The cabinet cleared the proposal moved by power minister R Kumaramangalam to allow duty-free imports of equipment for around 8 identified mega power projects which would be used for feeding into a national power grid across the country. The cabinet also approved a financial security package for this -- eventually, the states will have to give guarantees for the power they buy through the funds made available by the Planning Commission. A scheme was also evolved to give the state-owned Bhel aprice preference and deemed export benefits -- with zero duties, Bgel would be badly hit by the new policy.

The highlight of the decisions, of course, was the golden handshake of Rs 517 crore to enable the government to close down 8 chronically sick PSUs. The proposal to close down these units was taken by industry minister Sikander Bakht several months ago, but could not be implemented since, under the law, no voluntary retirement benefits can be offered to sick PSUs. The last time around also, the cabinet deferred a decision on the matter, fearing a political backlash. Today, however, the Cabinet passed the modified formula suggested to close these units. There are around 11,000 employees employed by these units. The BIFR had earlier recommended that these units be closed down. The PSUs, excluding Cycle Corporation, have registered a net loss of Rs. 182.87 crore in 1996-97 alone and in most cases the BIFR's efforts to find possible joint venture partners have come to nought.

The PSUs are the NationalBicycle Corporation, Cycle Corporation, Bharat Process and Mechanised Engineering Weighbird India, Mining and Allied Machinery Corporation, Tannery and Footwear Company, Rehabilitation Industries Corporation, National Instruments and Bharat Ophtalmic Glass.

In addition, the Cabinet also cleared the proposal to restructure the sick Instrumentation India and to spin off its three units into separate joint ventures.

In keeping with the country's obligations to the World Trade Organisation (WTO), the Cabinet cleared the concept of a `mailbox' system to deal with patent applications till such time as the country formally adopts the product patents regime. With around 29,000 applications for patents still pending, the cabinet also cleared an industry ministry proposal to modernise Indian patent office at a cost of Rs. 75 crore. "Modernisation of patent office would help speed up scrunity of patent applications and make the office and expert body," an official spokesman told reporters soon after the two hourmeeting.

The cabinet also approved a major overhaul of the Land Acquisition Act to reduce the time taken for land acquisition for industrial and other purposes to a maximum of one year. The rates of compensation have also been hiked dramatically for this purpose.