The Hindu Business Line : Plantation panel enlarges insurance cover scheme

PLANTATION COVER: The Minister of State for Commerce, Mr Jairam Ramesh, with the Chairman of Task Force on Plantation sector, Dr N. Rangachary, addressing a press conference after receiving a report of the task force, in the Capital on Tuesday. — Kamal Narang

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New Delhi Jan. 30 A task force on plantation industry has recommended a mix of subsidy-based insurance scheme at a cost of Rs 720 crore to the exchequer and a market-based scheme to co-exist over a period of five-years till the growers learn to "meet the risks of price movements and the art of price risk management". It has enlarged the insurance cover scheme from tea, coffee and rubber to include chilli, ginger, turmeric, pepper and cardamom.

The Task Force on Plantation, headed by the former CBDT & IRDA Chairman, Dr N. Rangachary, submitted its report to the Minister of State for Commerce, Mr Jairam Ramesh, with other members, Dr Vijay Kelkar, Dr Subhashish Gangopadhyay, Dr Bharat Ramaswamy and Prof A. Damodaran of IIM-Bangalore, also present on the occasion. The Rs 720-crore insurance cover to small growers would consist of the task force projection of Rs 679.55 crore over the Eleventh Plan as Government's financial support for the scheme — split into Rs 64.18 crore, Rs 99.99 crore, Rs 128.51 crore, Rs 177.72 crore and Rs 226.93 crore over the different years. Added to this, an annual interest accretion of Rs 40 crore would be available under the PSFS.

Recommendations

Explaining the recommendations of the task force, Mr Ramesh told the media persons that it has suggested that farmers, processors and exporters should be enabled to utilise the instrument of derivative contracts and options provided by National Commodity Derivatives Exchange of India (NCDEX). Currently, such contracts exist for pepper, cardamom, chilly, coffee, natural rubber, coconut oil and copra.

He hailed the task force recommendations as "out-of-box thinking" and said these would be referred to a Group of Ministers to take a call soon. Since only large growers were using the facility for derivative contracts and options, the task force favours that the small growers should be enabled to form cooperatives.

Market literacy programme

An innovative market literacy programme on trading in general and futures trading in particular is to be launched. As the extant system of banking regulations does not allow non-investment banks to take part in derivative trading, the task force favours that all the banking institutions with exposures to futures trader's commodities should be allowed to participate in futures trading, subject to position limits, Dr Kelkar said.

The task force designates a grower up to 10ha of holding plantation land as a small grower. It has proposed an insurance cover to the small grower and the periodical premium might be shared between the beneficiary and the Government (Price Stabilisation Fund Trust currently managing the PSFS), roughly on 50-50 bases.

Plantation Development Bonds

Dr Rangahcary said that a suggestion has been mooted for instituting `Plantation Development Bonds' to finance infrastructure development in plantation areas. The bond could be for a span of 10 years and the proceeds of it could be utilised as investments in bankable infrastructure projects.

The extant PSFT might be converted into an authority to issue the PDB, "resulting in synergies between price stabilisation functions and issue of bonds".

Crop insurance

For crop insurance, the one proposed is in line with that for coffee and the financial burden of payment of premium for each plantation crop and spices, tobacco and floriculture would have to be shared by the Government to the extent of 50 per cent at least for the first five years.

After five years, the task force has recommended a proposal where the farmers make no upfront payment but commit to pay a certain amount if conditions are good in return for receiving something when conditions are bad.

Commodity boards

The task force favours the introduction of measures to facilitate commodity boards — PSFT to help self-help groups and other farmers groups — in fair marketing for their produce. Such measures would enable the growers or groups of growers to process, store and market the produce to realise a much better price than what they get today, it said.

For tobacco growers, the task force recommends extension of group insurance and group life insurance and for price stabilisation.

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