Summer of 2020

The Indian Express     3rd October 2020     Save    

Context: The recent reforms brought out during the just-concluded special session of Parliament are not just momentous but in many ways historic.

Labour Law Reforms: 

  • Ending the tyranny of 'Inspector Raj': The web of 44 central labour laws, with over 1200 sections and provisions, has been dismantled
  • Four simpler Labour Codes have been put in place: 
  1. The Code on Wages
  2. The Industrial Relations Code
  3. The Social Security Code 
  4. The Occupational Safety, Health, and Working Conditions Code. 
  • They universalise minimum and timely payment of wages. 
  • They enable ease of doing business by bringing in a regime of one-registration, one-licence and one-return.

Company Law Reforms: 

  • Past Condition: Perverse provisions of Companies Act, 2013
  • It criminalised even otherwise normal civil infractions of routine nature. 
  • It completely paralysed risk-taking and quick decision-making among the private wealth creators.
  • Post recent reforms: the perverse sections of the Companies Act 2013 have been done away with and nullifies the fear of criminal prosecution that hung over every corporate decision.

Banking Reforms

  • Past Condition: No standard governance norms or binding regulations to protect customer interest.
  • Organisations that called themselves "banks" were completely outside the ambit of RBI regulation.
  • Indian mainstream banks had a practice of "grossing" their bilateral liabilities rather than "netting". These funds could otherwise have been available for lending to consumers and would have also helped lower interest rates.
  • Post recent reforms
  • The bilateral banking netting law has been passed: A large corpus of unproductive capital has been freed to be deployed in the market. 
  • Cooperative banks will now be regulated by the RBI: customers will have the same protections as those of other regular banks. 

Agricultural Reforms: 

  • Past Condition
  • Treated as captive sources of producing cheap food grain while living at subsistence levels.
  • At the farmer's end: no freedom to choose the point of sale for the produce, and also could not decide the price of the product with no say in selecting the buyer.
  • At the consumer's end: short-changed with frequent cycles of persistently high inflation.
  • The only beneficiaries of this perverse system were middlemen who thrived under political protection.
  • Post recent reforms
  • Farmers can now sell produce wherever they want, to whomsoever they want, and at whatever price they can command, the security of MSP still being there.
  • The stifling nature of the Essential Commodities Act and the Agricultural Produce Market Committee (APMC) Act have both been neutered. 
  • Contract farming is nationally enabled, allowing private investment to come in, which will bring in technology, modern equipment, better seeds, know-how for in-between-season crops, improved yields, better logistics, and freer access to national and international markets.