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NOW OR NEVER: STATES ARE DRIVING BOLD REFORMS

Why in news?

Uttar Pradesh, Madhya Pradesh and Gujarat have ushered in radical labour market reforms by freezing a vast number of acts and giving industries flexibility.

MP has initiated a series of ease-of-doing-business process reforms:

  1. A single form for registration.
  2. Valid licences for the life of a project with no annual renewal.
  3. Shops can open from 6am to midnight.
  4. From 61 registers and 13 returns for industries to just one return with self-certification and virtually no inspection by the labour department.

India’s Labour Market Regulations

  • India has so far had the most inflexible labour market regulations, which hindered large scale investments, productivity and enhancement, technology absorption and high employment growth in Indian manufacturing.
  • This has been the main reason why our enterprises have remained small in size and scale, leading to high informal employment.
  • Labour regulations with the intention of protecting the workers in the organised sector, were unintentionally preventing the expansion of industrial employment that could benefit a large mass of new workers.

The Need for Changes

  • In order to bring size and scale to manufacturing, there is a need to remove the permission clause for retrenchment, layoff and closure for all new units
  • The good thing about the new initiative is that all clauses related to minimum wages, the number of hours, safety and security measures have been kept fully functional; those related to child and bonded labour will also remain applicable.

States Changing the Scenario for Farmers

  • Punjab broke the state monopoly by reframing the Agriculture Produce Marketing Committee Act and Rules to allow private-owned markets and permit out-of-mandi transactions between farmers and consumers.
  • MP’s ordinance facilitates to totally free farm produce markets.
  • UP amended the five-decade-old Krishi Utpadan Mandi Adhiniyam by giving farmers total freedom to sell directly from their homes.
  • Farmer Producer Organisations have been allowed in most of the states to deal directly in the electronic National Agriculture Market (e-NAM).
  • All these reforms break the monopoly of middlemen who are rampant in agriculture and have been highly exploitative of farmers.

Way Forward: What more can be done?

  • In the agriculture sector they need to support small land holders through contract farming.
  • India’s land holdings are extremely small (86% of land holdings are less than 2 hectares).
  • Indian farmers, therefore, suffer due to lack of size and scale, technology, seeds, and fertiliser inputs and are unable to take market risks.
  • States, therefore, need to implement the Model Contract Farming Act, 2018.
  • As recommended by the 15th Finance Commission, states also need to implement the Agriculture Land Leasing Act for agricultural and allied activities.
  • Currently, registration means registration only of a deed or contract and not the property itself, and this has led to many land ownership related litigations. Hence, the states need to implement conclusive land titling on topmost priority.
  • One Nation One Ration Card must become a reality enabling a migrant worker to get his ration from any fair price shop in India.
  • States need to introduce a series of reforms in the electricity sector – 100% smart metering; granting of subsidies only through Direct Benefit Transfer (DBT); privatisation of discoms by way of sub-licensing and franchise models; and reduction in cross subsidy to ensure cost reflective tariff.

-Source: Times of India

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