Sanjib D Lahkar
The 1990s witnessed tremendous change across sectors of the Indian trade, business and industry. The economy had been unshackled and set on a path of liberalization. The acronym then used was LPG – liberalization, privatization and globalization. For those of us who experienced the corporate corridors in the 1990s, it was fashionable for corporate heads to preface their business presentations with a large picture of a dinosaur, preferably a menacing looking T rex. Thereafter, he (it was still a male-dominated corporate world) would go onto a tirade on how the dinosaur, in spite of its mammoth size, did not survive because it did not ‘change’. The ‘boss’ would then surmise, that unless corporates and businesses learn to pre-empt change and act proactively, survival would be at stake. There was definite truth in the prophecy and we saw large companies fold up. A classic example is the Hindustan Motors and the demise of its ubiquitous Ambassador, the car which dominated Indian roads, from share taxis to red beacon-bearing vehicles for ‘mantris’.
Is 2021-22 now poised to be a year of change for the world of business and industry in India? Stepping back a year, the pandemic and the consequent lockdowns had by itself triggered a series of changes in business and commerce. The way we worked changed. Remote working which was facilitated ever since the internet revolution witnessed upscaling of working from home. WFH became an acceptable coinage. Many corporates, especially in the IT and related sector, announced WFH policies which are now here to stay.
Simultaneously with WFH, e-commerce and online business saw unprecedented growth. These changes in turn continue to have domino effects across sectors such as real estate, rental rates, employee hiring policies and, more importantly, the way we work or conduct business.
As we prepare for the fiscal 2021-22, and even before the heat and dust over the much controversial and contested farm law reforms are anywhere near settling down, we have an aggressive budget, referred to by some as a once in a century. Even without delving into the positives and negatives of the budget or arguing whether it will be able to deliver India out of the economic downslide or reverse the loss of jobs, the tone of change is definite.
The privatization of PSUs sweeping across sectors from banking and insurance to logistics companies such as the Container Corporation of India are due to become reality this fiscal. Privatization of airports and dedicated railway freight corridors are now no more fictional news to be shared across WhatsApp groups.
Concurrently, the labour reforms are a reality in the avatar of the four Labour Codes. All the four Labour Codes have now been passed by Parliament and the President has granted assent. The new codes are being primed for roll-out once the relevant rules are notified. It is the intention of the government ideally, to give effect to the new codes from April 1, 2021. It is possibly a matter of weeks, if not days, by when the new central rules would be notified.
It appears to be a more determined government with an agenda and a resolve to bring about reforms in all segments of economy, be it in farm, industry, land or labour, resistance and protests notwithstanding.
The implications of these changes by way of policy reforms or as triggered by the pandemic are many which require examination. As an illustration in the context of WFH environment, what should be the hours of work? Who pays for the electricity, office equipment and furniture? Will the employer be responsible in the event of an accident during working hours? How does the employer establish indiscipline or misconduct of an employee? As part of the labour reforms, the government has proposed to formalize WFH policies and a model Standing Order drafted covering the service sector, which should partially mitigate some of the WFH issues.
In respect of labour law reforms, there is no doubt that the new Labour Codes are designed to support the ease of doing business and facilitating legal compliances. However, it would be wrong to believe that the transition would be seamless. The extension of the scope of labour legislations to cover workforce in the unorganized sector will have its own set of implications. Similarly, the coverage by the Code of Wages 2019, for all segments of workers, and thereby assurance of ‘floor wage’ is likely to impact the employee cost for many small and micro industries in Assam as elsewhere in the country. The very structure and component of ‘wages’ have been redefined in the new Wage Code. As an instance, house rent allowance and conveyance are excluded from the new definition of wages. Currently both these components are a standard add-on to Basic and DA across most industries in Assam.
Change is imminent and Indian industry and commerce in 2021-22 is poised to experience its share. In Assam too, where the majority of industry and businesses are in the SME sector, industry leaders would be assessing the implications.
That brings us to the 1990s anecdote on the ‘boss and T rex’. As in the 1990s, corporate and industry need to pre-empt these changes and act proactively. A strategic approach could be to conduct a scenario analysis, with the ‘as is’ status of the individual business enterprise against the ‘to be’ status consequent to the changes as may emerge. No doubt, we are today a very different India compared to the 1990s. Indian industry has today emerged as global leaders. Further, the resilience of Indian industry has been demonstrated, albeit with some hiccups, during the transition to the GST regime and the immediate past year of pandemic. As we step into the year of reforms, we are hopeful that industry, trade and commerce are equipped to ride the change and deliver much-needed economic recovery and generation of jobs.