Waiting for the states
Relevance: GS Paper III
Why in News?
A senior government official emphasised the importance of states focusing on the pending economic policy agenda to achieve sustainable 7% to 8% growth in India. He also identified areas for reform measures to enhance the ease of doing business and attract more investment in the coming months.
100-day action plan:
- Economic reforms rarely win votes, so statements on the need for reforms, even from officials, highlight the urgent need for making the Indian economy more productive and efficient.
- The Prime Minister earlier asked all the ministries to submit their 100-day action plan to be implemented after the elections.
- These action plans should be less about new schemes and projects and more about reforming and restructuring processes to make them transparent, rule-based, and non-discretionary, thereby making the economy more competitive and efficient.
- The role of government in businesses (privatisation) is also an area where the 100-day action plan can make a substantial impact.
- Following the April and May elections, the new government's 100-day action plans are expected to implement various economic policy reforms.
- To begin with, reforms of land, labour and agriculture laws must receive immediate priority.
- The government tried to bring about necessary reforms in all three areas but failed to make progress.
Land acquisition laws:
- Within a year of its formation in 2014, the government tried to relax the rules for acquiring land to set up industries and infrastructure projects by making the compensation amount more attractive and the process simpler.
- However, so strong was the resistance from political parties, even from sections within the ruling party, and so serious were the charges of the government having developed a cosy relationship with industry that the government decided to give a quiet burial to its land acquisition ordinance.
- Since then, the plan to amend the land acquisition laws has not been revived, and the Centre now appears to be expecting the states to amend their respective land acquisition laws.
Labour law reforms:
- To usher in labour law reforms, the government converted 29 central labour laws into four codes: the Code on Wages 2019, the Code on Social Security 2020, the Occupational Safety, Health and Working Conditions Code 2020, and the Industrial Relations Code 2020.
- The codes simplified and made the labour laws easier to enforce, although workers’ representatives were unhappy with many of the provisions.
- But so far, there is no immediate hope of a nationwide rollout of these codes, along with the notification of the rules under them.
- Labour is on the Concurrent list of the Indian Constitution, which allows both the centre and the states to frame laws in this sector.
- The government has strived hard to persuade states and workers unions to agree to the four labour codes.
- As many as 31 states have already pre-published the draft rules under the Code on Wages.
- 28 states have done so under both the Industrial Relations Code and the Code on Social Security.
- 26 states have done the same under the Occupational Safety, Health and Working Conditions Code.
- Perhaps trade unions' refusal to accept all the new provisions of these four labour codes is stalling a national rollout of the new law.
- Can the states make a breakthrough in this area? It is yet to be seen.
Agricultural Reforms:
- Something similar happened with agricultural reforms that were introduced by the government in 2020.
- The three laws sought to achieve three fundamental changes in the Indian agriculture framework.
- The Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020 categorised the entire area outside the mandis across the country as a trade area to provide an ecosystem for trade outside these mandis.
- The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020 provided a framework for contract farming agreements between farmers and buyer entities.
- The Essential Commodities (Amendment) Act, 2020 exempted certain agricultural commodities from the Act's purview and restricted its applicability only in extraordinary circumstances, including an abnormal increase or a fall in their prices.
- However, prolonged farmers’ agitation, mainly in western Uttar Pradesh, Haryana, and Punjab, demanded repealing these laws and a legal guarantee for providing minimum support prices (MSP) for all agricultural commodities.
- Later, the government reviewed its stance and agreed to repeal these laws.
- This was yet another political climbdown by the ruling party as far as key economic reforms are concerned.
- Farmers have once again begun agitating for a legal guarantee for MSP for all their produce.
- In such a situation, the likelihood of agricultural reforms being brought back on the table appears remote.
- Perhaps agricultural reforms, too, could be pushed for the states to implement them, and, as in the case of land and labour laws, the states might be expected to initiate farm law changes as well.
- After all, agriculture is also included in the State List of the Constitution, although some agriculture-related items are placed in the Union and Concurrent lists.
Conclusion:
Although economic reforms in India may face political opposition, there is a widespread understanding of the importance of implementing structural changes to improve the country's productivity and efficiency. The 100-day action plan could serve as a useful guide for initiating and advancing these reforms after the election.
