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Tea Plantation Sector In Sri Lanka Economics Essay

The tea plantation sector in Sri Lanka has a history of approximately 150 years. Tea plantation commonly refers to as tea estates and it become as a dominant crop of the estate sector4. The commercial planting of the tea was introduced by James Taylor in 1867 and emerged as the main plantation crop in the country after coffee was destroyed by the rust leaf diseases. In the following years thousand of land was opened to tea cultivation after clearing the virgin tropical rainforests, and the central highlands were entirely planted in a monoculture manner with tea (Jayasuria 1998). As a result of this commercialization of tea industry by the colonial era, the country became as a primary exporting economy. The liberalization in the early 1980s had changed the structure of the economy and the cash crops become as a secondary importance in export earnings next to the garment industry and migrant remittances. Today, Sri Lanka contributes to the world tea supply of 11.5 percent, keeping the fourth largest producer in the world after China, India and Kenya (Tea Board, 2010). As shown in the table 3.1 the total land extent utilized in the tea plantation is about 212,715 hectares by 2007. The tea cultivated area on the island represents about 3.0 percent of total country’s land. With the expansion of land usage on tea, the tea production also expanded by 30 percent during the last two decades.
The tea industry is even today dominant in the county’s economy. It is one of the major sources of foreign exchange earning in Sri Lanka. As shown in the table 3.2 in 2008, the tea industry accounted for 15.6 percent of the country’s foreign exchange earnings. It also contributed 1.2 percent of the Gross Domestic Products (GDP). The tea industry on other hand has been provided huge contribution to the labour market generating large amount of direct and indirect employment opportunities. The sector even today provides more than 1.5 million direct and indirect employment opportunities. Of which 243,047 workers are attached to the tea plantation sector [1] as a direct
Table 3.1 Expansion of tea during last two decades
Year
Production
(Mn.Kg)
Total land extent (Ha)
1990
233.1
207,147
1992
178.9
207,147
2000
305.8
188,970
2005
317.5
212,715
2007
304.6
212,715
Source: Statistical abstract 2009 and Agricultural survey 2002, Department of census and statistics in Sri Lanka, Annual reports 2008,2005 ,Central bank of Sri Lanka
Table :3.2 Tea industry: contribution to the economic development
Year
% Share of total export
Composition of GDP
Tea plantation workers as a % of total workforce
1990
24.9
N/A
6.8
2000
12.6
1.4
4.3
2005
12.8
1.3
3.2
2008
15.6
1.2
3.0
Source: Development Strategies, Welfare Regime and Poverty Reduction in Sri Lanka, IPS 2008, Annual reports 2008,2000 Central Bank , Sri Lanka, Labour force survey 2009
employees and it is approximately 3 percent of the total workfare in the Sri Lanka. Around 230,000 worker families (including both tea plucker and rubbertapper) with a population of about 900,000 live in tea and rubber estates (MNB 2006). However, over the last two decades, labour force in the tea plantation sector has declined of more than 45 percent from 541,971 workers in 1980. The relative contribution to the GDP and total employment has declined gradually over the years making some difficulties.
4.2 Labour in the tea plantation sector
The plantation system in Sri Lanka is enclave and it covers all institutional arrangements around the production, processing and marketing of tea. The system is mainly characterized by pervasive social system stratified along with the ethnic lines as a result of imported residential labour from the South India. Vast usage of local lands, foreign or local ownership with rigid management is other notable characteristics of the tea plantations.
The tea plantation industry is labour incentive and most services needed high number of labour for a better production. Due to the socio-political issues, the indigenous labour in the country refused to work as a labourers at the beginning. Since then, the British colonial administration turned to India which was already a source of cheap labour and imported labours form south India. Initially labour was imported on a contract basis where they returned to the India after completion of contract. With the gradual development of industry, the existing labour supply mechanism was changed and had begun importing families including their children as a residential labour for plantation estates and planter provided huts inside the estate with free of charge. As housing is provided within the tea estate bounders it started to give new concept of residential labour. Presently, tea plantation population is descendants of this labour that continued to be imported into country till 1940s (Gunetilleke 2008). Even today, majority of tea plantation workers are Indian Tamil and most of them are working as a tea pluckers. The heads of the households both male and female are workers in the tea estates. As well as their working aged children also have recruited and works as tea pluckers.
The plantation community is mainly concentrated in the Districts of Nuwara Eliya, Badulla, Ratnapura, Kandy, Matale and Kegalle (Ministry of Estate Housing, Infrastructure and Community Development 2005). Most of Plantation labour force is located in central part of Sri Lanka within a Sinhala population living in the surrounding areas. Though these communities scattered throughout area, they live inside estate as a bunch without mixing with others. Rigid working condition, language and cultural differences, widen gap between communities. Thus most of plantation workers do not have much opportunity of interacting with other communities.
After independence in 1948, the Sri Lanka had taken many stapes to legalize immigrant plantation workers. Accordingly, the citizenship and voting power were restored for this immigrant community in 1988. This has been become as a landmark of their life and the plantation workers who are of Indian origins had a chance to nominate their own members in to the parliament. These entitlements have opened the door to enter the main stream as others.
However, tea plantation workers are tightened by the rigid hierarchy. The organizational structure is divided in to five layers; the owner, management, staff, sub-staff and labours. Mostly clerical and white colour workers and above are consider as a staff members. The lower level supervisors, gang leaders and watchmen all caught as sub staff of this hierarchy. The others labours specially tea pluckers pertain to the bottom of the plantation hierarchy and generally do not include in upper class. Nevertheless, kangany [2] was played a critical role in the plantation system. He was the sole source of labour supply to the plantations in the early period of the plantation ( Wikramasinghe).Letter, these imported and recruited labours were organized in to the gangs under the headships of this kanganies and they became as a recruiting agents for planters. This kangany system became very critical element in the plantation system. He was the leader, spokesman, banker, goods supplier and worked as an intermediatory plantation management and the workers (Wikramasinghe). Even now some parts of this system exist such as gang leaders who makes link between management and labours. It is tightly applied to control current labours in deference face.
Wage system of the tea plantation workers
One of the most apparent features of the plantation is large number of female workers. Women are believed to be more effective for tea plucking from beginning of the industry. The women have been assigned to plucking tea and men assigned for cutting trees, weed and spray chemicals .All plantation workers work as daily waged labours from the beginning of industry.
The wage administration system of the tea plantation sector was used as a tool for reducing personal mobility in the colonial era (Wikramasinghe). The historical plantation management implemented large cash advances, instead of the monthly basis payment. This system had been tied the labours in to the estate. Even now, this system is used in the tea plantation for keeping labour in the plantation estates steadily.
Before early 1930s the daily wage rate for the workers was recognized by the wage board. This wage board had computed daily wage by using the criteria which sown in table 3.4.
This criteria still persists and is used for determining daily wage of the labours. However, after the privatization in 1992, some of plantation managements get rid of many of these responsibilities. After passing the legislation in 1978, the wage anomaly between male and female plantation labour was despaired that existed in the sector since beginning. As shown in the table 3.5 the daily wage for both male and female worker is Rs 285.0 and it is excluded incentives and attendance allowances.
Table 3.4 Criteria that used for computing daily wages of the tea plantation worker
Particulars
Percentages
In cash
85
Housing and welfare
10
Medical
05
Total
100
Source: Improving Livelihood of the Resource Poor shekh, 2005
Table 3.5 The present Criteria that used for computing daily wages of the tea plantation worker
Sri Lanka Rupee
Particulars
Male
Female
Basic wage per day
285
285
Incentive
90
90
Attendance allowance
30
30
Total
405
405
Source : Author, based on the Field survey
Generally, tea plantation women start their job at 7.30 am and work until 4.30 pm and a worker has to pluck an average of 20 kg tea leaves to qualify for the basic wage per day. The worker who can pluck more than the daily requirement of 20 kg is supposed to get and additional payment for the extra Wight. Nevertheless, only the workers who worked more than 23 – 25 days per month are eligible for obtaining incentive and attendance allowances. It is also noted that, the male workers work only six hours day. Therefore it is clear that there is a deferent between male and female wage rates.
As sown in the table 3.6, the labour wage rate of the tea plantation sector is still lower than the rubber and paddy sectors. In particular, daily wage rate of the female tea puckers are 2.7 dollar per day and lower than males in the all sectors. Even today, in pursue of the average wage rates, the wage differences between male and female tea plantation workers are appeared. Further, wage rate gap between the men and women has been expanded yearly in the tea plantation sector sectors. Therefore, the inequality of the wage has been severely compromised poor households of the plantation sector where represented high level female contribution in the labour force.
Table 3.6 : Average dally wage rates in the informal sector
US Doller9
Year
Tea
Rubber
Paddy
Male
Female
Male
Female
Male
2002
2.3
1.9
2.6
1.8
2.6
2003
2.4
1.8
2.6
2.0
2.8
2004
2.9
2.1
2.9
2.2
3.5
2005
2.9
2.1
3.0
2.3
3.3
2006
3.1
2.2
3.1
2.3
3.5
2007
3.4
2.4
3.6
2.5
4.2
2008
3.9
2.7
4.4
3.3
5.0
Source: Based on Annual Reports of Central Bank, Sri Lanka, 2003, 2005, 2009
Labour welfare and its development
Mostly the historical plantation system operates as a closed system with forcing to confine to the boundaries of the plantation estates. In particular, the plantation community and their welfare were separated from the mainstream of the country. During the colonial era, the plantation management provided most of welfare services needed by the labour such as education facilities, free medical services, child care services and essential consumer goods. Moreover, the management provided rent free housing [3] for the workers to keep them within the estate boundaries as residential labour. Therefore, all workers depended for their needs from womb to tomb on state management (MNB 2006). This welfare provisions for the plantation community has been positively influenced for their well-being. It is also apparent that the health indicators of the plantation sector were recorded better condition rural sector (Gunatllake, 2008).
During the period 1990 – 1948 the education facilities of the plantation sector significantly developed and widespread throughout the plantation areas. The number of the officially recognized plantation schools grew from 43 in 1904 to 968 in 1948 (Little 2007). Nevertheless, most of plantation managements provided Hindu temples, maternal wards and a midwife for maternal and child care (Wikramasinghe).
By 1976, more than 300 plantation schools were integrated to the national curriculum in Sri Lanka. The government also strengthened the human resources capacity of the plantation schools by increasing Tamil teachers up to 4843 in 1994 (little, 2007). Health system of the tea plantation sector was timely changed. By 2000, twenty estate hospitals from a total of 54 hospitals and some maternity wards/dispensaries had amalgamated in to the mainstream of the health system. However, rest of medical institutions is still maintained by the estate management.
Besides, Plantation Housing and Social Welfare Trust (PH

The Effectiveness Of Bancassurance With Special Reference Economics Essay

With reference to SBI, bancassurance is gaining acceptance gradually. Bank is converging towards a model of global retail financial institution offering a wide array of products creating a one stop-shop where mortgages, savings, pensions and insurance products will be available. Some of the regulatory issues need to be addressed comprehensively and sorted out particularly with respect to competition and market structure problems. Given these changes, bancassurance and collaboration between banks and insurers has a long way to go in India.
Bancassurance is the process of using a bank’s customer relationships to sell life and non-life insurance products. In some developed countries it has had a dramatic impact on developing sales volumes, attaining market shares in excess of 50 percent in life and more than 10 percent in non-life. By contrast, in other developed countries it has had much lower impact. Its strategic benefits to developing countries are wide ranging.
The scope for bancassurance models as feasible source of sustainable income to banking sector is explored by exploiting the synergy in the context of India having the largest banking network on the one hand and lower insurance penetration and insurance density on the other hand. While analysing the present trend of banks handling insurance products, it also highlights some of the likely issues in general as well as specific from the point of regulator and supervisor. It concludes that going by the present pace, bancassurance would turn out to be a norm rather than an exception in future in India.
Introduction: Bancassurance primarily banks on the relationship the customer has developed over a period of time with the bank. Banks have felt the need to offset these through growing fee incomes particularly from the retail side. To target the retail segment, banks have felt the need to offer a more diversified product range to appeal to a diverse range of risk profiles. . Thus as far as banks and other financial services providers are concerned, there has been a ‘double coincidence’ of needs that has led them to collaborate either through direct equity participation or ownership by banks or strategic alliances.
SBI Life Insurance Company a predominant player in bancassurance is positive about the channel bringing about a transformation in the way insurance has been sold so far. The company is banking heavily on bancassurance and plans to explore the potential of State Bank of India’s 9000 plus branches spread across the country and also its 4000 plus associate banks – one of the reasons why SBI Life Insurance is not laying much emphasis on increasing its agent force from the present 3000.
Bancassurance in State Bank of India Perspective:- SBI Life insurance, a joint venture between State Bank of India, the largest bank in the country and Cardiff insurance company of France. Cardiff has launched eight products so far incorporating certain features that are introduced for the first time in the country. SBI -Life is banking on the bancassurance model on the strength of the SBI Groups 10000 plus bank branches and its vast customer base. In addition it is also tapping other banks corporate agents and the traditional agency route to penetrate the insurance market SBI Life is planning to introduce more novel and user friendly products to cater to the requirements of the consumers in different segments.
There are so many insurance products launched so far. Among them ‘sanjeevan’ in June, 2001 (single premium policy for VRS retirees), ‘Sukhjeban’ (guaranteed returns for village groups), ‘Scholar’ (for children’s higher education combining insurance cover for parents and guardians), ‘Swarna ganga’ (premium is refunded in the form of saving element with life cover and without obligation medical examination), ‘Super Suraksha’ (For all deposit holders initially at SBI) are to name a few. Other challenging new products are ready to come into the market to cover under the pension product, the unorganized population such as, self-employed professionals, Small traders, artisans, contract labors and house hold helpers. SBI has the largest banking network in the county. The bank is looking for business from every customer segment of the bank rural and urban segments, upper, middle and lower income segments / groups and corporate segment. Besides own channel, they are planning to distribute products through other interested banking channels. Cardif, ‘SBI-Life’s JV partner, has hand on experience with various banks around the world. In France, it is selling insurance products through BNP Paribas network of banks, the largest bank of the country and 35% of bank’s retail banking profit comes from distributing insurance products. SBI has customers in Bangalore with huge response. It is expected that 2/3 rd of the premium income in expected to come by way of bancassurance and the rest from the traditional agency channel as well as ties up with corporate agents (Sundaram Finance). SBI has also introduced group insurance to some well managed corporate staffs. Premiums paid by corporates on behalf of their employees qualify as a deductible expense and employees are not taxed, when employees pay premiums on a saving linked group insurance scheme, the monthly contribution qualifies for section 88 tax rebate and the final maturity sum received is also tax-free. Technology is an integral part of this operation. Cardiff provided the technology required. Cardiff’s PMS software has been successfully implemented in 24 countries. It modified the software, engaging TCS to suit our requirements.
Review of Literature Studies exist concerning diversification of banks into financial services, especially insurance, but none of these focus specifically on the interactions of the agency/broker industry and bancassurance. Rose and Smith (1995) studied BHCs’ expansion into the limited number of insurance lines allowed during the period 1974 to 1990 and found banks experienced positive abnormal returns, especially after 13 1982. Carow (2001) conducted an event study to determine the market value effect on banks and insurers of rulings that allowed banks to enter the annuity and insurance business. Bancassurance activities can be formed by several corporate strategies of banks and insurance companies. According to the OECD (1992), for banks the main structural operations for bancassurance may take the form of minority or majority holdings, full-fledged acquisition, creation of subsidiaries, or joint ventures with holding companies.
METHODOLOGY AND DATA Objectives of the Study: To understand the concept of Bancassurance and its practical applicability at State Bank of India, Bangalore.
To find out the benefits of Bancassurance to the bank.
To evaluate the future prospects of Bancassurance in State Bank of India.
Statement of the problem: Globally, cross selling is a major component of the business of banks. In India too, it is catching up fast with several of the banks. SBI is the leading bank among all nationalized banks having largest banking network in the country, also has made headway in selling the insurance products along with the banking products. Cross selling would help the banks by boosting their fee income. So there is a scope to study how the concept of bancassurance has been applied in State Bank of India.
Scope of the Project: The study is limited to State Bank of India, Bangalore.
The study will be conducted on the basis of past three year’s performance of the bank.
Limitations of the study: Detailed information is not provided by the bank staff because of the privacy policy of the bank. Only the bank employees of Wilson Garden and Koramangala branches are included for this study due to time constraint.
Data collection method: Primary data is collected through;
Observation
Discussion with the bank manager and bank employees.
Filling up of the questionnaire from the bank staff.
Secondary data is gathered through;
The financial statements of the bank.
From various books, websites, magazines, bank brochures etc.
Tools used for analysis:
MS Excel
Graphs and charts
SPSS
Need for the study: Squeeze on margins of fund based revenue has taken place in the banks now. Banks have felt a need to offset these through growing fee incomes particularly from retail side. So there is a need to study how the bank is trying to increase its fee based revenue.
Universal Banking- approach to provide all financial products under one roof; is another need for the study. Moreover, hawking of insurance products by banks is seen as a logical step for expanding their business and improving the bottom line.
Optimum utilization of infrastructure and resources to maximize revenue has also created the need for the study. It is necessary to study how the bank is optimally utilizing the resources and infrastructure through the activity of bancassurance.
Customer retention in the face of competition is very difficult for the banks. So there is a need to study how the bancassurance is helping the bank to retain its customers.
ANALYSIS Total income and total miscellaneous income before cross selling for the years 2006, 2007 and 2008:
Particulars
2006
2007
2008
Total income
Rs.4967000
Rs.7608000
Rs.10068000
Total miscellaneous income
Rs.828000
Rs.219000
Rs.317000
Total income and total miscellaneous income after cross selling for the years 2009, 2010 and 2011:
Particulars
2009
2010
2011
Total income
Rs.17253495.36
Rs.18156082.16
Rs.25481107.46
Total miscellaneous income
Rs.621000
Rs.903000
Rs.1282000
Graph Showing Trends of Total Income

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