After decades of experience as a Tata Group manager and as strategic advisor to some of the world?s biggest firms as Boston Consulting Group chairman, Planning Commission member Arun Maira is unarguably the most experienced professional manager in government. As a member of the special task force on micro, small and medium enterprises set up by the PM, Maira told fe?s Vikas Dhoot that labour law reforms are more important for small firms than for big corporates as they are the engine of growth for the economy, yet most vulnerable to harassment by multiple inspectors and high compliance costs with myriad laws.
From consulting global firms to framing policies for government, what has been your initial assessment of the job at hand?
I have been looking at industry and urbanisation from the perspective of inclusive growth and whether the Plan would be able to deliver the targets. At the Planning Commission, we are trying to find ways to achieve even more inclusive growth that reduces poverty further. There is a need for inclusion, but not by giving people something, but inclusion by people themselves.
The PM has often stressed that rigidities in our labour legislations ?have created a situation where we have industry but it does not grow at a fast enough pace to create more jobs for our young.? Small firms have to comply with multiple labour laws ? 43 central labour laws and as many as 25,000 state-level rules. Isn?t there a need for this to change?
Our laws are cumbersome ?there are too many laws, too many inspectors. For example, there?s a provident fund inspector, factories inspector, boiler inspector and so on. However, the bigger companies can have in-house labour departments to deal with it. However, It?s the smaller companies that suffer. It is important to reduce or combine the jurisdictions and reduce the number of inspections and forms to fill. We can?t simply do away with labour laws as it is important to ensure safety of workers in the factories. Infact, the laws are tougher in other countries. When it comes to the labour versus employer sort of paradigm, I suggest labours should have the rights to form unions. Good managements know how to respect these rights. I have been involved in dialogue with labours in difficult situations for over 35-40 years and it works when management and labours co-operate. Therefore, simplifying labour laws will be very good for the small-scale industry. It is not the big guys, but small ones who constitute over 95% growth in employment.
You are part of the task force set up by the PM to address the issues plaguing the 2.61 crore MSMES. What are you finding?
One of the major concerns of MSMEs are delay in payments by larger customers. If they are not getting paid by the bigger companies on time, they really get squeezed as banks get even more scared of lending to them. They also complain about harassment by multiple inspectors, especially those implementing labour laws.
Credit growth for MSMEs has slowed down quite drastically. In slowdown, while big companies are able to extend credit cycles, banks are not lending enough to MSMEs.
Yes, they are caught in a bind. That?s what we are trying to sort out through the task force, which also has a representative from the RBI. Putting MSMEs in priority sector list can also help. We are examining the percentages under priority sector.
Is it possible to hammer down change in government administration or does it need a different strategy?
Large corporations also find it very difficult to change, but then it can be hammered down, as you say, because you can throw people out if they don?t co-operate. You can?t throw people out of a country. You may throw them out of the administration, but they can still influence the system. The change has to be infused from within.
Often the best intentions of the government get lost in implementation delays. Do you feel deadlines can be prescribed?
Things have changed in recent years. The same machinery has delivered results in Gujarat for quite a while now, in Andhra Pradesh and in Karnataka, off and on. Even Haryana, Punjab and Himachal Pradesh are making remarkable progress.
India lives in the states, more today than ever before, with chief ministers like Narendra Modi are working with a zeal akin to CEOs, luring away investment from competing states. Do you see such leadership coming in states like West Bengal and Kerala?
It can be done, but only through sensitive leadership. Such leaders can energise people around them to become a team with a common vision and goal. Twenty years ago, who would think of Andhra Pradesh as a rich state? The state has set now benchmarks. So it can happen.