The past year saw the Narendra Modi government making bold attempts to carry out potentially transformative reforms in agricultural marketing and the labour market. It also sought to fast-track privsatisation/unlocking of stuck public capital through structured programmes. These reforms could have helped address a lot of structural infirmities of the Indian economy and produced creditable incremental growth via greater competitiveness, but as the year draws to a close, the picture on the reforms front is admittedly bleak.
The government was forced to repeal the three farm laws – which were rolled out via Ordinances in June last year and enacted in September – in the recently concluded Winter Session of Parliament, yielding to sections of farmers, who opposed the laws with a firm resolve and staged a year-long protest that caught the world’s attention. The farmer unions also demanded a more robust MSP system with legal backing.
The laws were aimed at freeing the farmers from the clutches of notified APMC market yards, giving them the freedom to sell their produce anywhere in the country sans the burden of levies and thereby enabling them to earn more. But the critics feel these laws would have made farmers subordinate to corporate firms, which are eager to expand their foothold in farming-to-retailing-of -farm goods and deprived farmers of whatever little price security they are endowed with.
The four labour codes, all notified by the Centre by September 2020 and marked for a combination of reformist and social-security steps for boosting labour productivity, are still hanging fire due to slow-moving – if not dithering – state governments. No state has so far notified the requisite rules under these codes; only 12 among 28 states have published even the draft rules thus far. Of course, the the Central government has been constantly urging the other states to frame the rules, which are necessary for the roll-out of the codes. The Centre has already published the draft rules and invited comments of all stakeholders including general public on the provisions.
The Code on Industrial Relations, if implemented, would increase in the threshold for company managements to seek prior permission for retrenchment, lay-off and closure to units with 300 workers from 100 now. It also proposes to make trade unions more representative to have negotiating power and make sudden strikes difficult.
In August this year, the Modi government unveiled a National Monetisation Pipeline (NMP), seeking to generate upfront revenues of Rs 6 lakh crore in four years starting from FY22, out of operational infrastructure projects, under various innovative log-term lease plans that involve minimal ceding of government’s ownership of the assets. The move is in step with a plan to revert to the path of fiscal consolidation without any lapse of time and create the fiscal heft to finance the Rs 111 lakh crore National Infrastructure Pipeline and other capital-intensive ventures.
The NHAI, Power Grid and a few other entities have drawn the road map for monetisation of some of their assets, the NMP project could gather pace in the next year only. Monetisation of non-core public sector assets that are not part of NMP such as land could add to the Centre’s effort to channelize more funds for infrastructure development. The infra pipeline and promotion of PPP projects for assorted port services, with the abolition of Tariff Authority for Major Ports, could help cut the country’s logistic costs, which are one of the highest among peer economies.
The progress on the strategic disinvestment – read privatisaton – front has been not up to the mark even though the Budget for FY22 unveiled the policy which entailed that the government have a ‘minimum presence’ in the four broad sectors while state-run firms in other sectors are to be privatised or merged or closed. However, except Air India and a couple of relatively smaller CPSEs such as Central Electronics and Pawan Hans, the government’s plans for strategic disinvestment of BPCL, IDBI Bank and two public sector banks will be pushed to FY23.
With privatisation of fuel retailer-cum-refiner BPCL delayed, the government will miss the ambitious Rs 1.75 lakh crore disinvestment target for the current financial year.
Amid fierce protests by bank unions, the government deferred its bold plan to introduce a Bill in the recently-concluded winter session of Parliament to facilitate the privatisation of two public-sector banks (PSBs). Niti Aayog has reportedly suggested that Indian Overseas Bank and Central Bank of India be privatised, although a key panel to endorse the names is yet to take a call. The Cabinet, too, is yet to ratify the draft amendment Bill.