Defaulting on loans need not be the end of business. At least for sick tea gardens eyeing a rejuvenation package.
A loan recovery mechanism welded into the “new look” Special Purpose Tea Fund (SPTF) has thrown a lifeline to tea estates that defaulted on loans provided by the Tea Board of India.
Prior to the SPTF, the Tea Board had been providing loans to estate and factory owners for plantation finance, purchase of irrigation equipment and installation of machinery. Under the Board’s Northeast Zonal office are 197 defaulter gardens owing Rs 16.2 crore.
They were initially kept out of the Rs 4900 crore SPTF. A scheme to recover past dues through the tea auction centers has to a large extent enabled the defaulters to avail of subsidies and loans under SPTF.
“SPTF now entails sale of produce through the auctions and realization of money by banks through the brokers,” said Tea Board executive director Chandrajit Saikia. “However, the idea behind opening the SPTF door to defaulters is to give thousands of people dependent on these gardens another chance.”
The break also applies to estates that have defaulted on loans from banks and financial institutions. In such a case, the defaulter needs to be armed with NOCs from the banks they owe money to.
Besides, SPTF has provided a breather for another category of defaulters – estates that have long opted out of membership of tea research institutes. The revamped scheme also accommodates tea-growing areas above 2500 ft from mean sea level.
Notably, the SPTF was launched in the 2007-08 fiscal for rejuvenating the Indian tea industry over 15 years. The scheme entailed rejuvenation and replacement of old tea bushes on 2.12 lakh hectares across the country. Declining quality and productivity of Indian tea is largely blamed on over 38 per cent tea bushes aged 50 years and above.
According to Tea Board officials, the 11th Plan period will account for replacement planting in one-fifth of the total area targeted by SPTF. This translates into 40,991 hectares, the bulk of it in Assam, which produces over 55 per cent of India’s tea.
While applications from Tea Board defaulters are being processed, Rs 43.87 have been disbursed to 122 out of 577 applications under SPTF. The financial assistance comprises a long-term loan of 50 per cent of the unit cost of replanting or rejuvenation and a capital subsidy of 25 per cent of the unit cost.