The Hindu Business Line : Closed tea gardens look for turnaround

The Union Minister of State for Commerce, Mr Jairam Ramesh, peeved at the poor response of the owners of West Bengal’s closed tea gardens to the rehabilitation scheme earlier announced by him with fanfare. He made yet another bold announcement at Jalpaiguri recently that the provisions of Section 16(D) and Section 16(E) of the Tea Act, 1953, would be enforced to reopen the gardens. However, those familiar with the ground realities are not so hopeful.

In Dooars region, in West Bengal, there are 166 gardens and 13 of them are closed. The number of closed tea gardens a few months ago was 14. The garden that opened did not wait for the Minister to announce the package.

Reasons aplenty

Why the uncertainty over the reopening of the closed gardens? One might wonder. The reasons are many and varied. Firstly, the main reason for the poor response to the rehabilitation scheme is the lack of commitment on the part of both owners and the workers of the closed gardens. It might appear as surprising but it is true.

Let us first look at the genesis of the tea industry’s crisis which started with the crashing of tea prices in the middle of 1999 and continued till 2004. In Dooars, as many as 55 gardens were closed. Forty-one of them reopened, subsequently, when the prices started moving upwards and with it their financial condition.

In other words, there were gardens which continued to remain closed even after the recovery of the industry. This was because the condition of these gardens was so bad that the turnaround of the industry was not much of help to them.

Owners not forthcoming

The owners of these gardens, therefore, were just not interested in reopening. Even the announcement of the rehabilitation package did not change the situation, presumably because the owners noted, much to their chagrin, that to become eligible for the benefits under the rehabilitation package they themselves would be required to set their houses in order first which they were either unable or unwilling to do.

They have to first restructure their existing institutional loans as per the scheme. While waiver will be granted to Tea Board loans (including interest), regular payments have to be made to the current EPF liability. They will be entitled to fresh working capital from banks and financial institutions only after they have regularised their existing accounts.

Once the accounts have been regularised, they will be eligible for loan and subsidy under Special Purpose Tea Fund, but the garden owners have to contribute to the extent of 25 per cent.

No bank support

As it appears now, most owners of the closed gardens are just not interested in all this. Few of them, therefore, have approached the banks for restructuring of their loans. In many cases, the banks, having become wiser from their earlier experience, are reluctant to enter into fresh deals with many of them. Not without reasons through.

Many of the owners are believed to have siphoned off funds, did not clear the statutory liabilities, defaulted in payments of institutional loans, the list of allegations can be long. In several cases, the banks find it difficult to locate the original owners.

The other intractable issue is the workforce. Most gardens are burdened with surplus workforce, but in West Bengal, any talk of rationalisation of workforce in tea gardens is a sacrilege. A first step towards reopening presupposes initiation of dialogue by the willing owners with the unions opposed to any proposal for reduction of workforce; worse, they will also insist on the payment of wages for the period the garden has remained closed. The Government too, it appears, is helpless in this regard.

A large number of workers of the closed gardens too, it is reported, are cool towards reopening because most of them continue to have earnings. They are paid at the rate of Rs 750 each every month under the State Government scheme for financial assistance for workers of the locked out industries.

The workers of the closed gardens being under BPL category get rations at heavily subsidised rates and free medical benefits in the government hospitals. In addition, they are entitled to minimum 100 days’ jobs under the special rural job guarantee scheme.

It has been found that many workers insist on payment of two weeks’ wages after working for two days under the job guarantee scheme.

Meanwhile, the Union Government has paid Rs 1,000 to each worker of the closed gardens as one-time ex-gratia payment for the current festival season. The State Government too, has announced a similar ex-gratia payment of Rs 750 to each worker. In addition, each worker will get Rs 1,000 from the Union Government towards purchase of books for their school-going children.

There is another point. In many closed gardens, limited operation, particularly tea plucking, continues under the supervision of the so-called operating management committee (union committees). The leaves are plucked during the tea season and then sold to the bought leaf factories or other gardens. There is a steady income from such operation. Those who are beneficiaries of this arrangement, therefore, would not like to disturb it.

In fact, a section of workers and their leaders, all beneficiaries of the arrangement, are pleased with the present state of affairs that they would often put up stiff resistance, directly and indirectly, to any move to reopen the closed gardens. The matter was taken up by the Union Government with the State Government but with no result.

No takers for management

The enforcement of the relevant provisions of the Tea Act might not yield results because the Union Government (Tea Board) has to first identify a willing person or a body of persons and to authorise him or them as the case may be to take over the management of the whole or any part of the tea undertaking or tea unit. Locating a willing person is indeed a difficult job, if past experience is any guide. Earlier, many businessmen came forward only to retreat after having done the proper due diligence. Most gardens are virtually bottomless pits having undisclosed hidden liabilities, both statutory and others.

Capping it all, there is the unhelpful attitude of a section of workers and their leaders. A major tea exporter recently showed interest in reopening one of the closed tea estates only to withdraw subsequently. Who will stick their neck out in such a situation?

Under Section 16(E), the liabilities of closed garden will remain frozen initially for five years extendable by another six years in stages. But there is a feeling that the period should be extended at least to 20 years, if not more.

Unless the leeway is long, it is difficult to achieve turnaround in the present situation, emphasise tea industry circles. No wonder owners of only three of the 13 closed gardens have so far responded to show-cause notices served on them seeking explanation why the Government would not proceed with the enforcement of the relevant provisions of Section 16(E) of the Tea Act.

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