On the 25th anniversary of India's economic reforms, a general consensus seems to have emerged within the country and without that the next phase reforms must address what has so far eluded agreement among the principal stakeholders: land and labour. Make in India will not happen if these two main factors of production remain entangled in political one-upmanship.
The government has made some overtures in the domain of land reforms, but the issues surrounding it have not yet fully crystallized. Unless there is clarity and consensus around land reforms, including land acquisition for implementing government's industrialization and infrastructure development projects, the vision of converting India into a global manufacturing hub will remain unrealized. It is essential to pursue efforts towards a comprehensive land reforms policy relentlessly to bring the matter to a satisfactory conclusion.
In the field of labour, the exercise for rationalisation and consolidation of labour laws undertaken by the government in the last two years has suddenly taken a breather. Despite earlier attempts to push the agenda forward, the feeling that the main stakeholders were not taken fully on board has provoked angry reactions among the major trade unions, which have threatened a nationwide strike in September. Recognizing the possible implications of unilateral action, the Prime Minister has reportedly decided to proceed more cautiously in future by taking the workers' representatives into confidence.
Industry lobby FICCI had set up a special tripartite group to consult the stakeholders and make suitable recommendations for the government's consideration. As convener of the special group, I held extensive consultations and submitted my report making a host of recommendations. Among other things, I advocated gradualism and proposed an incremental approach to labour law reforms in place of the wholesale reforms that were being attempted.
There really is no alternative to dialogue, compromise and consensus in the realm of social re-engineering. The efforts may appear tardy and frustrating at times, but sustainable results can be achieved only if we are able to hone the strategy of tactical retreat with a view to eventually finding the winning formula that will be acceptable to all.
The rolling back of government's publicly announced EPF policies earlier this year is a case in point. The massive street protests in Paris in April and May 2016 against the French government's labour reforms that were perceived as pro-capitalist portend social unrest that may become intractable if such sensitive matters are not handled with understanding and empathy.
The fact that recent amendments to the Child Labour (Prohibition & Regulation) Act encountered widespread criticism from academia, social activists, international organizations like Unicef and others exposes the absence of broad-based dialogue and consensus building that is the cornerstone of progressive and sustainable labour reforms architecture.
Despite all the wishful rhetoric over the last two years of the present government, it is now common knowledge that enough jobs -- especially decent quality jobs -- are not getting created in the economy, particularly in the organized manufacturing sector. The government would do well to ensure that the frustrations of youth poised to enter the job market are effectively contained. Towards this end, the recent announcement about massive injection of funds for skilling and re-skilling potential job seekers is most opportune.
The concerned department and agencies of the government must quickly respond by setting up capacity and infrastructure to absorb the funds and put them to best advantage. The youth are impatient and care must be taken to ensure that the burning embers are not allowed to be stoked by "indosceptics" who have a problem for every solution.
Clearly, job creation is the single most important direction to follow in the next phase of reforms. If adequate numbers of jobs are available in the marketplace, the resistance to labour reforms on the part of the traditional trade union movement will surely mellow.
Meanwhile, the government should re-establish confidence and trust among employers' and workers' representatives by organizing impartial and meaningful tripartite consultations on labour reform proposals that are doable. There is no point in biting off more than you can chew. The priorities and pace of reforms must be carefully calibrated so that the achievements can endure in the long run.
The government has three more years to go in its first term. There is sufficient time to readjust the trajectory so that results start showing before it must inevitably return to the hustings. Alarm bells are not ringing just yet, but a gentle reminder is not out of order.
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