Economy

The GST Is Taking Away Ragpickers’ Already-Meagre Income

Recyclable plastic, an item commonly sold by ragpickers, was taxed 5.5% before but is now in the 18% bracket.

One kg of empty milk packets could be sold by ragpickers for Rs 20; now the price has halved to Rs 10. Credit: Reuters

One kg of empty milk packets could be sold by ragpickers for Rs 20; now the price has halved to Rs 10. Credit: Reuters

New Delhi: The goods and services tax (GST) is creating a range of new problems for a group already living difficult, marginalised lives – ragpickers. The tax rates on the items they sell have gone up immensely; recyclable plastic, for instance, taxed at 5.5% before, is now in the 18% bracket.

Reports from across the country have talked about how this has made the occupation unviable, eating away at the little income it was providing. Vijay Kumar, a 37-year-old ragpicker living near Chennai’s Kodungaiyur dump yard, told the New Indian Express that his earnings of close to Rs 10,000 a month (after working 12-hour days) is now down to Rs 4,000. One kg of empty milk packets could be sold by ragpickers for Rs 20, the newspaper reported; now the price has halved to Rs 10.

“Plastic recyclers faced with the new tax are protecting their margins by slashing the prices at which they buy from the thousands of waste managers and ragpickers,” The Hindu reported.

The prices of all sorts of materials collected by ragpickers has fallen drastically, a Times of India report says. The newspaper quoted Jaiprakash Chaudhary, a Delhi-based wholesaler of recyclable waste, as saying that he could no longer afford to pay ragpickers the same price as before. “Ragpickers earlier sold waste plastic at Rs 10 per kilo. Now, they don’t get more than Rs 3. Paper was sold at Rs 12 per kilo, now it’s Rs 6; tin was sold at Rs 22 per kilo, now it is being sold at Rs 12,” said Chaudhary.

According to a report in The Hindu, the Mahadevapura Mahila Okkuta, a collection of 17 SHGs that collects and segregates waste in Garudacharpalya, Karnataka, has seen their profits completely disappear. While they were earlier making a profit of around Rs 30,000 every month, in July they had zero profits to report.“We have been collecting and recycling waste for over 12 years now. We have never faced a situation like this. We’ve even had to cut down on the lunch we give our workers,” Nagaratna, a member of the collective, told the newspaper.

Kabadiwaalas, who collect waste paper and used glass bottles across cities, are also facing the brunt of the decision. “Due to GST on scrap, our work has reduced because the customer/waste generators are now getting lesser rates for their recyclable waste. They are looking for better prices elsewhere or just throwing away their waste. Earlier, if we were getting 2.5 quintal per month of paper, now we are hardly getting two quintals,” Vivek, a kabadiwaala in Dwarka, told Down To Earth. The GST on scrap paper is at 12%, while glass is also in the 18% bracket.

While this immediately affects ragpickers and their families, the effect could soon be felt on a larger scale as well; according to the Times of India, ragpickers help recycle 20-25% of Delhi’s 10,000 metric tonnes of daily waste. “Recycling is being carried out in India almost entirely by the informal sector of more than four million people who will be greatly affected by the new rates because their already meagre incomes will get further squeezed,” Chitra Mukherjee from the NGO Chintan told Down to Earth.

Rasool Khan of KK Plastics, which fashions recycled waste into bitumen, told The Hindu that the GST has made their recycled products uncompetitive. “All we can do is cut our margins so that even with the higher tax rate, the product is sold at the same rate. I don’t understand how an environment-friendly initiative such as recycling can be taxed at this high rate,” he said.