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Modi Govt kicks in labor reforms to boost investment

Modi Govt kicks in labor reforms to boost investment

The Narendra Modi government is into reforms overdrive. Even as the opening up the farm sector is underway, it has initiated the much-needed labor reform process in the country. It introduced three crucial labor legislations in the Lok Sabha Saturday.

The three bills are: the Industrial Relations Code Bill, 2020; the Code on Social Security Bill, 2020, and the Occupational Safety, Health and Working Conditions Code Bill, 2020.

While the aim is to increase the scope of social security among workers, it gives flexibility to the employers to hire and fire. The reform process it is expected to boost investments—both foreign and domestic.

“We have included 174 out of 233 or 74 per cent of the recommendations of the standing committee on labor across three codes being introduced again as they have undergone substantial changes,” Labor and Employment Minister Santosh Gangwar said in Lok Sabha.

The labor reform process will offer states flexibility in policies relating to hiring and firing. Besides, state governments will also be able to fix working hours in the factories and other establishments and even restrict the workers from forming unions. Besides, it will ensure the government extends social security to all, including the unorganized and gig workers in a phased manner.

“Labor reforms are critical for drawing investments, many state governments including Uttar Pradesh have already implemented the changes. This will allow the states to indulge in healthy competition with each other in attracting investments,” a senior government official said.

The reform process was initiated in the wake of the stringent nationwide lockdown imposed for about two months disrupting businesses which also led to large scale job losses. States such as UP, Maharashtra and Gujarat have come on board to bring in the necessary changes in labor laws, which will help them draw fresh investments.

The move is particularly critical as many companies hitherto operating in China have evinced interest in relocating their manufacturing facilities.

“We are keen to do the needful to ensure that maximum investments flow into the country, critical for job generation and recovery of the economy,” the official said.

India’s economic growth dropped to a shocking 23.9 per cent in the first quarter of the current financial year due to the lockdown..