Special tea fund size raised as wages go up

Special tea fund size raised as wages go up

The government has enhanced, by about Rs714 crore, the Rs4760-crore Special Purpose Tea Fund set up to help revive tea gardens in India. This amount will help pay additional costs arising from wage increases in tea estates last year that increased the overall cost of the programme.

The size of the fund, crafted to help 1,600 tea gardens owned by about 700 firms, was announced before the higher wages kicked in. After the fund was formally flagged off by the Union minister of state for commerce, Jairam Ramesh, in January, the nodal bank for the programme, National Bank Agriculture and Rural Development (Nabard), computed the actual cost of running it.

During the exercise, the bank factored in the revised wages from wage agreements signed by the managements and labour unions in the different gardens through 2006.

The fund was set up to help planters replant and rejunevate (by pruning) tea plants in an effort to increase flagging production. According to the programme, 25% of the funds will come from the government as subsidy, the tea grower will have to pitch another quarter of the cost and the remaining 50% will be provided as long term loan by the special fund. “The estimates submitted by Nabard show that unit costs are up 10-30% for re-planting or rejuvenation of the individual gardens, depending on their location and the wage hike implemented," says G. Boriah, director (tea development), Tea Board of India, which is the nodal agency co-ordinating the programme. The overall hike in the estimates averages 15%, he adds.

Nabard’s new estimates recently got the nod from the Union government. Given the 15-year span of the project, Boriah points out cost escalations are inevitable over the years ahead. So far, the tea board has got about 266 applications for the fund, although, as previously reported in Mint, there are almost no takers for it in South India.

“We expect to start the disbursement in about six weeks’ time," says Basudeb Banerjee, chairman of the board. The government had hoped for the process to start by the middle of the year, but this has not been possible with the re-computation. The government had already made a budgetary allocation of Rs100 crore towards the fund in the Union Budget for the previous fiscal year.