Cabinet clears tea, coffee sector plans

As part of efforts to revive the plantation sectors, the Cabinet Committee on Economic Affairs today approved modernisation schemes with an outlay of Rs 93 crore for the tea sector and an additional budgetary allocation of Rs 95.70 crore to provide interest support under the Special Coffee Term Loan.

"The special one-time scheme for the tea sector involves a total estimated outlay of Rs 93 crore from the special fund created with accumulated amounts from collections of additional duty of excise on tea," Finance Minister P Chidambaram told reporters after the CCEA meeting.

The implementation of this will contribute to the overall modernisation and development of the plantation tea sector, he said.

The modernisation scheme for the tea sector includes grant of subsidy for the production of orthodox tea at the rate of Rs 3 per kg for leaf grades and Rs 2 per kg for dust grades for existing levels of production.

There would be an additional incentive of Rs 2 per kg for incremental volume over the previous year from January 1, 2005 to March 31, 2007.

In order to support research in the tea sector the scheme also proposes to provide a package of Rs 28 crore to meet the actual deficits of the two research and development institutions namely Tea Research Association (TRA) at Tocklai (Assam) and United Planters Association for Southern India - Tea Research Foundation (UPASI-TRF), Tamil Nadu for a period of five years from 2004-05.

This would be subject to a maximum of 80 per cent of the expenditure on already agreed items of expenditure, of which 49 per cent would be met from the normal Plan outlay of the Tea Board and balance from the special fund.

The package for relief measures to revive the coffee sector includes financial relief with banks, government and the loanees equally sharing up to one third the total interest burden of Rs 287.10 crore on the special coffee term loan (STCL) during the three year moratorium period.

An additional budgetary allocation of Rs 95.70 crore would be provided to the Department of Commerce during 2005-06 to meet the government's share of the interest in SCTL.

Coffee developmental loans along with interest amounting to around Rs 24 crore due from Coffee Board would also be written off. The Board would in turn waive off the old developmental loans amounting to around Rs 64.59 crore extended by the Board to the coffee growers (below 10 hectares only).

Besides, the government would also request banks to lower interest rates charged on STCL from the existing 11 per cent to 9 per cent in addition to writing off coffee development loans along with interest amounting to Rs 24 crore, due from the Coffee Board.

Package deal

• The special one-time scheme for the tea sector involves a total estimated outlay of Rs 93 crore
• An additional budgetary allocation of Rs 95.70 crore has been provided to the coffe sector for interest support under the Special Coffee Term Loan