The Hindu : Business : Insurance package for plantation sector

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Saturday, Aug 26, 2006

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Insurance package for plantation sector

Special Correspondent

Price Stabilisation Trust fund will be in place shortly

BANGALORE: The Union Government will put in place in the next 45 days a Price Stabilisation Trust Fund (PSTF) for the plantation sector, Minister of State for Commerce Jairam Ramesh announced here on Friday.

Expert Committee

The Government has also set up a four-member Expert Committee to develop an effective insurance package to stabilise the income of the plantation sector. The panel, comprising the former Union Finance Secretary, Vijay Kelkar, the former IRDA Chairman, N. Rangachary, Bharat Ramaswamy of the Indian Statistical Institute and Subhasish Gangopadhyay of the Confederation of Indian Industry, is expected to submit its report by the end of November.

Mr Ramesh said the Price Stabilisation Trust Fund as originally conceived was a "non-starter.'' "We have now substantially improved the package by liberalising the quantum of assistance that small growers will get as part of the Fund from the earlier proposed Rs. 1,000 to Rs. 5,000 in a season,'' he disclosed. "We hope to get Cabinet approval soon for setting up the Fund,'' he said.

The Minister, however, admitted that the proposed Fund was not expected to work wonders for the growers by insulating them from price fluctuations. "None of us is convinced that this is going to work. That is why we have set up the expert committee to look at alternate models like crop insurance as a price smoothening instrument,'' he noted.

The proposed Special Purpose Tea Fund will become operational by mid-November.

The Rs. 4,700-crore Fund with an initial capital contribution of Rs. 100 crore from the Government will be spent over 15 years for re-planting 40,000 hectares.

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