Government have
approved setting up of the Price Stabilisation Fund (PSF) for
plantation crops -- tea, coffee and rubber and the agricultural
crop -- tobacco in order to safeguard the interests of the growers
of these commodities. The Cabinet Committee on Economic Affairs
(CCEA), which met here last evening, has approved the proposal
of the Department of Commerce for operationalisation/ implementation
of the scheme from April 2003 onwards for a period of 10 years.
The total corpus of the Fund is Rs. 500 crore.
The objective of
the Fund is to bring about price stabilisation for each of these
commodities without resorting to procurement operations by Government
agencies. That is, intervention through the PSF means that when
prices of these commodities worsen, the participating growers
will be compensated by the Fund. In the boom years, the growers
will contribute a certain amount to the Fund.
To begin with,
the Scheme will cover about 3.42 lakh growers who are the most
needy having operational holdings of four hectares. Commodity-wise
break-up of the numbers of growers to be covered is as follows:
Rubber (1,97,461), coffee (71,949), tea (42,619) and tobacco
(30,317). The growers of these commodities are spread across
different States, namely, Kerala, Karnataka, Tamil Nadu, Andhra
Pradesh, West Bengal, Himachal Pradesh and the North East. The
significance of the scheme arises from the fact that the scenario
in the plantation sector for the last three years has been extremely
unfavourable for the growers of tea, coffee, rubber and tobacco
with the continuing decline in prices in the domestic as well
as international markets. Shri Arun Jaitley, Minister of Commerce
& Industry and Law & Justice said today that with the
implementation of this scheme, the growers would be benefited
during their distress. He observed that the principal underlying
the PSF is to set up a permanent pool of resources which would
be sustainable in the long run in helping the growers, while
noting that they had been facing severe problems as prices of
almost all agricultural commodities witnessed a steep decline
after experiencing a boom in the mid-1990s.
It may be recalled
that deeply concerned with the problems faced by the growers
of tea, coffee, rubber and tobacco and after examining the report
and various options recommended by the National Council for
Applied Economic Research (NCAER), the Department of Commerce
had proposed to establish the Price Stabilisation fund in keeping
with the government’s commitment to safeguard the interests
of growers of these commodities. The Cabinet Committee on in
its meeting held on 11th June 2002 had given in principle
approval for the proposal of Department of Commerce for setting
up of a Price Stabilisation Fund of Rs. 500 crore and constituted
a 9-member Inter-Ministerial Committee headed by Shri L. V.
Sapthirishi, Additional Secretary, to work out the operational
modalities of the PSF Scheme. The Committee after extensive
interaction with the growers and the other segments of industry
and the concerned State Governments submitted its Report to
the Department of Commerce on November 30, 2002.
To facilitate administrative
back-up for implementation of this scheme by NABARD or a designated
bank under a Trust Fund, approval of the CCEA has also been
accorded to the appointment of Chief Executive Officer of the
Fund and the constitution of a high-powered committee under
the Department of Commerce for monitoring and operation of the
Fund. The details would be worked out in consultation with the
Ministry of Finance and Company Affairs.
Under this Scheme,
each participating grower would be required to make a non-refundable
initial contribution of Rs. 500 to the Fund and open a PSF account
with a Nationalised Bank. When prices fall below a certain level,
the Central Government will credit up to Rs. 1000 per grower
every year to the subscriber-grower’s account as a measure of
support in a distress situation. At the same time, when prices
rule above the upper levels of price spectrum band, the grower
will be required to contribute an amount of Rs. 1000 per annum
to his own account. When prices fall below a certain level the
grower will be permitted to withdraw an amount of Rs. 1000.
However, in a normal year i.e., when prices remain within a
price spectrum band, the grower subscribing to the scheme is
not allowed to withdraw any amount from the account.
