Calcutta, Oct. 8: The government and states should share 50 per cent of the total social cost of Rs 592 crore borne by the tea industry to house, cure and feed its army of plantation workers, an inter-ministerial group comprising members of the finance, labour and commerce ministries has said.
The Union government will bear 40 per cent of the social cost and the state government will chip in with 10 per cent. The remaining 50 per cent will be shouldered by the tea industry.
The social cost in the north Indian tea industry is Rs 459.97 crore which is about Rs 7.17 per kg of made tea. The social cost in the south Indian tea industry is Rs 132 crore which is about Rs 3.96 per kg of made tea. The Indian tea industry employs around a million people.
Social cost includes medical, housing, education, fuel, drinking water, child care and creches, sanitation, roads and highly subsidised ration.
The inter-ministerial group was set up to look into various issues plaguing the plantation sector in India.
Tea industry officials said the recommendations, if implemented, will be a big relief for an industry saddled with spiralling costs of production and low price realisation. The price of tea has gone down by Rs 4-5 per kg in the current fiscal.
The group has also suggested that the tea-producing states review the high agricultural income tax imposed on the industry. In Kerala, the agricultural income tax is 45-60 per cent, in Karnataka it is 30-50 per cent. In Tamil Nadu, the tax is 45-60 per cent, while in West Bengal it is 30 per cent. In Assam, agricultural income tax is 40-45 per cent and in Tripura it is 50-60 per cent.
The inter-ministerial group has said that the state governments should take a holistic view and examine the taxation issues and rationalise the sprawling enactments, keeping in mind the financial health of the plantation sector. While doing so, the relevance of plantation tax in Kerala and salami in West Bengal should be examined, the group feels.
The group has also asked the state governments to review the Plantation Labour Act. It has also suggested that wages be linked to productivity in tea sector.
The tea industry will soon make a presentation to the commerce minister Arun Jaitley.
Last Monday, Tea Association of India president Suresh Bansal and senior vice-president Arun Kothari met Jaitley. They urged the government to provide export subsidy, reimburse the social costs and classify tea at four per cent of the value-added tax.