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New Delhi, May 26: The cabinet committee on economic affairs (CCEA) today cleared a subsidy proposal of Rs 3 per kg for the production of leaf grades of orthodox tea and Rs 2 per kg for dust grades at the existing output levels.

The scheme, which will be effective from January 1, 2005 to March 31, 2007, provides for an additional incentive of Rs 2 per kg for incremental volumes over the previous year.

The package cleared by the CCEA entails an outlay of Rs 93 crore and will be used to meet the actual deficits of the Tea Research Association at Tocklai in Assam and the Tea Research Foundation of the United Planters Association for Southern India in Tamil Nadu.

A maximum of 80 per cent of the deficit run up by the two research and development institutions will be covered for five years with effect from 2004-05. Of this, 49 per cent will be met from the normal plan outlay of the Tea Board and the balance from the special fund.

The fund created from collections of additional excise duty on tea will make allocations for the new schemes.

According to an official statement, these schemes will “contribute to the overall modernisation and development of the tea plantation sector”.

“This will invigorate a number of individual gardens and the industry as a whole in terms of increase in productivity, high unit value realisation and exports. The additional support for research would also help the industry,” the statement added.

The CCEA also approved a package of relief measures to revive coffee plantations. Under this, interest dues of Rs 287.1 crore on special loans will be shared among banks, the government and growers saddled with these debts.

As a result, the coffee growers will have to pay only one-third of the interest on the special coffee term loan.

“This relief package aims at debt amelioration and will bail out the coffee industry from its current crisis,” finance minister P. Chidambaram said after the CCEA meeting.

The government subsidy would come only after the coffee growers had paid their full share by June-end.