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As policymakers try to work out ways to keep businesses afloat in the covid crisis, some states have ventured where governments seldom go. They have relaxed labour laws to help businesses survive. Employers can look forward to easier compliance requirements, longer work hours, greater flexibility in laying workers off, and enhanced authority over them.

Such reforms are best done when an economy is in a boom phase. Allowing firms to let go of workers freely, for example, encourages recruitment. In theory, it also shuffles people around so that jobs and skills are better matched. However, at a time when most companies are looking to reduce their staff, it is likely to leave lots of them jobless. Sadly, there seems no other way out right now. Many enterprises say they would have to shut down if they can’t cut their payrolls. If so, this only highlights the urgency to strengthen our social safety net. At a basic level, we should institute income transfers for all. Taxpayers who lose their jobs could be given back their tax payments of 2019-20 as a loan, to be repaid at zero interest in five annual instalments. Such measures would give millions of Indians a safety cushion.

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