India’s auditor general on August 8 issued a 176-page report that faulted the national Tea Board on a long list of problems including lapses in enforcing tea industry regulations; lax financial management and internal control in disbursing subsidies; mismanagement of funds for research; and ineffective expenditures for promotion and marketing.
The Comptroller and Auditor General (CAG) audit, titled “The Role of Tea Board India in the Development of Tea in India,” reviewed board activities during the five year period ending in fiscal 2022. The findings are under review by the Public Accounts Committee of India's Parliament.
Auditors drew attention to:
- The board’s failure to curb an influx of smuggled tea and tea untraceable to origin that is being used in blends for sale in domestic markets.
- The lack of a well-defined strategy to register growers both large and small, resulting in a loss of licensing fee revenue. In March 2021, 38% of small growers were unregistered.
- Failure to monitor tea processing facilities by collecting samples and conducting timely inspections and laboratory testing.
- Lack of a database to track yield per hectare, labor productivity, new plantings, aging tree stock, and distribution of cultivars.
The Audit stated that the Board failed to enforce the mandate that at least 50% of the tea produced in India must be sold at auction. Auditors found that most registered buyers did not purchase tea at auction.
“The overall productivity of tea in India had decreased gradually from 2,165 kilograms per hectare in 2016–17 to 2,016 kg/ha in 2020–21. The productivity of big tea growers was much lower than that of small tea growers due to the aging of the tea bushes,” reads the report. Forty-six percent of land cultivated by large growers was "not economically viable” because growers had failed to replace trees aged 40 years and above.
Auditors also recommended that the government audit India’s private tea research institutions (TRIs) to track the large sums of public funding allocated to them via the Tea Board. India’s three TRIs are outside the Auditor General's ambit and are not independently audited by the Tea Board. In one instance, auditors cited administrative costs as high as 93%, with only 7% of a $560,000 research grant utilized for research. “Eighty percent of the total expenditures of two private TRIs were funded from the grants-in-aid (program)... These are out of the purview of the government audit.”The audit is likely to influence ongoing industry discussion regarding the importance of supporting the small tea growers (STG) and bought-leaf factories that now supply most of the country’s tea.