The Hindu Business Line : Mixed reaction from tea industry

Mr Jaswant Singh has allowed the small growers, who contribute about 18 per cent to the total national tea production, to take working capital loans up to Rs 2 lakhs at an interest rate of nine per cent.

The industry, however, has expressed some doubts on the significance of this decision. "There is hardly any small grower who take loans from the nationalised banks. They are mostly dependent on other sources of finance," industry sources said.

Mr N.K. Das, Chairman of Tea Board, said the industry was looking forward to the special tea term loan. "We have been hearing about this initiative for some time but it is good that the Union Government has made a formal announcement. This is likely to be a major boom to the industry", Mr Das said.

Mr C.K. Dhanuka, Chairman of Indian Tea Association, clarified that the revival package, which the Finance Minister mentioned, is actually a set of recommendations made by the IBA.

According to the association, tea should be categorised as a priority sector and all loans that are due to the corporate houses up to December 31, 2003 should be converted as term loans and be given at interest rates lower than the PLR (prime lending rates).

Fresh loans, thereafter, can be charged with interest rates at par or above the PLR. In this context, IBA mentioned that banks should follow the suggestions of the Madhukar committee.

Mr Dhanuka said that banks should not ask for new collaterals while giving fresh loans because most of the tea companies already have a huge debt exposure. "Banks should set practical and bankable proposals for the tea companies," he said.

Mr Suresh Bansal, President of Tea Association of India, urged IBA to fix low interest rates, at around eight or nine per cent, while working the revival package of the tea industry. He said the Union Government has taken steps in the right direction but added that it would mostly help the small growers.