square feet of real estate on the condition of running the mill with 1,400 employees. However, only 84 permanent employees have been retained on the rolls today while there is no sign of the mill starting to function ever again, he added.

According to state government sources, 15 sick private mills have been permitted to sell land for the BIFR-recommended revival proposals. Under these provisions, a maximum of about 100 acres of private mill land can legally be sold in the open market. While some of it has already been sold, given the steep drop in property prices, the private mills and builders are likely to bide their time in developing the land, and do so slowly to avoid an 'oversupply and low-price' situation.

With the government dithering on implementing its decision, property developers are unwilling to go ahead with their plans, which only keeps the workers unemployed and unrehabilitated. The ongoing dispute over the prime estate in the heart of Bombay between the developers, workers, and the government seems set to continue.

Workers' to get share in new mill land division plan

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