J&K budget: Mufti govt bites the bullet on labour law reforms
New Delhi: Jammu and Kashmir has joined the growing ranks of states pushing ahead with labour law reforms.
In his fourth budget, finance minister Haseeb Drabu on Thursday proposed a uniform employment code, with the exception of domestic workers and agricultural labourers.
The code, consisting of all labour laws of the state, will set out a framework for terms of employment and service of all the workers.
Drabu added that a separate “labour judiciary” will also be set up.
“The bane of multiple labour laws has been their poor implementation and the resultant inadequate impact on the ground. Labour law reforms are critical to ushering in real ease of doing business in the State, besides, of course, addressing the aspirations of the labour class,” he said pointing out that these reforms have been long overdue.
Labour law reforms have been a hot button issue with most political parties reluctant to take them on, just as Indian industry continues to argue that lack of flexibility in recruitments was a dampener to fresh investments.
“While the whole country currently grapples with the issue of labour law reforms, I have decided that the State should take the lead and show the way to the country. A multidisciplinary committee has been set up to frame the J&K Employment Code for the State,” he said.
With this, the state will be the first to subsume all its labour laws into one code; at present it has 260 labour laws.
Kamal Karanth, a former managing director of human resource firm Kelly Services India said what the government has announced is creating a sense of political goodwill and something they can implement quickly. “This will attract domestic companies to go to the state but the real problem for the state is security and dearth of compelling talent,” said Karanth, co-founder of Xpheno, a staffing firm.
To be sure states like Rajasthan, Madhya Pradesh and Maharashtra had already reformed some of their labour laws including contract labour law and industrial dispute law a couple of years back setting the tone for improving the growing labour market not from New Delhi but from their individual state capitals.
The Union government for last four years is looking to convert some 46 central laws into four labour codes on industrial relations, wages, social security, and industrial safety and welfare.
Over the last few years, the annual budget exercise of Jammu and Kashmir has come up with many out-of-the-box solutions—from a separate power budget to develop the state’s energy resources to being the first to commit to a universal basic income.
The budget for 2018-19 was largely a populist one with sops for industry, small and medium enterprises and steps for job creation and low-cost housing for all.
Budget 2018-19 also sought to facilitate to smoothen the transition towards the goods and services tax (GST).
In addition, the state government will provide industrial units incentive in lieu of the exemption from paying 2% central sales tax. Also, the state GST will be refunded to industrial units, who were earlier exempt from tax payment under the value-added tax (VAT) regime, on the value addition component.
Drabu reiterated the state government’s commitment to bring real estate, electricity, alcohol and petroleum under a state GST.
The budget also announced sops for the hotel and tourism industry. They will be able to avail concessional power tariffs as applicable to other industries. It also waived off interest and penalty on power arrears on small scale industries hit by the floods in the state in 2014.
The budget also introduced a Business Interest Relief Scheme wherein a part of the interest due on restructured accounts will be paid from the fund.
Drabu also presented a panchayat budget ahead of panchayat elections next month. It put the spotlight back on the third tier of governance and was aimed at developing the budgetary and financial empowerment of panchayats and “democratization of public expenditure and not just devolution of funds and provision of grants.”
The budget committed to construct a minimum of 15,000 low cost houses to be constructed in 35 cities.
The budget envisages an expenditure of more than Rs80,000 crore with more than one third allocated for capital expenditure. Revenue receipts were at Rs64,269 crore while the fiscal deficit was at Rs9673 crore.