Treasury releases Rs 17,179 mn to maintain guaranteed price on agro-crops

The general Treasury has released Rs 17,179 million to relevant ministries for the expenses incurred to maintain the guaranteed price for tea, rubber and paddy purchasing and other subsidies announced in the interim budget including the 50 percent reduction of farmers’ loan and providing 15 percent interest on fixed deposits by senior citizens.

The government expects to purchase 120,000 MT of paddy under the guaranteed price this Yala season and the Treasury has issued a guarantee for a pledge loan of Rs 6000 million to two state banks. Accordingly, the Bank of Ceylon will make available Rs 4000 million while Rs 2000 million by the People’s Bank to the Paddy Marketing Board.

During the 2014/2015 Maha season the general Treasury released Rs 7500 million to the ministry of Food Security and the 160,000 MT of paddy bought, have not yet been released to the market with the aim of maintaining price stability.

The Treasury has also allocated Rs 312 million to the Ministry of Food Security for the maintenance cost of the paddy purchasing during this Yala season and it has already released Rs 30 million to cover the initial cost.

The government’s allocation for the purchasing of tea leaves at Rs 80/ per kg is Rs 6,300 million and so far Rs 5532 million have been released to the ministry of plantation industries for reimbursement for the tea leaf so far purchased by 712 factories in the country.

As the tea prices have come down in the recent past in the world market the government in order to mitigate the difficulties faced by the factory owners introduced a loan scheme to provide them one month’s working capital with subsidized interest rate of 2 percent through commercial banks at a concessionary interest rate of 6 percent. The Treasury is expected to incur an expenditure of Rs 258 million per annum for this.

Another scheme proposed by the interim budget is purchasing sheet rubber at a guaranteed price of Rs 350 per kg from the rubber small holders who are having less than 50 acres of land. Country produces around 6000 MT of rubber annually and more than 75 % of this is being produced by the 130,000 rubber small holders. In the past this subsidy was not directly paid to them at the time of purchasing. The small holders after having sold their produces to traders had to visit the offices of the Rubber Development Dept with the receipt to make the claim. But, under the new plan the traders will buy sheet rubber under guaranteed price later to be reimbursed by the dept of Rubber Development. A sum of Rs 3,600 million has been allocated to purchase rubber under the guaranteed price of Rs 350 per kg.

Relief for articles pawned in the state banks is another first of its kind introduced by the budget – 2015. Accordingly the interest rate of the pawned items which has the value of less than Rs 200,000/ and falls into the non-performing category by January 31, 2015 will be reduced up to 12 percent and released to the owners. - Ministry of Finance

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