REVIVAL PACKAGE FOR TEA INDUSTRY ON THE ANVIL
KAMAL NATH’s STATEMENT IN LOK SABHA
Date : 21 Jul 2004
Location : New Delhi
A scheme is presently under formulation to provide interest subsidy by the central government, as part of the government’s efforts to revive sick tea gardens and as an integral part of the revival package which would include promoter’s contribution, further loans from the concerned banks and restructuring of the accounts. Announcing this in a statement in the Lok Sabha today in response to a calling attention motion on "Situation arising out of the closure of a number of tea gardens in West Bengal, Assam, Tamil Nadu and Kerala resulting in unemployment of thousands of workers and steps taken by the government in regard thereto", Shri Kamal Nath, Union Minister of Commerce & Industry, that additional subsidy for replantation would also be provided and this package would additionally cover the tea gardens proposed to be privatised by the state governments of Assam and West Bengal. The scheme will be financed from the special fund created out of the additional duty of excise collected, Shri Kamal Nath added.
The Minister noted that there was some improvement in the auction prices of tea during the last few months and if this trend continued, it would bring immense relief to the Indian tea industry, which in turn would go a long way in easing the sufferings of the tea garden workers. At the same time, he said there was a need to improve productivity, effect cost-reduction, production of quality teas and adoption of better management practices. The government would continue to extend all help to the Indian tea industry in this regard, he stressed.
The following is the full text of the statement:
"Honourable Mr. Speaker, Sir,
The Indian tea industry has been passing through a long period of depressed prices. Domestic prices of tea move in tandem with international prices. The prices started declining from November 1999 onwards. The all India average auction prices for tea came down from about Rs. 76 per kg in 1998 to about Rs. 56 per kg during 2003. In the first half of 2004, the tea auction prices have increased marginally, especially in North India.
The continuous fall in prices of tea, coupled with high costs of production, sluggish rate of growth in domestic demand and increased age of tea bushes have adversely affected the viability of tea gardens, particularly the medium sized and financially weak, resulting in closure/abandonment of some tea gardens. Presently, 54 gardens are closed, out of which 20 are in West Bengal, 17 in Kerala, 11 in Assam and 6 in Tripura. About 28,000 workers are affected due to the closures. As per available information, in some of these gardens, workers are plucking green leaf by forming workers’ committees.
In order to address the problems of the closed tea gardens in the country, in 2003 Government of India had appointed three Expert Committees to make in-depth study of the closed tea gardens. These Expert Committees studied 36 gardens which were lying closed in 2002 (19 in West Bengal, 11 in Kerala and 3 each in Assam & Tripura). The main causes for sickness/closure, as identified by the Committees, include the inherent weakness of the gardens due to poor yields arising out of the poor condition of the garden and factory, poor garden management and the management’s excessive reliance on debt with negligible equity infusion. According to these Committees, all these estates need to invest both in plantations as well as in factory to achieve better results in terms of quantity, quality and price realisation of their teas. The Expert Committees found some gardens as potentially viable.
Based on these findings, Central Government and Tea Board have facilitated discussions between the managements of the closed tea gardens and their bankers. Subsequent to the discussions, 12 gardens – 11 in West Bengal and 1 in Assam out of the 36 studied – were reopened. Towards the Government’s effort to revive sick gardens, and as a part of a revival package which should include promoter’s contribution, further loans from the concerned banks and restructuring of the accounts, a scheme is under formulation to provide interest subsidy by the Central Government. Additional capital subsidy for replantation is also proposed to be provided. This package would also cover the tea gardens proposed to be privatised by the State Governments of Assam &West Bengal. The scheme will be financed from the special fund created out of additional duty of excise collected.
Under the normal Plan schemes of the Tea Board, financial and technical assistance is provided for various plantation development activities like replanting, rejuvenation, creation of irrigation facilities etc. With a view to improve the quality of teas produced in the country, which would in turn help in boosting exports of tea and fetching higher prices, the Tea Board is implementing a quality upgradation programme. Through its Plan schemes, the Tea Board also supports some welfare programmes and activities for the benefit of tea plantation workers and their dependants in education and health care.
On the initiative of the Central Government, the banks have formulated a Special Tea Term Loan (STTL) for the tea sector. This will improve the financial health of the tea sector. It envisages restructuring/rephasing of irregular portion of the outstanding term/working capital loans in the tea sector with repayment over 5 to 7 years and a moratorium of 1 year, which will be on a case to case basis for large growers. The STTL also provides for working capital upto Rs. 2 lakhs at a rate not exceeding 9% to small growers.
The Plantations Labour Act, 1951 provides for the welfare of plantation labour and regulates the conditions of work in plantations, including tea. The State Governments are the appropriate authorities for administering this Act and are empowered to frame rules in this regard. Government of India had taken up the problems being faced by the workers of the tea gardens with the State Governments for intervention and providing necessary relief. The State Governments have taken various steps to provide relief to the affected plantation workers and their families.
An Inter-Ministerial Committee, set up by the Ministry of Labour, has studied issues relating to the plantation sector, including social costs, provident fund dues of the plantation workers and taxation structures. This report has been circulated to all concerned for their views.
As I have stated earlier, Sir, it is encouraging to note that there is some improvement in the auction prices of tea during the last few months. If this trend continues, it will bring immense relief to the Indian tea industry. This will, in turn, go a long way in ameliorating the sufferings of the tea garden workers. At the same time, there is a need to make conscious efforts towards improving overall productivity, cost reduction, production of quality teas and adoption of better management practices. Government of India will continue to extend help to the Indian tea industry in this direction".