I have spent 42 weeks in India in full-time employment. That is at least two weeks longer than a typical pregnancy. What has it delivered for me? If I have to place one thing at the top of the list, it would be that we Indians sweat the small stuff too much. This includes myopia, staking egos on small priorities and a genuine inability to see the big picture. We do not fail to miss the wood for the trees. This is true at the level of individuals, institutions (private and public), and governments. I shall avoid talking about individuals and institutions and focus on the big boys and the big picture.

Take the recent National Company Law Tribunal (NCLT) and National Company Law Appellate Tribunal (NCLAT) rulings on Infrastructure Leasing and Financial Services (IL&FS) and the Essar Steel resolution plan arrived at by the committee of creditors (CoC) that sent shock waves through the banking community and threatened to throw a big spanner in the works of the Insolvency and Bankruptcy Code (IBC). The Union ministry of corporate affairs understood the gravity of the rulings’ implications, a rare instance of getting the big picture. It immediately passed several amendments that would address the issues thrown up by the rulings of the NCLT and NCLAT.

But what about the thought process of the men—were there any women?—who sit in these tribunals?

Variously, the tribunals noted that they had to be bound by a higher law of fairness and that the claims of the provident fund (in the IL&FS case) had to be heeded because of the age factor of contributors to the provident fund. Is there an even higher degree of fairness in not overruling the apportionment arrived at by the CoC, setting aside the legal argument that the CoC was legally within its right to determine the allocation that it did?

If banks did not collect their dues and had to write off the loans or take a bigger loss on the loans than they would have to suffer under the allocation arrived at by the CoC, would it not affect their ability and willingness to lend to deserving borrowers? Would it not cause the government to divert precious funds meant for development towards recapitalizing bonds? Would it not lead to the poor and infirm, widows and orphans receiving less support than they would otherwise receive?

Take the case of the government of India withdrawing the provision in its labour codes making it possible for employers to retrench up to 300 workers without prior government approval. Nearly two decades after former finance minister Yashwant Sinha mentioned this in a budget speech and then withdrew it, the government is still sweating this. Labour law reforms should not be seen as being pro-capital. Higher limits for retrenchments without government approval must be seen as “liquefying" the labour market. It is not about making retrenchments easier, but about facilitating recruitment.

If labour costs became wholly fixed costs, it would be socialism. If they became wholly variable costs, that would be predatory capitalism. The answer lies in the middle. Statutory protections for compensation on being retrenched, retraining assistance, and a severe penalty for “frivolous" retrenchment can accompany higher retrenchment limits. Further, if corporations abuse them, the original lower limit can be reinstated for such companies, sectors or the entire economy.

Successive governments and politicians of all Opposition parties have routinely opposed this measure, even as they tried to introduce it in their states or when they were in office at the Centre. They don’t see this as supporting the small base of workers in the formal sector whose resistance to this measure possibly comes in the way of creating formal-sector jobs by the million. Worse, while governments bare their bleeding hearts for workers against the rapacious greed for profits of capitalists, how about reflecting on what their policies have done against workers?

Demonetization might have cost more jobs than policies facilitating retrenchment. The malaise in the banking sector, the problems faced by power producers, and the relentless and often arbitrary pursuit of tax claims might have hurt employers and thus workers’ interests much more than this enabling retrenchment provision would ever do.

Consider the proposal by the ministry of corporate affairs that undisbursed corporate social responsibility (CSR) funds after three years could be appropriated by the government for its general pool. It is so wrong on so many counts that one does not know where to start. It would hit sentiment, morale and confidence among corporations so badly that they would be in no mood to invest further in the country, thus delaying investment, employment and an economic recovery. Corporations should run businesses legally, not wantonly damage the environment or engage in predatory practices, and be fair to all stakeholders. The very idea of mandating CSR expenditure was ill-conceived. To appropriate those funds is not only fundamentally untenable but also runs counter to all the things that the government would like them to do.

Small minds cannot create a large economy.

These are the author’s personal views.

V. Anantha Nageswaran is the dean of IFMR Graduate School of Business, Krea University

Close