Governments are suspending major labour laws for periods of up to three years to ‘encourage’ investment in their states. Uttarakhand is also reportedly contemplating doing the same. This is basically a knee-jerk reaction by bureaucrats to the idea floating around that major multi-national companies are contemplating leaving China for other shores. The accepted idea is that these companies had initially invested in China because of the ‘captive labour’ in that country, which did not make trouble for capitalists at the behest of their communist government. This is, at best, a very incomplete story. The companies basically found the labour to be not just cheaper, but also disciplined and suitably skilled. Additionally, China proved to be a huge market, as also an excellent conduit for export to most parts of the world. It is naïve to believe that mere twisting of regulations will see a surge of investment in the country.
The truth is that reforms have been ongoing under the Modi Government over the last six years to change the industrial scenario, but the process has by no means been easy. It has been vigorously opposed by vested interests for all kinds of bogus reasons, including the supposed friends of the working class – the communists. All the labour laws enacted to benefit the workers actually proved to be means of making money for officialdom at every level. The regulations were rarely implemented. The basic principles behind these laws were flawed, so money was spent on getting around them. Responsible companies, such as the Tatas, have always been ahead of government in looking after their employees. Despite knowing all this, the socialists and communists, in particular, have worked to undercut the fundamental reforms being sought to be made.
India has a well deserved reputation for being an anarchic democracy. A business house can spend years – owing to the multiplicity of clearances to be obtained and palms to be greased – to establish a business, and all it needs is a PIL to bring a halt to everything. There is no part of India where there are not such projects hanging fire. Increasingly, the judiciary has begun not just to interpret the law, but lay down policy, which obviously is the task of government. India’s grassroots reality is ignored and standards determined by foreign institutions are applied. The elitist activists cannot be held accountable for the suffering that results and governments are left to pick up the pieces.
These are just a few examples of the problems being faced. It will take a long time for India to become an investment friendly country – a healthy domestic business environment that is competitive and gives value for money is required first. Unfortunately, crony capitalism has deep roots and many friends – even unlikely ones like the communists.