Price Stabilisation Fund must attract funds from WB: panel

NEW DELHI: The Rs 500-crore price stabilisation fund aimed at protecting small plantation farmers from price fluctuations should attract contribution from multilateral funding agencies including the World Bank, a high-level committee has recommended.
"The Fund, depending upon its efficient operations, should attract contributions from IDA credit (the soft loan window of World Bank) or other multilateral funding agencies," the committee set up to recommend operational modalities of the fund said in its report.
It has also suggested that commercial banks having exposure to the plantation sector should come forward and participate in the scheme at some stage or the other by contributing to the fund appropriately.
The report submitted to Commerce & Industry Minister Arun Shourie on Sunday mooted a modified Price Stabilisation Fund (PSF) scheme, which would cover 3.42 lakh growers of tea, coffee, rubber and tobacco, having operational holdings of upto four hectares.
The fund would attract contributions from the Centre and States and contribution of concerned states to this fund could be based on size and operations of the plantation crops and their relevance for the economy and number of small growers.
"The fundamental principle that should govern operation of the scheme is that the corpus of the fund remains undisturbed and interest earnings alone be utilised for operations with respect to different commodities," it said.
The report which would be tabled before the Cabinet Commitee on Economic Affairs (CCEA) also recommended that the government must facilitate establishment of commodity exchanges with provision for futures trading.
Under the modified PSF (MPSF) scheme, each participating grower would be required to make a non-refundable initial contribution of Rs 500 as entry fee to the fund and open an MPSF account with a nationalised bank.
In normal years, when prices remain within the price spectrum bank, the grower would be required to deposit Rs 500 each year without being allowed to withdraw from the account.
The government would also contribute Rs 500 to individual growers, account during these years. However, when the prices fall below the lower band, the subscriber would be permitted to withdraw an amount up to Rs 1000.
The committee also recommeded establishment of a wing in each commodity board for disbursement of compensation and receipt of contributions from the growers.
"The committee does not recommend addition of any new staff to the commodity boards for this purpose and they have to re-train and re-deploy their existing personnel for discharging responsibilities in this area," it said.
The 10-year scheme should be reviewed after a period of five years and if need be new features should be incorporated in response to emerging needs and requirements of exit of uncompetitive growers, it added.
The nine-member committee was chaired by additional secretary in the Commerce Ministry LV Saptharishi.