The Special Purpose Tea Fund (SPTF) scheme has been recast. The loan component has been dropped from it. This follows poor response to loan under SPTF. The new arrangement has already come into force.

“In the past five years, we’ve disbursed a meagre Rs 48 crore as loan under SPTF against Rs 134 crore of subsidy,’’ according to a spokesman for the Tea Board.

“As per the scheme, loan should be double the subsidy amount but that did not happen”.

Tax holiday for tea cos

The poor demand for loan is attributed to the total tax holiday the tea companies enjoy under the relevant provisions of the Income-Tax Act provided they invest their own funds for the purpose of tea plantation. The SPTF loan on the other hand attracted 9.5 per cent rate of interest.

12th Plan fund allocation

There is another reason. The 12th Plan allocation of fund to Tea Board is likely to be lower than what has been asked for — Rs 1,425 crore against the demand for Rs 2,400 crore. As a result, some of the existing subsidy schemes such as vehicle subsidy and drainage subsidy are being dispensed with.

KPMG, which evaluated the existing schemes prior to the finalisation of 12th Plan allocation, recommended it. The target for replantation too is being revised downward.

Allocation for small tea growers

A significant new addition to the 12th Plan is the allocation of Rs 300 crore for small tea growers. There are now nearly two lakh small growers in the country, together accounting for close to 30 per cent of the country’s total tea production.

Through a small growers’ directorate, which is being constituted, the Tea Board is planning to bring them under certain discipline so that they can produce quality leaf and get the right kind of prices. An estimated 10 per cent of the fund being allocated for small growers will go to meet the administrative expenses.

Another Rs 25 crore is being allocated in the 12th Plan for developing regulatory mechanism for the first time under the Tea Board.

The board got Rs 745 core in the 11th Plan (without allocations for small growers and regulatory mechanism).

(This article was published on November 27, 2012)
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