The Tea Board had proposed a plan outlay of Rs 304.30 crore to the commerce ministry, taking into account the planned expenditure on the plantation development scheme, processing and packaging, tea development scheme for north-eastern states, small growers development scheme and market development and export promotion.

The commerce ministry has effected the cut in its sanctions in the second year of the Ninth Plan (1997-2001).

A top industry official told The Financial Express that the cut will hit the industry, which has already been affected by a global oversupply and fears of cheap imports from south Asian countries.

According to available estimates, against the Tea Board's proposal of Rs 82.10 crore for the plantation development schemes, the government has approved only Rs 45 crore.

Bigger cuts have been effectedin subsidy schemes like the new area development scheme and small growers development schemes, where the government sanctions have been a paltry Rs 5 crore, against the proposed Rs 14.05 crore and Rs 15.9 crore respectively.

The industry official said the budget for tea development schemes in the north-eastern states has been slashed from the proposed Rs 41.75 crore to Rs 10 crore.

The government has also cut the tea cess budget for 1998-99 from Rs 40 crore to Rs 35 crore, although it is collecting more by way of the levy on green leaf. Cess collections are estimated at Rs 40 crore on the domestic green leaf production of 810 million kg, at fifty paise per kg.

According to the official, the research and development programmes have also been squeezed. Against the Tea Board's proposed budget of Rs 60 crore, only Rs 33 crore has been sanctioned by the government for the entire Ninth Plan.

Another industry official said the board's role in developing the West Bengal tea industry is being crippled all themore as the government has been thinking of transferring the staff from Calcutta to north-eastern states and south Indian offices of the board.

No R&D funds for Darjeeling tea

The commerce ministry has not sanctioned any separate funding for research on Darjeeling tea in the Tea Board's annual budget this year, upsetting major growers in the state.

The Board has its own R&D centre at Kurseong -- the Darjeeling Tea Research Centre -- to support the efforts of Darjeeling tea growers, who produce around 10mkg of the premium tea annually.

However, the government has cleared funding for the R&D schemes launched by the United Planters Association of South India (Upasi) and the Tea Research Association in Assam.