NEW DELHI: The new government at the Centre may go slow in some key pending reforms, including in labour and agriculture as well as in privatisation of state-run firms, given the reduced majority of the National Democratic Alliance (NDA), analysts said.The BJP, which is short of the majority mark on its own, will have to carry allies together on key decisions.
The NDA with 117 members is just four short of the 121 majority mark in Rajya Sabha at present. The setback in the Lok Sabha polls could make its Upper House majority tenuous over the coming months. The Modi government made several attempts to carry forward structural reforms in the economy, but had to backtrack on many occasions. Most notably, it dropped the plans to liberalise land acquisition for industrial purposes in 2015 and revamp the marketing of agricultural produce in 2021.Barring the sale of Air India to Tata Group in 2022, no big-ticket privatisation of state-owned firms could be completed.
The government, in 2019-20, had consolidated the labour laws into four codes: Code on Social Security 2020; Occupational Safety, Health and Working Conditions Code 2020; Industrial Relations Code 2020; and Code on Wages 2019. These four codes, although framed, are not yet notified, as the Centre is waiting for the states to pass their respective legislation to enforce these Codes.
FE had reported earlier that the new government is likely to implement the codes soon after it assumes office, but that seems doubtful now.“It (implementation of he codes) requires consensus to be built, which is now difficult, as BJP tally in the the Lower House has reduced,” a prominent trade union leader said on condition of anonymity. Labour laws fall under the concurrent list of the Schedule 7 of the Constitution of India. The Centre didn’t notify the rules earlier as the intent was to take all the states on board. But some states refused to frame the respective rules, such as West Bengal. In any case, if the Centre notifies the codes, the states will be “bound to implement the laws”, an official had told FE earlier.
Lekha Chakraborty, professor, NIPFP, however, said: “I don’t think the implementation will be stalled. However, a tripartite consultation involving the government, management, and labour unions is essential for the successful implementation of labour codes.”After the sustained protests by farmers, Modi in November 2021 announced the revocation of the three farm laws. The farm laws had laid down the framework for contract farming, and allowed inter-state and intra-state trade and commerce outside the physical premises of markets notified under state APMC legislations, besides amendment of the Essential Commodities Act.
“At its core agriculture is a state subject. With federal polity recovering its lost ground, we can expect a more meaningful consultation with the state governments. The government will do well to enable the existing agricultural produce marketing committees (APMCs) and to make them stronger, more transparent and more efficient,” Siraj Hussain, former secretary, ministry of agriculture, told FE. Hussain said the land bank of APMCs across the country should be used to create better infrastructure so that the farmers are not forced to sell their produce immediately on harvest. Promoting inter-state mandi trade through reforms in APMCs functioning in the respective states remains a challenge for the Centre. There are more than 7,000 APMC mandis across the country and traders from outside the state have to adhere to stringent norms to buy commodities directly from the farmers.
With amendments to land acquisition law abandoned by the Centre in 2015 due to fierce political opposition, the Centre will have to continuously nudge states to usher in reforms in land record and titling, tenancy, urban land, forest land and agricultural land uses to ensure India’s economic rise is not stymied by land acquisition delays. Streamlining these would augment credit flow to the needy sectors and resolve land-related disputes, which comprise almost two-thirds of pending court cases in India, analysts said.
The new government may slow down the privatisation of the central public sector enterprises (CPSEs) and public sector banks (PSBs). However, the ongoing privatisation processes for IDBI Bank and a clutch of other entities may go through as they are in various stages. Similarly, the rationalisation of the Goods and Services Tax (GST) rate may become a hot potato in the coalition government and may have to be carefully managed by the GST Council.
Source: The Financial Express
