The Hindu Editorial Analysis | 15th May’20

Table of Contents

One for the poor

COVID-19 threat has snowballed into a major economic crisis for the urban poor in general and migrant labour in particular.
Loss of livelihoods has pushed them into penury.
In the second of a series of measures that are part of a ₹20 lakh crore economic package, Union Finance Minister Nirmala Sitharaman has tried to address the needs of these sections, apart from small farmers.
She has recognised that migrant workers have taken to the Mahatma Gandhi National Rural Employment Guarantee Scheme in a major way after the Centre gave explicit instructions to reopen the scheme.

As in the past, this remains a lifesaver for people dependent on fragile livelihoods, and the decision to extend it to the monsoon season is welcome.
The government should also ensure that wages are paid without delays.
A waiver or at least an extension of the 100-day limit per household too would have helped.
It is now up to the States to ensure the scheme is implemented properly.
For migrants who are still stationed in their places of work and who are not beneficiaries of the National Food Security Act or State schemes, the Finance Minister has promised 5 kg of foodgrains per person and 1 kg of channa per family per month for two months.
This will bring the number of people receiving subsidised foodgrains close to the legal requirement of the National Food Security Act (67% of the population).
It is a welcome relief for many starved workers, but the government could have extended the Public Distribution System coverage to include more people who are suffering from loss of jobs and livelihoods, besides migrant workers.
Ms. Sitharaman also announced that the ‘one nation, one ration card’ scheme to allow migrants access any fair price shop across the country will be implemented by March 2021.
But this scheme, as implemented now, has been utilised only sparingly by migrants, and concerns from States like Tamil Nadu where PDS is nearuniversal are yet to be addressed.
Many of the announcements, including one for small farmers, are a combination of liquidity and credit-easing measures or the extension of existing schemes.
As things stand, they fall short of the substantive fiscal measures that could stimulate demand in the economy.
Obviously, the key will lie in the implementation of these measures.

Lockdown syndrome

The country’s industrial output, as measured by the Index of Industrial Production (IIP), contracted by 16.7% in March.
This is in contrast to a growth rate of 2.7% witnessed during the same month last year.
The sharp fall can largely be explained by the nationwide lockdown that was imposed by the Centre in the last week of the month.
The manufacturing sector, which witnessed a contraction of about 20%, was the worst hit among the key sectors, perhaps due to disruptions in the labour market caused by the lockdown.
In terms of end-goods, capital goods and consumer durables witnessed a roughly one-third contraction in size as the sale of non-essential goods was obliterated by the unexpected lockdown.
Analysts say that industrial output is likely to fall even further in April when the economy was in complete shutdown.
Growth for the whole financial year could well turn out to be negative.
We may see a quick bounce-back in economic activity once the lockdown is lifted.
But the actual pace of the recovery in industrial production and even the wider economy will depend on the policy environment created by the government after the crisis.
Previous attempts by the Reserve Bank of India and the government to flush the system with liquidity, after all, have failed to improve credit flow to businesses.
The government must also ensure that bureaucratic red tape does not kill any nascent recovery at a time when businesses, whose balance sheets have been hit hard by the crisis, need the freedom to adjust to a new economic reality.

Keeping Asia-Pacific afloat

For generations, the Asia-Pacific region has thrived on our seas.
The seas provide food, livelihoods and a sense of identity, especially for coastal communities in the Pacific island states.
Sadly, escalating strains on the marine environment are threatening to drown progress and our way of life.
In less than a century, climate change and unsustainable resource management have degraded ecosystems and diminished biodiversity.

Insights from ‘Changing Sails: Accelerating Regional Actions for Sustainable Oceans in Asia and the Pacific’, the theme study of this year’s Economic and Social Commission for Asia and the Pacific (ESCAP), reveal that without data, we are swimming in the dark.
Data are available for only two out of ten targets for the Sustainable Development Goal 14, ‘Life Below Water’.
Due to limitations in methodology and national statistical systems, information gaps have persisted at uneven levels across countries.
Environmental decline is also affecting fish stocks.
Our region’s position as the world’s largest producer of fish has come at the cost of over-exploitation.
The percentage of stocks fished at unsustainable levels has increased threefold from 10% in 1974 to 33% in 2015.
We must also work with the shipping community to navigate toward green shipping. Enforcing sustainable shipping policies is essential.
Trans-boundary ocean management and linking ocean data call for close cooperation among countries in the region.
Harnessing ocean statistics through strong national statistical systems will serve as a compass guiding countries to monitor trends, devise timely responses and clear blind spots.
Through the Ocean Accounts Partnership, ESCAP is working with countries to harmonise ocean data and provide a space for regular dialogue.
Translating international agreements and standards into national action is also key.
We must fully equip countries and all ocean custodians to localise global agreements into tangible results.
ESCAP is working with member states to implement International Maritime Organization (IMO) requirements.

Stop the return to laissez-faire

Employers now want labour laws to be relaxed.
Several States have exempted industries from complying with various provisions of laws.
The Confederation of Indian Industry has suggested 12-hour work shifts and that governments issue directions to make workers join duty failing which the workers would face penal actions.
Thus, after an organised abandonment of the unorganised workforce, the employers want the state to reintroduce laissez-faire and a system of indenture for the organised workforce too.
This will take away the protection conferred on organised labour by Parliament.
The move is reminiscent of the barbaric system of indentured labour introduced through the Bengal Regulations VII, 1819 for the British planters in Assam tea estates.
Workers had to work under a five-year contract and desertion was made punishable.
Later, the Transport of Native Labourers’ Act, 1863 was passed in Bengal which strengthened control of the employers and even enabled them to detain labourers in the district of employment and imprison them for six months.
Bengal Act VI of 1865 was later passed to deploy Special Emigration Police to prevent labourers from leaving, and return them to the plantation after detention.
What we are witnessing today bears a horrifying resemblance to what happened over 150 years ago in British India.
Factory workers too faced severe exploitation and were made to work 16-hour days for a pittance.
Their protests led to the Factories Act of 1911 which introduced 12- hour work shifts.
Yet, the low wages, arbitrary wage cuts and other harsh conditions forced workers into ‘debt slavery’.
The labour laws in India have emerged out of workers’ struggles, which were very much part of the freedom movement against oppressive colonial industrialists.
Since the 1920s there were a series of strikes and agitations for better working conditions.
Several trade unionists were arrested under the Defence of India Rules.
The workers’ demands were supported by our political leaders.
Britain was forced to appoint the Royal Commission on Labour, which gave a report in 1935.
The Government of India Act, 1935 enabled greater representation of Indians in law-making.
This resulted in reforms, which are forerunners to the present labour enactments.
The indentured plantation labour saw relief in the form of the Plantations Labour Act, 1951.
By a democratic legislative process, Parliament stepped in to protect labour.
The Factories Act lays down eight-hour work shifts, with overtime wages, weekly offs, leave with wages and measures for health, hygiene and safety.
The Industrial Disputes Act provides for workers participation to resolve wage and other disputes through negotiations so that strikes/lockouts, unjust retrenchments and dismissals are avoided.
The Minimum Wages Act ensures wages below which it is not possible to subsist.
These enactments further the Directive Principles of State Policy and protect the right to life and the right against exploitation under Articles 21 and 23.
Trade unions have played critical roles in transforming the life of a worker from that of servitude to one of dignity.
In Life Insurance Corporation v. D. J. Bahadur & Ors (1980), the Supreme Court highlighted that any changes in the conditions of service can be only through a democratic process of negotiations or legislation.
The orders and ordinances issued by the State governments are undemocratic and unconstitutional.
The resurgence of such a colonial mindset is a danger to the society and the well-being of millions and puts at risk the health and safety of not only the workforce but their families too.
The health and strength of the workers cannot be abused by force of economic necessity.
Labour laws are thus civilisational goals and cannot be trumped on the excuse of a pandemic.

Are India’s labour laws too restrictive?

Some State governments including Uttar Pradesh (U.P.) and Madhya Pradesh (M.P.) have proposed ordinances to exempt manufacturing establishments from the purview of most labour laws.
Are the ordinances justified given the need to both preserve and create jobs in the wake of the COVID-19 crisis?
K.R. Shyam Sundar(KRSS): First, let me express my profound sense of shock [at the] changes or even disruptions that M.P. and U.P. governments have introduced on the pretext of creating employment and attracting investment.
There are three issues here: The Constitution provides a number of basic rights, and, under the directive principles of state policy, a number of assurances.
Now, the kind of changes that have been made, they potentially will hurt, will dis-enable the realisation of the constitutional objectives.
Second, the facility of the concurrent subject has been abused. And, we should bear in mind that the national codification and the labour law reform process is on.
What is the unholy hurry on the part of the State governments to do this?
But, I have an explanation: given the COVID situation and the national lockdown, the trade unions that are already weak cannot mobilise their forces and conduct any kind of a State-level or national struggle.
This is a clear case of vulnerability, which the state has exploited.
The World Bank survey, 2014, asked employers… and the employers did not rate labour law regulations as [among] the top five or seven or 10 irritants.
For them, the availability of skilled workforce and cooperative labour-management relations were far more important than flexible labour laws.
Amit Basole (AB): One must remember in all of these discussions that India still remains, what economists call, a labour-surplus country.
More bargaining power is with employers.
The responsibility of the state in such a context is to safeguard the interests of labour through legislation because the market does not give them the necessary protection.
Second, on the question of how they act as constraints or barriers: of course employers will always want to have a freer hand in managing labour relations, setting wages, conditions and so forth.
Of course, they will make working conditions worse, and life worse for workers.
All of these macro policies, industrial policies, trade policies govern the climate of job creation, in addition to the overall health of the economy.
Was lack of flexibility an issue retarding manufacturing and job creation even before the pandemic?
AB: There is also an issue of diversity of employers when we talk about manufacturing.
What is people’s purchasing power?
Are their wages rising or not?
What is the stability of the business climate?
Is the state trusted by businesses, small and large businesses, to deliver on its promises?

What are the export conditions like?

Is the government following a consistent policy, sending out the correct and consistent signals on what it wants to promote and what it doesn’t want to promote?
Big, Medium, Small… they all experience the government and the labour regime differently.
So, there has to be a little bit more of a nuanced understanding of where exactly labour laws are a constraint and what can the government do to make life simpler there, while not going beyond a non-negotiable floor.
Industry is reported to have urged the Centre to mandate the return of workers and warn labour of penal consequences. Is this implementable and what does it bode for employer-employee relations?
KRSS: The state and the employers could ask the employees to report for work, only if two conditions are met.
Resumption of public transportation or private provision of transportation by the employers.
COVID SOPs [must be] effectively implemented at the workplace because the workers could withdraw from a potentially hazardous workplace.
There must be work.
Do these ordinances risk compromising workers’ rights, including safety?
Both [ordinances] have frozen the conditions of work like lighting, temperature, dust and fumes and brightness… and there is every incentive for the employer to ignore [these conditions] given the labour market opportunistic behaviour.
Second, the extension of working hours. It is well known that long hours of work, repetitive work… deficient conditions of work, pose a considerable threat to occupational safety and health.
One justification spoken of is the need to make India a more attractive destination than China for setting up manufacturing plants.
AB: Regarding competitiveness with respect to labour, it is true that a race to the bottom is a general accepted principle.
It is ironic in a way in the globalisation period, that countries compete on low wages, and primarily on that sort of labour element, particularly the labour-surplus countries.
But that said, those are again never the only factors when investment decisions are considered.

States cannot be left to the Centre’s mercy

It is apparent that financially broke State governments are forced to adopt desperate and reviled measures such as opening liquor shops to mobilise money for their fight against COVID-19.
All the States have come together like “pearls on a string” in the “spirit of cooperative federalism” for the economic integration of India, said Prime Minister Narendra Modi at the stroke of midnight hour on July 1, 2017 when he launched the Goods and Services Tax (GST).
What was not mentioned was that the States on that “pearl string” were now stuck to the Centre’s neck forever.
GST forced the States to surrender their powers to raise resources independently through local State taxes and place them entirely at the mercy of the Centre for most of their financial needs.
For richer States such as Maharashtra, Tamil Nadu, Gujarat, Delhi, Karnataka, Punjab, Haryana and Kerala, 70% or more of their revenue comes from taxes generated within their State boundaries.
Nearly half of these were from the sale of goods and services within the State and the remaining half, from a combination of excise duties on petrol, electricity, alcohol, land registration fees, etc.
Before GST, States were free to charge sales taxes as legislated by their State legislatures.
If a State had a natural disaster, they could raise additional resources for rehabilitation by raising sales tax rates on goods and services.
For the sake of GST, States sacrificed their fiscal powers in the promise of ‘economic efficiency’ and ‘tax buoyancy’, which never materialised.
Under GST, States are legally entitled to their share of tax revenues collected in their State.
But they are now reliant on the Centre to release these funds to them periodically.
When the GST was enacted, States were also guaranteed a minimum tax revenue every year for a period of five years.
This is a triple blow for the States — not being paid what they are owed, not being helped with additional resources, and bearing the brunt of the pandemic’s impact.
The other available options for States to raise funds are through taxes on sale of petroleum products, alcohol, lottery tickets, electricity, land or vehicle registration.
During this extreme lockdown, demand for petroleum products, electricity, land and vehicles has dwindled substantially.
So, the only option left for most States is to raise funds through the sale of alcohol.
For the large, richer States, alcohol sales account for more than one-third of their State tax revenues.