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Wednesday, July 11, 2001



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Time to review tea account scheme

Rabindra Nath Sinha

KOLKATA, July 10

THE existing provisions for the Tea Development Account Scheme (TDAS), which has its origin in Sec 33 AB of the Income-tax Act, warrant a fresh look as the Department of Commerce (DoC) in the Union Commerce and Industry is firm that the Tea Board should devise an effective mechanism to monitor utilisation of additional resources that will be available to tea companies the Central budget for 2001-02.

The existing provisions were made with reference to the 20 per cent allowance under Sec 33 AB for specified development programmes. The Central Budget for 2001-02 doubled the allowance under Sec 33 AB to 40 per cent.

The moot point now is whether the existing provisions for deposit under TDAS for the first, or rather, the original 20 per cent allowance should hold good for the second 20 per cent allowance and would, as desired by DoC, facilitate proper monitoring by the Tea Board of utilisation of funds.

In the first place, withdrawal of amounts deposited in TDAS under the first 20 per cent allowance is permitted for a whole lot of purposes. Among others, these include, extension planting, replanting, replacement or inter-planting of planted areas includ ing preparation of land, construction/extension of roads, culverts, bridges etc, construction of labour quarters, purchase of tractors, trucks etc, control of soil erosion, purchase of spraying equipment for weed control as also purchase of computers.

Secondly, the Centre never stipulated monitoring of fund use. The Tea Board's role ended with notifying the scheme and prescribing the purposes for which it was meant.

Initially, under TDAS, deposits had to be made only with NABARD. But, subsequently, in deference to the pleas by tea companies, the authorities also allowed them the facility of deposit with nationalised banks.

For the new 20 per cent allowance, the Union Government has stipulated that the amount accruing therefrom should be used for only replantation, rejuvenation and modernisation of processing facilities, that is, factories. DoC's insistence on advance actio n plans by tea corporates and a proper fund use monitoring mechanism has to be viewed in this backdrop.

Logically, tea companies can have the twin facility of deposit, that is, either with NABARD or with nationalised banks. But, given the geographical spread of nationalised bank branches and the limited number of places where the Tea Board has its offices, the board is bound to find the task of monitoring very difficult.

What, therefore, are the workable options ? The Tea Board will be ideally placed to discharge its responsibility if the Union Government stipulates that funds accruing from the second 20 per cent allowance be deposited with the board. But, reliable repor ts have it that the Centre is against this arrangement. And, it has a valid reason. The question will arise of the Tea Board paying interest on unutilised deposits. This will mean its playing a role that is not covered by the activity prescribed under th e Tea Act.

Therefore, the next best course for the Union Government will be to stipulate that tea companies deposit the second 33 AB allowance funds only with NABARD. The Centre can even lay down that deposits under the first 20 per cent allowance also be made with NABARD. Who knows at a later stage the Centre may deem it necessary to monitor use of such funds too ?

In the tea industry's assessment, in a normal year, the total allowance of 40 per cent under Sec 30 AB, should mean availability of Rs 160 crore. For the Tenth Plan period (2002-03 to 2006-07), it has assumed that Rs 800 crore will be available from this source.

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