2021 – The year that has been: the intention to reform is clear, political economy issues remain thorny

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The Industrial Relations Code, if implemented, would increase the threshold for company management to request prior authorization for dismissal, dismissal and closure of units with 300 workers compared to the current 100.

Last year, the Narendra Modi government made bold attempts to push through potentially transformative agricultural marketing and labor market reforms. It also sought to accelerate the privatization / release of stranded public capital through structured programs. These reforms could have helped to remedy many structural infirmities in the Indian economy and produce honorable incremental growth through greater competitiveness, but as the year draws to a close, the picture on the reform front is certainly gloomy. dark.

The government was forced to repeal the three farm laws – which were put in place through ordinances in June last year and enacted in September – during the winter session of parliament that just s ‘finish, giving way to sections of farmers, who opposed the laws with firm determination and staged a year-long protest that caught the world’s attention. Farmer unions also demanded a more robust MSP system with legal backing.

The laws were aimed at freeing farmers from the clutches of APMC’s notified market prices, giving them the freedom to sell their produce anywhere in the country without the burden of levies and thus allowing them to earn more. But critics say the laws would have subordinated farmers to trading companies, which are keen to expand their presence in agriculture to the retailing of agricultural products and deprive farmers of the little price security they had. .

The four labor codes, all notified by the Center by September 2020 and marked by a combination of reformist and social security measures to increase labor productivity, are still on fire due to the slowness – even hesitation – of state governments. No State has so far notified the rules required under these codes; So far, only 12 of the 28 states have even published the draft rules. Of course, the central government has repeatedly urged other states to oversee the rules necessary for the deployment of codes. The Center has already published the draft rules and sought comments from all stakeholders, including the general public, on the provisions.

The Industrial Relations Code, if implemented, would increase the threshold for company management to request prior authorization for dismissal, dismissal and closure of units with 300 workers compared to the current 100. He also proposes to make unions more representative in order to have bargaining power and make sudden strikes difficult.

In August of this year, the Modi government unveiled a National Monetization Pipeline (NMP), seeking to generate initial revenue of Rs 6 lakh crore in four years from FY 22, from operational infrastructure projects. , under various innovative long-term rental plans that involve minimal transfer of government ownership over assets. This decision is part of a plan to return to the path of fiscal consolidation without any delay and to create the necessary budgetary weight to finance the national infrastructure pipeline of Rs 111 lakh crore and d other capital intensive enterprises.

The NHAI, Power Grid and a few other entities have mapped out the roadmap for monetizing some of their assets, the NMP project may pick up steam next year only. Monetization of non-core public sector assets that are not part of the NIP, such as land, could complement the Centre’s efforts to channel more funds for infrastructure development. The infrastructure pipeline and the promotion of PPP projects for various port services, along with the removal of the Tariff Authority for large ports, could help reduce the country’s logistics costs, which are among the highest among comparable economies.

Progress on the strategic divestment front – read privatization – has fallen short even though the budget for FY22 unveiled the policy that implied that the government had a “minimal presence” in the four major sectors. while state-owned enterprises in other sectors must be privatized, merged or closed. However, with the exception of Air India and a few relatively smaller CPSEs such as Central Electronics and Pawan Hans, the government’s plans for the strategic divestment of BPCL, IDBI Bank and two public sector banks will be pushed back. FY23.

With the postponement of the privatization of fuel retailer-refiner BPCL, the government will miss the ambitious divestment target of Rs 1.75 lakh crore for the current fiscal year.

Amid fierce protests from banking unions, the government postponed its bold plan to introduce a bill in the recently concluded winter session of parliament to facilitate the privatization of two public sector banks (PSBs). Niti Aayog has reportedly suggested that the Indian Overseas Bank and the Central Bank of India be privatized, although a key panel to approve the names has yet to take an appeal. The Cabinet also failed to ratify the amendment bill.

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