It’s Now or Never

Context:  Covid-19 Pandemic has acted as the catalyst in overcoming the challenges of labour laws and agriculture sector, because of the initiatives taken by several states in this regard.

In labour laws

Inefficiencies of present labour laws

• Inflexible labour market regulations: hindered large scale investments, productivity and enhancement, technology absorption and high employment growth in Indian manufacturing.

• Protected workers and not jobs: adversely impacting economies of scale and ensuring rampant informalisation.

• Prevents the expansion of industrial employment

Recent labour reforms by the States 

• Single Window Clearance: Single form for registration

• No Annual Renewal: Valid licences for the life of a project.

• Self-certification and virtually no inspection by the labour department.

• Clauses related to minimum wages, the number of hours, safety and security measures, child and bonded labour are kept fully functional.

In Agriculture Sector

Challenges

• 86% of land holdings are less than 2 hectares.

• Lack of size and scale, technology, seeds, and fertiliser inputs.

• Registration only of a deed or contract and not the property itself has led to many land ownership related litigations (66% of civil cases are land related) and causes 1.3% lost growth per year.

Recent Agriculture reforms by the States

• Punjab: Reframing the Agriculture Produce Marketing Committee Act and Rules to allow private-owned markets and permit out of mandi transactions between farmers and consumers.

• UP: Amended the five-decade-old Krishi Utpadan Mandi Adhiniyam by giving farmers total freedom to sell directly from their homes.

• Warehouses and cold storages have been designated as mandis and fruits and vegetables have been taken out of their purview.

• Farmer Producer Organisations have been allowed to deal directly in the electronic National Agriculture Market (e-NAM).

Other Reforms that States can implement in Post Covid era:

• Model Contract Farming Act, 2018 for small land holders.
• Agriculture Land Leasing Act for agricultural and allied activities (recommended by the 15th Finance Commission).
• Conclusive land titling for ensuring ownership of land.
• Digitisation and management of land records and Nationwide One Nation One Ration Card 
• Reforms in the electricity sector like 100% smart metering; granting of subsidies only through direct benefit transfer; privatisation of discoms by way of sub-licensing and franchise models; and reduction in cross subsidy to ensure cost reflective tariff.
• Ensure terminated employees to get 45 days’ worth of salary for every year of work (like Gujarat SEZ)

Every crisis presents an opportunity and Indian states must seize this opportunity to usher in big, bold, structural reforms.