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Centre, States, plantation growers to contribute to corpus

By Our Special Correspondent

New Delhi Nov. 30. The Disinvestment Minister, Arun Shourie, who received a paper on the Rs. 500-crore price stabilisation fund for plantation crops here today said the corpus included contributions from the Centre, growers and the States where these crops are primarily grown.

An official release says the committee recommended that the corpus of the fund should remain undisturbed and interest earnings alone be utilised for operationalising the scheme. A trust fund may be created for operating the fund and its monitoring will be entrusted to a committee set up under the Department of Commerce.

The fund seeks to bring about price stabilisation for each of the commodities without resorting to the practice of procurement operations by the government agencies. Intervention through the PSF means that when the prices worsen, growers participating in the scheme will be compensated through the fund and in the boom years, the growers will have to contribute to it.

The committee recommended adopting a uniform band of 40 per cent for all four commodities to determine the normal level of prices with a price spectrum band of plus and minus 20 per cent from the seven year moving average of international prices.

After considering various schemes to support growers, the committee has recommended adoption and implementation of the modified price stabilisation fund (MPSF) scheme, which is based on the principle of suitable contributions from the Government as well as from the growers during the normal, boom and distress periods. The committee has recommended that to begin with, the scheme may cover only about 3.42 lakh growers, these being the most needy among those having operational holdings of up to four hectares.

Under the scheme, each of the participating growers will be required to make a non-refundable initial contribution as entry fee to the fund and open an MPSF account with any nationalised bank. During normal years, when the prices remain within the price spectrum band, the grower will be required to deposit a certain amount to the MPSF account. The Government, from the interest earnings of the corpus, will also contribute to the individual account of the growers. During the boom years when prices pierce the upper band, the grower will contribute to this account while the Government will not make any contribution. In the distress years, when prices fall below the lower band, the Government will contribute and the grower will not be required to contribute to his account.

The release says the committee has also recommended that the Government should take the initiative and facilitate the establishment of commodity exchanges with provision for futures trading.

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