The central government must not now waver on its intended labour reforms, that it started last year before the COVID-19 crisis, says India Inc. Group Founder and CEO Manoj Ladwa in the second of this 6-part series of articles on his vision for reforming India's economy.
Uttar Pradesh, Madhya Pradesh, Gujarat, Rajasthan and Punjab announced significant labour reforms last week.
Labour laws in these states are now comparable to those in India's peer nations in South East Asia.
At the federal level, the government has been working at reforming India's labyrinthine labour laws by consolidating the more than 150 central and state statutes into four comprehensive and transparent labour codes.
Last week, three states ruled by Prime Minister Narendra Modi's BJP - Uttar Pradesh, Madhya Pradesh and Gujarat - signalled their intent to attract businesses leaving China by announcing sweeping labour reforms. Uttar Pradesh, India's most populous state, suspended all labour laws barring four: to ensure payment of fair compensation and wages, the prevention of forced, or bonded, labour and to ensure the availability and protection of construction workers. Madhya Pradesh, in central India, gave establishments with up to 100 workers the flexibility to take on or reduce their work force according to requirements, banned corruption-ridden labour 'inspections', eased licensing and registration norms and allowed employers to increase shift timings from eight hours a day to 12. Modi's home state of Gujarat also similarly exempted industry from most intrusive labour laws to create a conducive atmosphere for foreign investors, and domestic players, looking for a destination for their investments.
These reforms give employers a more reasonable employment law framework, ending labour inspections (a major source of corruption), reduce government interventions and diminish the horrendously stifling role that some of India's trade unions have played, thus, addressing several major complaints of foreign and domestic investors.
Since these reforms could not have been announced without the Prime Minister's consent, they will reassure foreign investors that Modi is serious about implementing even the most politically contentious reforms.