The Hindu Business Line : Rs 1,500-crore corpus mooted for Plantation Development Bonds

New Delhi, Sept. 4 The Task Force on Plantation Sector, headed by Mr N. Rangachary, has suggested a corpus of Rs 1,500 crore for the Plantation Development Bonds it had proposed in the main report early this year, in order to fund technically robust projects that are bankable and promise good returns.

In its supplementary report presented to the Union Commerce and Industry Minister, Mr Kamal Nath, it said the Plantation Development Bonds might be in the nature of zero coupon bonds with maturity tenure of seven years, according to official sources.

The sectors to be covered might encompass energy, water supply, roads, quality labs and specific investment requirements of cardamom, tea, coffee and rubber sectors, it said while laying due accent on and justification for flotation of Plantation Development Bonds to finance the much-needed infrastructure development in plantation sector and to impart better accessibility to growers.

The Task Force also scanned the option of funding some projects through the Rural Infrastructure Development Fund available with the National Bank for Agricultural and Rural Development. It said an attempt could be made to tap this source, in consultation with the Ministry of Finance and the State Governments.

The supplementary report is a follow-up to the earlier report submitted by the Task Force on January 30. The main report was discussed by the Group of Ministers (GoM) headed by the Union Minister for Agriculture, Food & Civil Supplies, Mr Sharad Pawar, in April, which directed the Task Force to work out the detailed parameters and the modalities of implementation of its recommendations relating to plantation development bonds, IOU (I Owe You) option as an alternative to crop insurance scheme and a package for the floriculture sector.

While stating that the IOU option might be feasible, the Task Force is of the view that a pilot project in a designated area should be undertaken to test the scheme. A proposal in this regard would be formulated by Prof. S. Gangopahdyay and the cost of the project might be funded by PSF Trust.

When contacted, the Minister of State for Commerce, Mr Jairam Ramesh, told Business Line that the GoM would study the set of three recommendations to operationalise the insurance scheme for the plantation industry at the earliest as the UPA Government deems this sector crucial from the livelihood perspective of small and marginal growers who need to be insulated against the vicissitudes of the industry.

The supplementary report also recommends the introduction of crop insurance scheme subject to a ceiling of Rs 2 lakh, which would be eligible for a 50 per cent subsidy from the Government.

The exporters would be free to avail themselves of an insurance cover exceeding Rs 2 lakh from their his own resources. Given the fluctuations in global market prices and the high quality standards needed to be met by the floriculture exporter, it should be recognised for grant of an export incentive from government in an appropriate scheme.

It also reiterated its earlier view that farmers/exporters should be encouraged to participate in the futures market to utilise the instrument of derivative contracts with "options" trading route, hitherto not allowed under the regulations framed by Forward Markets Commission. All commodities might be brought within the ambit of futures market and the banks might be allowed to enter this market for commodities. For small growers, cooperative societies/self-help groups might be beefed up to have the financial muscle for participation in futures markets to take due advantages.

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