The Telegraph
Since 1st March, 1999
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Move to link sops with tea output

Calcutta, Jan. 17: The tea industry, worried about the spiralling cost of labour and falling tea prices, wants workers to produce more. A proposal linking output to incentives currently enjoyed by workers has been placed before the Bengal government and trade unions.

“The current wage level is unsustainable. The industry is not advocating paying labourers less, but they must produce more. There is a need to improve labour productivity to reduce overall cost. Workers should accept a formal system of disincentivisation against non-fulfilment of any task. The industry has conveyed this to the unions and the government,” Indian Tea Association vice-president K. S. David said.

The Bengal tea industry employs three to four lakh people directly.

The wage increase over the years has been much more than the rate of inflation and rate of increase of tea prices. In 1993-2002, while wages have increased 138 per cent, the increase in the all-India consumer price index and the tea prices were only 89 per cent and 18 per cent, respectively.

David also expressed concern over the non-availability of funds against an additional excise duty of Re 1 per kg which the industry is paying.

The government had created a development fund with the corpus from this additional excise duty and identified certain areas where this fund could be used. The areas include export-linked orthodox production, generic promotion of tea and upgradation of tea research institutions.

“I am distressed to state that although several months have passed, the government has not disbursed any fund till date,” David added.

He added that the high salami rate (lease rentals) of Rs 9,000 per hectare that is being charged by the Bengal government is also affecting the financials of the tea industry. “We have urged the state government to reconsider a total waiver from the payment of any salami on land,” David said.

Financial restructuring of the tea industry is one area which needs special attention. A fall in realisation, coupled with rising costs, has led to cash losses reflecting in the deficits in working capital accounts. Interest is a significant component of the cost of the tea industry and it is highest in India compared with other tea producing companies.

David added that the weakest segment of the industry suffers from adverse credit ratings by the banks, further pushing up the spread over prime lending rate being charged by the banks.

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