Exclusive: BMS President, In An Article For Outlookindia, Says Economic Governance Crawling With Misguided Reforms

Recently on May 26 , NITI Aayog held a program in Delhi where Michael E. Porter, a professor from Harvard University spoke on the subject, “Nations and Governments: New Insights”. He pointed out that the main problem of Indian economy is that when India is leading in GDP growth, it is far behind in social and economic progress. He proposed that State-wise Social Progress Report should be published to give attention to this fact. It is a pity that a Harvard Professor was required to tell the Government that it is not engaging seriously in social and economic progress.

Such a situation is a creation of wrong predatory policies and a destructive economic reform process unsuited to Indian conditions pursued for the last 26 years in the name of Globalisation.

The present model of GDP growth is not inclusive, it benefits only a small creamy section of the society not the downtrodden and marginalised population of the country that lie in the social sector. Hence BMS had to take a strong critical stand against the policy initiatives of the successive Governments.

Till 1990s, India was experimenting the Russian Socialist model of planning and Planning Commission was instrumental to it. Thereafter we begun experimenting the American model of Capitalism and as a result, NITI Aayog came into being, replacing the Planning Commission.

Hence in the recent National Conference held at Kanpur, UP, Bharatiya Mazdoor Sangh made a scathing attack on the policy blunders of NITI Aayog. BMS hinted that our economy is going in a wrong direction even though we have friends in the Government. The identification of issues, priorities, methodology adopted to analyse them and the remedies prescribed are highly defective and based on a failed western Capitalist model. Every new reform is in effect burdening the poor and benefitting the rich. Every Government initiatives result in subsidising the rich and taxing the poor. In such a circumstance, corporates are the greatest beneficiaries with corporate advisors occupying important spaces in the Government, especially in the policy making mechanism.

Read Also: The BJP Government At The Centre Is Nothing More Than UPA III, Says Sangh Parivar Leader

 The ‘Art’ of Choosing Wrong Advisors

Our governments are importing not only foreign ideologies and foreign investments but also foreign or NRI experts and advisors. Such experts and advisors who have no idea about real India are heading most important economic posts. Many of the bureaucrats and advisors who were with the UPA Government and created the way for an easy exit to Dr. Manmohan Singh have changed their colours and are advising the present Government. The person who is known for his policy blunders is leading the team of advisors of the Government.  He proposed to impose tax on farmers, which the Finance Minister and others had to publicly decline.

He as the proponent of the corporate lobby, gave a prescription to Railway: “Liberalise, Privatise and Corporatize”, upon which the government has to frequently clarify apologetically. This is only one example. Things are moving badly, thanks to these advisors who look at the common man with contempt.  Because of such people, the Government is continuing the UPA policies with more vigour. Hence in the economic and labour front, it is nothing more than UPA III! Any additions are only cosmetic changes. This is not what was expected by all those who have liked this government perform. The ghost of fallen UPA Govt. is still haunting the corridors of the central government, hoping for a resurrection.

 Making of a “Jobless India”

Within ten years of the LPG (Liberalisation, Privatisation, Globalisation) Reforms which was initiated in 1990s, the growth was identified as a “jobless growth” by none other than its own forefront campaigner, Dr. Montek Singh Ahluvalia. Till today job losses exceeding job creation is a constant worry in spite of earnest efforts of the government to create jobs and encourage skill development. Overthrust on jobless growth is creating a jobless India, leading to serious impact on the wages, service conditions, rising contractualisation and even the mere existence of labour.

The government forgets the fact that important sectors which are labour intensive are in a collapsed state. Agriculture which gives about 55% of employment is now infamous world over because of lakhs of farmers committing suicide. Farmers are failing because of the exploitative agro marketing system at the mercy of middlemen. Micro and small industries which come second in providing jobs are virtually wiped out from many of its traditional hubs, thanks to the LPG reforms, FDI, onslaught of MNCs and other similar reasons. Examples of traditional MSME hubs like Faridabad, Amritsar or Hosur in South India are before us. These two together account for nearly 85% of our employment. Other labour intensive sectors like textiles, beedi, construction etc. are all in crisis.  It is all because of the lack of communication of the government with these sectors and lack of knowledge about ground realities.  In such circumstances,  the government will have to find some magic to claim any sort of employment creation.  

Craze for FDI is destroying our MSMEs and small traders. E-commerce giants like Amazon, Flipkart, SnapDeal, Jabong, Myntra, Shopclues etc. have started destructive invasion over our local traders. Foreign investors are given all sops, local manufacturers neglected. Similar is the Uber and Ola phenomenon even though one of these is an Indian company.

 Wrong Identification of Issues of Economy

The excuse that Service sector that claims to give 60 percent of GDP is the engine of growth is not a sustainable idea. Agriculture is known as primary sector, industry as secondary sector and service as tertiary sector. Thus service sector can only be ancillary to the other two sectors in the long run.

We can very well identify that our Nation is facing about five crises in the economy, which successive governments since 70 years of Independence have failed to address. The first one is crisis of poverty. Half of India’s population is still either below poverty line or just near the poverty line. India is notoriously behind majority of nations in Human Development Index, Social Development Index etc.

The crisis in the agricultural sector is the second one. Third and fourth crises are mentioned in the economic survey of 2013-14. Our manufacturing growth is the slowest since independence, which is the third crisis.

The crisis mentioned in the Economic Survey report which comes as the fourth one is that India has the highest trade deficit since 1950. Indian market is full of Chinese products ranging from mobile phones to crackers. India’s trade deficit with China is almost equal to China’s defence budget of 60 billion dollars. That means if there is a war with China, Indian market will pay their military expenses! Our brave soldiers are capable of facing any aggression of Chinese at the borders. But in the trade war, where are we?

These were the crises in manufacturing and foreign trade during the last year of the UPA regime. Hence no other evidence was required for the total failure of the current economic reforms initiated by Dr. Manmohan Singh from the beginning of 1990s.

The fifth crisis that we are facing today is an offshoot of the above crises, namely unemployment. The Government is earnestly trying to create jobs, but the loss of jobs and consequent rise in unemployment supersede the jobs created. It has also led to two other issues, namely 1. Revenue crisis, i.e. the government does not have money to run its machinery and development of social sector and 2. NPA crisis i.e. non repayment of loans taken from the banks especially by the big corporate houses. The revenue deficit and mounting NPAs eat away all the allocations meant for the development of the poor people in the social sector. These are apart from other economic issues.

Eastern India has many areas where people live in inhuman circumstances. It lies on a belt where poverty, unemployment, malnutrition, illiteracy, Naxalism etc. are rampant. A report says in many places in the belt, there are more mines than schools and hospitals. In such a situation India cannot afford to have crawling economic governance.

 Disconnect with people and defective implementation

Many of the good intentions and efforts of the Prime Minister are neutralized by lack of proper experts, dependence on faulty advisors and bureaucrats, misguided reforms, lack of communication and feedback from social sectors. The new Government took many good policy initiatives for transforming India. It includes several social security schemes for the common man, Ujjwala Yojana, Make in India, Shrameva Jayate, U-Win card, Start Up India initiative, codification of labour laws etc. But we are pained to see that most of them are contaminated with policy blunders. The new draft Labour Code on Social Security is a typical example. It can be termed historical and revolutionary because it assures about 14 benefits up to the last worker in the country. But it has a highly defective working system that includes entrusting the large ESI and PF funds to State Governments. It also proposes privatisation of Social insurance, government to withdraw from providing contribution or budget allocation, limiting trade union representation in Committees, defective contribution formula etc. This ill fate is reflected in many of the recent good initiatives including demonitisation, GST, digitisation and other labour and economic reforms initiated by the Government, because of lack of proper consultation with social sector representatives including Trade Unions.

No doubt GST, demonetisation and digitisation were historical and revolutionary steps but were badly implemented without considering ground level practical realities. GST is accused of having an unscientific tax structure. Those items which were hitherto having less tax were brought under higher tax regime and those with higher tax structure were brought to low tax regime. People who normally rush at the last movement for payment of tax saw crashing of digital system. But when they tried in the next few days, every such day they have to pay fine for the fault of the Government mechanism, which is heartening for the small traders and micro industrialists. The government sat idle for months together on such small issues without taking prompt action till the traders went to streets. It shows the low quality of the monitoring system that the Government is depending on. Governance should not be a child play. Total lack of constant interacting machinery and lack of participation of stakeholders in the governance while implementing visionary programs are unpardonable mistakes.

 The tragedy called ‘Labour Reforms’

India’s labour sector is in a tragic state. Those sitting in the government want to create a labour force in India devoid of even human rights. Business people from countries which give their workers all labour rights, demand union free workplaces, lawless business zones, freedom to hire and fire employees, etc once they land in India. Successive governments are advised by the faulty advisors to oblige them by creating slave like situation in the labour field. Government is not much worried about improving the tragic plight labourers especially in the unorganised sector.

When we discuss about the issue of generating jobs, we forget to discuss about increasing low quality jobs i.e. increasing contractualisation. Increase of low quality jobs with workers who have no permanent loyalty to their establishments is one main reason for our industrial failure. We need to have not only jobs, but quality jobs. Textile industry has fallen because at present nearly 80% of its workforce is contract labour. The present Governance model does not give dignified space to labour and other social sector groups. Social sector includes labour, farmer, BPL, tribals, backward people, micro industries etc. Hence nothing short of people’s participation in governance can bring a change.

In spite of frantic efforts of pursuing labour law reforms and taking many other steps claiming they will ease our business atmosphere, the index of Ease of Doing Business has moved only one point, from 131st position to 130th position among world countries. Hence we have to probe other reasons for the stagnation in business growth. Of late, many at the apex level have started realising that the labour law reforms have nothing to contribute to employment generation or business development, except giving a bad anti-labour image to the government during the last three years.

 Nov 17 Rally for Total Transformation

When the dreams of the marginalised India are being bulldozed, social organisations like BMS are compelled to interfere. Hence BMS has decided to hold a vishal rally and march to the parliament on November 17th with lakhs of workers participating. The rally will raise sector wise demands of about forty four national federations cutting across almost all labour sectors. It includes shifting to a people centric economic reforms, implementation of minimum wages and Social Security to the last worker in the unorganised sector, implementation of equal pay for equal work for contract labour throughout the country, stopping of disinvestment and privatisation, strictly following tripartite consultation on everything related to labour as per ILO mandate, recognition of Scheme workers like Anganwadi, Asha workers etc. as government servants and bringing them under Pay Commission benefits etc.

Today, only about 7 to 10 percent of total unorganised workers are benefitted by minimum wages. Only those labourers who are included in the schedule of the act are covered for the purpose of minimum wages. Others are outside the coverage. Hence the new labour code on wages which has been presented in the parliament proposes universal coverage of minimum wages that reaches the last worker in the country, which is a welcome move. When two workers are working on two sides of a machine, one who is a permanent worker is paid Rs.20000 and the other who is a contract labour is paid Rs.3000. This is a common feature of exploitative labour system throughout the country which the Government is supporting.

Currently Anganwadi, ASHA and other scheme workers are technically considered as “volunteers” and are paid “honorarium” even though poor hapless village women take up the job as a means of livelihood. Unlike the UPA Government this Government is capable of taking bold decisions, but unfortunately it is not doing so for lack of proper social sector enthusiasts. If the Government intents to eliminate poverty and raise the standard of living of common man, the best way is to implement strictly two things viz. minimum wages and social security up to the last person.

We should not be satisfied with anything less than total transformation of India, including the world of work. Hence the Delhi Rally on November 17th will be a declaration of BMS mission of transforming the social sector, especially labour. The rally will address the gross disconnect of governance with the aspirations of the average Indians. It is time to stop all these directionless and failed reforms. Replace all failed advisors. Government has to create a permanent mechanism for constant participation of social sector representatives including trade unions in the policy making process. It is hardly one and a half years left to face people in the elections. If this is the way of governance, 2019 may not be like 2014. But there is nothing to worry, there is still time left to serve the common man, provided the great vision pronounced by the Prime Minister is translated to the ground level with sincerity. Let us wait and see whether the Government will take in to confidence the representatives of real India.

 (Saji Narayanan C.K. is the National President of Bharatiya Mazdoor Sangh)