Last year, Amitabh Kant, the CEO of Niti Aayog, made a candid admission that big structural reforms such as demonetisation and GST had caused severe disruption in the economy and its growth trajectory, even though such reforms would be beneficial in the long run.
Even before the putative benefits of those disruptive reforms are in sight, the Modi government has chosen to create more disruption in the form of the new farm bills and the changes in the labour laws.
Quite apart from the merit or otherwise of these moves, what is more important is the timing of these new disruptive reforms.
They come in the middle of a pandemic-devastated economy which requires palliative care more than anything else. This is not the time to create more paranoia and apprehensions among farmers and industrial labour about their future incomes when the overall national income has already shrunk 24% and the economy faces massive demand compression.
Structural reforms, even if they are beneficial in the long run, must come at an opportune time when the economic agents are prepared for it mentally and psychologically. They cannot be thrust like the way the new farm laws and proposed labour legislations are being pushed down the throat of farmers and workers.
In a democracy, the government must communicate with the people in earnest. Prime Minister Modi, as usual, has begun his communication exercise after committing the act, much like demonetisation.
A watershed moment in the history of Indian agriculture! Congratulations to our hardworking farmers on the passage of key bills in Parliament, which will ensure a complete transformation of the agriculture sector as well as empower crores of farmers.
— Narendra Modi (@narendramodi) September 20, 2020
He told the people of Bihar via video conferencing on Monday that those who are opposing the farm bills are the ones who sat on Swaminathan Committee report all these years. But it was Modi’s own government which told the Supreme Court that recommendations of Swaminathan Committee was not possible to implement.
So is the prime minister being sincere at all in his communication with farmers? No, he is not being honest at all. This is the sole reason why farmers do not believe a word of what this government says.
Another example of this mixed messaging is the way farmers were misled these past few years by the government’s commitment to help increase the number of state-run and regulated mandis by 20,000 – simply by converting haats (periodic markets) into primary agriculture markets or small mandis.
Where does this exercise fit into the new farm law framework, one does not know.
This was the recommendation of the Ashok Dalwai committee set up by this government to look at ways of doubling farm income by 2022. The Dalwai Committee relies heavily on an increased mandi infrastructure run by states.
So one does not know what the real intention of the Modi government in suddenly bringing these farm bills in the name of freeing farm markets could be. If anything, farmers suffer the worst effects of free market in India.
Similarly the government has been pushing for radical labour law changes in the middle of the pandemic, again without much discussion with stakeholders. In April, some BJP ruled states pushed for radical changes in labor laws in the name of attracting American and Japanese companies wanting to shift supply chains from China.
Whether labour law changes alone will help achieve this is quite another debate. Quite aside from the merit or otherwise of such reforms, the question to ask is whether to implement them in the middle of the worst global recession in 90 years is advisable.
Prime Minister Modi seems confident that far reaching changes to agriculture laws and industrial labour legislation can be made without much debate either in parliament or civil society. In the name of big structural reforms to boost the economy, announced along with the Rs 20 lakh crore package in the middle of the COVID-19 lockdown, all rules of democratic conduct are being thrown out of the window.
Agriculture is a state subject and regulation of agri-markets is very much in the domain of the states. Yet states have not been consulted on changes in agriculture laws which seek to bypass the jurisdiction of states in creating new contracts between farmers and corporates.
Some states are contemplating constitutionally challenging the new amendments being made in the name of offering farmers more choice to sell their produce outside some 7,000 odd designated mandis in the country.
Both the new farm laws and labour laws have major implications for the future incomes of farmers and organised industrial labour. The changes in industrial laws aim at allowing full freedom to factories of up to 300 employees to hire and fire workers without seeking any statutory permission.
Until now, this was possible only for factories with up to 100 workers. Some BJP ruled states like Uttar Pradesh and Madhya Pradesh have already implemented these harsh provisions to attract new investments.
As part of new labour law contracts, the government is proposing introduction of a standard collective agreement between employees and management which will lay down the rights and obligations of both parties. Under this, the employees can formally raise a collective dispute and negotiate with the management in a formal framework.
However, the rights of the trade union to go on a lightning strike is sought to be curtailed heavily. The standard document lays down terms of employment, termination, compensation, etc.
One common strand in the changes to both farm law and labour law is that they have been hugely welcomed by big business. Corporatisation of agriculture is the new mantra to improve farm productivity when everyone knows the real issues surrounding
Indian agriculture cannot be addressed by corporatisation or other wooly headed ideas around “freeing agri markets”.
Throughout the history of western capitalist development, agriculture has progressively got more support from governments. Businessmen have also talked about new labour law changes as some sort of magic bullet at a time when unemployment in India has touched a 45-year high even before COVID-19 hit the economy so badly.
There are other globally driven structural issues, such as relative de-globalisation of trade and investment since 2008, which have caused deterioration in employment quality in different parts of the world. India is not immune.
The fact is that 95% plus of India’s workforce is still in the unorganised sector and one is not sure how the changes to new labour laws will touch them. Yes, it will provide flexibility to companies to freely hire and fire workers and make it easy to shut down businesses within the standard collective agreement that has been proposed between workers and managements of bigger companies.
Overall, the changes in law relating to farmers and industrial workers seem aimed at attracting big capital. There is little evidence that big capital and technology can solve India’s employment problem.
Modi and his advisors have been groping in the dark for six years without being able to address the serious decline in all economic parameters, from employment and income to savings and investment.
It seems Modi feels somewhat cornered and is taking a big gamble with these new reforms in the middle of a pandemic-led chaos. All of it is being done in the name of advancing the interests of farmers and workers.
There is already a wave of protest across India and this will only intensify in the absence of an open and transparent debate. BJP is about to lose an ally in Akali Dal because it has brought these changes by stealth.
One is not sure whether BJP has consulted national trade unions, including its own sister organisation Bharatiya Mazdoor Sangh, on the new labour law changes. PM Modi is taking a huge risk in pushing these unprecedented changes without proper discussion and debate.