The Hindu Business Line : GoM finalises crop insurance cover norms for plantations

The Group of Ministers (GoM) on plantations sector has finalised its stance on the proposed Rs 729-crore crop insurance scheme for tea, rubber, tobacco and spices, extension of the personal accident insurance (PAI) scheme to spices sector and flotation of a plantation development bond.

"These decisions would be forwarded to the Union Cabinet shortly for a final call to operationalise the various proposals recommended by the GoM for the plantation sector in a bid to impart the much-needed relief to this employment-intensive segment", the Minister of State for Commerce, Mr Jairam Ramesh, a special invitee to the GoM told Business Line here after it met on Wednesday.

Under the crop insurance cover, the GoM has recommended covering growers with landholding up to 10 hectares.

But in case of tea and cardamom, growers with land holdings between 10-50 ha would also be covered.

The growers owning land holdings up to 10 hectares would be provided 50 per cent of subsidy on the insurance premium (Rs 723.63 crore) and those between 10 and 50 ha would be provided 25 per cent subsidy (Rs 5.17 crore), thereby, taking the total premium subsidy liability of the Government to Rs 728.80 crore, Mr Ramesh said.

Officials explained that the Price Stabilisation Fund (PSF) Trust's interest earnings on the extant corpus of Rs 435.12 crore and surplus interest balance of Rs 103.44 crore as on end-March 2007 would be used partly for funding the programme.

The gap between the Union Government's crop insurance premium liability and PSFT's interest earnings over the five-year period would be Rs 499.55 crore which would be provided by the Centre as budgetary support.

Under the modified Personal Accident Insurance (PAI) Scheme approved by the Cabinet Committee on Economic Affairs (CCEA) on March 22, the officials said that at the rate of premium of Rs 14 per person per annum for 12.77 lakh growers, the annual premium outgo is Rs 178.78 lakh.

For additional 51.08 lakh workers premium outgo would be Rs 715.12 lakh per anum, taking the total outgo to Rs 893.90 lakh per annum. PSFT Scheme would have to fork out 50 per cent of liability, the officials said adding that both the crop insurance scheme and extension of PAI to spices segment would be put before the Union Cabinet.

Development bonds

On plantation development bond (PDBs), Mr Ramesh said that the task force in its supplementary report in August this year flagged off issues that need to be addressed to render the scheme attractive from the investors' standpoint. These include, he said, the Ministry of Finance/the RBI to categorise the investments in PDBs as eligible investment on par with `regular Government securities' or `other approved Government Securities under "SLR category" so as to attract institutional investors such as banks/FIs and to obviate the interest rate fluctuation risks, the duration might be kept shorter to seven years.

The GoM's decision on this would be put up to the Cabinet, he added.

Meanwhile, it has been decided by GoM to launch a pilot project on IOU option, wherein growers do not have to fork out any money upfront and the expenditure on this pilot project experiment would be borne by the PSF Trust, Mr Ramesh added.

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