Narendra Modi's First 100 Days - August 1

Archaic labor laws to be reformed

The Union government will move bills to amend three key archaic labor laws in the current session of Parliament. Traditionally, governments have found it hardest to undertake administrative, labor and land reforms since none of them enjoyed a clear majority in the house. These reforms, the first in three decades, are an indication that the current government will use the power of its majority to push through difficult reforms. They also demonstrate the government’s focus on facilitating business, attracting investment and boosting labor-intensive manufacturing in the country.

Some highlights from the proposed amendments:
•    Permitting women factory workers to work at night with adequate safety and provision of transport
•    Doubling the limit on overtime - from 50 hours in a quarter to 100.
•    Extending the Apprentices Act to 500 new trades, including IT-enabled services. The scheme would also include non-engineers, a major push towards fulfilling the PM’s “Skill India” campaign.
•    Dropping a provision that employers who do not implement the Apprentices Act will be arrested.
•    Allowing companies with 10-40 employees to hire without having to comply with cumbersome labor law requirements

India-WTO standoff

On July 31, India effectively blocked a worldwide reform of customs rules easing trade regulations, and presented a new proposal hours before the deadline. At a recent WTO meeting, India argued that the promotion of global trade should be linked to food security. According to the WTO clause, public stockholdings must not exceed 10 percent of the value of food grains produced. Over the last decade, India has consistently procured more than it has dispensed through its public distribution system. Such massive stocks have been perceived as a threat, as this could lead to India dumping its surplus in the international market. These apprehensions have increased as India has become a significant agricultural exporter and is gaining market share in sugar and wheat exports. 

The WTO clause poses two issues to developing nations like India. First, the determination of the value of food grains is based on 1986-88 prices, ignoring the inflation since then. Second, and more fundamentally, this becomes a domestic concern in countries where food security is a more basic matter of welfare and livelihood. 

India has firmly asserted that it will not support a ‘trade facilitation’ agreement without a parallel agreement allowing developing countries more freedom to subsidize and stockpile food. India’s hard position may also be the result of the Prime Minister’s electoral assurance of a 50 percent profit margin to Indian farmers.