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Jan Vishwas Bill 1.0 recognised this problem but couldn’t do enough. A Jan Vishwas 2.0 that aims higher is needed, so that job creation can be accelerated

Tulsidas’s Ramacharitmanas asks, Jaum mrigpati badha medukanhi bhala ki kahai kou tahi (if a lion kills frogs, will anyone speak well of him)? The Indian Penal Code makes the Indian state very powerful — does it really need jail provisions in half of the 1,536 laws that touch employers? The recent Jan Vishwas Bill, now a law, has reduced corruption demands on employers by removing 113 jail provisions across 23 laws. I make the case for Jan Vishwas Bill Version 2.0 with a shift in policy strategy from retail to wholesale filtering after next year’s general elections to further reduce corruption and accelerate good job creation.

Labour laws are the biggest culprit. The Factories Act, 1948, read with 58 rules, contains more than 8,682 imprisonment clauses. But even simpler laws are hardly innocent: The Legal Metrology Act, 2009, read with 29 rules, has 391 imprisonment clauses; the Electricity Act, 2003, read with 35 rules, has 558; and the Motor Vehicles Act, 1988, read with nine rules has 134. Overall, there are 25,000+ employer jail provisions, of which 5,000+ arise from central legislation.

Stalin’s Secret Police head, Lavrentiy Beria, often said, “Show me the person, and I’ll show you the crime”. Beria’s technology for corruption — selectively using imprisonment clauses in vaguely drafted laws — is hardly unique. Our employer regulatory cholesterol — including thousands of compliances and filings — breeds corruption because some of our 25 million civil servants and 3 million election winners find personal gain in subjectively creating transmission losses between how those laws are written, interpreted, practised and enforced. More painfully, this cholesterol rewards informal enterprises with a sense of humour about the rule of law while punishing the high-productivity enterprises that pay high wages by combining technology, capital and skills. Regulatory arbitrage — corruption — and informality are corrosive because India’s economic challenge is wages, not jobs.

This article’s title comes from a book published in 1950 with six essays by 20th-century writers on their conversion to and subsequent disillusionment with communism and socialism. It chronicles how their search for the betterment of humanity led them to false gods and the personal agony that subsequently caused them to reject them. India’s tryst with false economic gods — articulated in the Avadi Resolution of 1955 — bred distrust of employers that manifested itself in many ways, but among the most poisonous was the false legislative god of criminalisation.

Jan Vishwas Bill 1.0 tackled this with innovation, judgement and stamina. Its innovation lay in a single law amending many laws. Its judgement lay in keeping “good” jail provisions that deter or Distrust of employers is bred into Indian policy. It needs to end Jan Vishwas Bill 1.0 recognised this problem but couldn’t do enough. A Jan Vishwas 2.0 that aims higher is needed, so that job creation can be accelerated deliver consequences for bad behaviour while eliminating “bad” jail provisions that discourage good behaviour. Its stamina lay in constructing the list of 113 “bad” jail provisions eliminated for employers by asking each central ministry to reflect on their criminal provisions and voluntarily surrender the bad ones. This “retail” approach had inclusivity but ended up defending the status quo — few institutions cut the tree they are sitting on — and only about 4 per cent of the 678 Central Acts that matter to employers were touched. Consequently, only 2 per cent of 5,239 jail provisions in central legislation were removed by Jan Vishwas.

The government has wisely signalled Jan Vishwas 2.0 with higher aims. Success requires a new strategy for filtering decriminalisation that shifts from retail (ministry’s volunteering) to wholesale (a positive list). A government committee with cognitive diversity should identify criteria where jail for employers is merited, like harm to others, theft from employees, etc. Subsequently, every central ministry must remove all the 5,000+ jail provisions that do not meet the committee’s criteria.

Early evidence from decriminalisation suggests it reduces the load on the judicial system. Over the last four years — outside the Jan Vishwas Bill — the Ministry of Company Affairs decriminalized over four dozen violations. These cases are now decided by the Registrar of Companies, and MCA data suggests ROC orders issued jumped from 157 in 2019 to 765 in 2023. These orders entail a penalty but no prosecution and are rarely challenged in court.

A fertile habitat for job creation hardly implies zero compliance, filings or jail provisions. If that worked, SWAT Valley in Afghanistan or Waziristan in Pakistan would be hotbeds of entrepreneurship. But every doctor knows the dose makes the poison — anything powerful enough to help has the power to hurt, and our excessive regulatory cholesterol currently hurts productive and compliant employers. More good enterprises will create the good jobs that tackle our biggest economic challenges: Low wages, low tax-to-GDP ratio, missing middle of enterprises, demand for reservations, low labour force participation by women, financing skill development and slow farm-to-non-farm job transition. The most sustainable reform for keeping regulatory cholesterol low is civil service reform. But life is second best at best, so decriminalisation is urgent. Also because our excessive laws breed excessive change; there were 11,000+ regulatory changes in 2023, more than 10 daily!

India will soon have the world’s third-largest GDP because of higher formalisation, urbanisation, financialisation, industrialisation and human capital. But becoming a top 10 per-capita GDP country is currently sabotaged by the siblings of corruption and informality. There is nothing cultural about either; suggestions that there is something “Indian” about the siblings is, at best, the soft bigotry of low expectations and, at worst, racism. India’s war on poverty will struggle till millions of good jobs in productive enterprises are assassinated before birth by the failed legislative god of excessive jail provisions and regulatory cholesterol. The Vishnu Sahasranama knew this long ago: Saha-srarchi sapta-jihvah saptai-dha sapta-vahanah, Amoorti ranagho chintyo bhaya-krudbhaya-nashanah (amateur translation: Fear is created so it can be taken away). A new wholesale strategy for amendments to the Jan Vishwas Bill will deliver lower corruption, higher wages and productive enterprises. All three bring India’s new tryst with the destiny of combining mass democracy with mass prosperity within grasp.

The writer is with Teamlease Services

In India, women still face numerous hurdles to access employment and, once employed, to access decision-making positions.

Claudia Goldin’s winning the 2023 Nobel Prize in the Economic Sciences, with her comprehensive account of women’s earnings and their underrepresentation in the global labour market, has aroused renewed interest among the international community in the persistently low female labour force participation rates across many countries. The G20 New Delhi Leaders’ Declaration 2023 also focused on the importance of women’s economic empowerment, recognised as a driver of national prosperity.

Unfortunately, in India, women still face numerous hurdles to access employment and, once employed, to access decision-making positions. Despite constitutional provisions safeguarding gender equality and initiatives like the National Policies for Women in 2001 and 2016, Mission Shakti, etc., gender inequality and discrimination persist in India. Understanding the difficulties and seizing opportunities to increase women’s economic involvement are essential to solving the puzzle of the low female labour force participation rate.

Grip of unpaid work

Everyone shares the same “time budget” of 365 days a year and 24 hours a day. However, the ability to allocate time freely is influenced by societal norms and gender roles. The significant disparities in time spent on unpaid work between women and men underscore the need for a closer examination. In rural India, women spend an average of 301 minutes per day on unpaid work, while urban women dedicate 293 minutes. In contrast, rural men devote only 98 minutes, and urban men spend 94 minutes on these activities. This stark contrast in unpaid work could be a key factor contributing to the gender gap in the labour market. Every extra minute women spend on unpaid work costs them the opportunity to earn a living and be independent.

Data from the Periodic Labour Force Survey (PLFS) 2021–22 corroborate these findings, revealing that a whopping 76 per cent of women in the productive age group (15–59) reported being out of the labour force due to childcare and household responsibilities.On top of that, 7 per cent cited social reasons for not being employed. However, research from different parts of the world indicates that access to childcare programmes can significantly boost women’s participation, ranging from 5 per cent to 47 per cent, depending on various contextual factors.

Work from Home: A Catalyst

Women, with their natural instincts, outdo men when it comes to voluntarily engaging in childcare, elderly care, and other household responsibilities, but sadly, these instincts became gender norms. While it might take several generations to overcome the social barriers imposed by these gender norms, workplaces could offer a conducive environment for women to stay in the workforce. The workplace being averse to employing young, unmarried women because they will soon get married and then bear children is not uncommon. But hold on—research finds that women demonstrate unparalleled dedication in various professional domains. Their work ethics, attention to detail, and ability to multitask bring immense value to organisations. Studies consistently highlight the positive impact of gender diversity in the workplace, emphasising the significance of women’s inclusion. Women’s participation in the workforce has a direct impact on economic productivity as they bring diverse skills, perspectives, and talents. Thus, it wouldn’t be a stretch to say that a workforce that includes women is more innovative, efficient, and better positioned to address the complex challenges of a rapidly evolving global economy.

How not to lose such a productive and potentially large proportion of aspirant women to social barriers? Remote work could possibly be a solution. The concept of ‘Work from Home’ (WFH) gained prominence, especially in the wake of global events such as the pandemic. In a country like India, where women’s participation outside the home is frowned upon, WFH can be a game-changing solution. It provides women with the flexibility to balance their professional and personal responsibilities by diminishing the traditional dichotomy between work and home life. As observed in the State of Working India Report, 2023, a significant portion of employed women in India depend on public transportation for their daily commutes, a factor frequently identified as a hindrance to women’s participation in the workforce. This challenge could potentially be mitigated through the adoption of WFH practices. While WFH presents numerous advantages, challenges such as blurred work-life boundaries, potential feelings of isolation, and the need for robust digital infrastructure should be acknowledged and addressed to ensure a sustainable and healthy work environment.

India, with its high population growth rate, stands at a pivotal moment where tapping the potential of the demographic dividend could lead to remarkable economic growth. Nevertheless, this hinges on the meaningful engagement of women in the economy. Moreover, over the years, India has made substantial investments in educating its female population. The exclusion of women from the workforce implies an underutilization of the skills acquired through education.

The PLFS data also shows that of the total men who are trained in vocational courses, about 80% stayed out of the labour force as they proceeded to pursue higher education. On the other hand, this proportion is only 11% in the case of women, while an additional 87% of women stayed out of the labour force to attend domestic duties.To reap the benefits of educational investments, it is essential to create avenues for women to apply their learning in professional settings.

The rapid evolution of digital technologies has heralded a transformative era, reshaping every aspect of life across the globe. Digital advancements present a unique opportunity to break down barriers and empower women economically. Freelancing, online entrepreneurship, and remote work options can provide women with a platform to transcend the constraints posed by traditional roles or geographical and social barriers.

Digitalization has democratised access to education and skill development. Online courses, webinars, and digital skill-building platforms can allow women to acquire relevant skills irrespective of their geographical location. This, in turn, can enhance their employability and equip them with roles in emerging digital industries.However, despite the positive promises, digitalization also suffers from various challenges. The persistent digital gender divide in the country, due to uneven access to digital tools and literacy, remains a challenge. Bridging this gap is pivotal to ensuring that women, irrespective of their socioeconomic backgrounds, can harness the benefits of digitalization.

The active participation of women in India’s economic growth is not just a matter of equality but also an economic and social imperative. A nation that leverages the talents, skills, and aspirations of its entire population, irrespective of gender, stands to gain immeasurable benefits. To garner India’s demographic dividend and ensure inclusive growth, it is essential to create an environment that empowers and enables women to participate fully and meaningfully in the nation’s progress.

Jyoti Thakur is associate fellow and Poonam Munjal is professor at NCAER, New Delhi

Each sequential release of GDP estimates by MoSPI (Ministry of Statistics and Programme Implementation) generates considerable excitement. Yet, perhaps many of us are unaware that each year’s estimates are revised six times over a stretch of three years before they are finalized.

For example, the first estimate of growth for the current year 2023-24, the First Advance Estimate (FAE), would be released in the first week of January 2024. A Second Advance Estimate (SAE) would be released after about a month and a half in end-February 2024. A Provisional Estimate (PE) would be released three months later in end-May 2024.

These three “early estimates” would then be followed by annual revisions spanning nearly a three-year period. The First Revised Estimate (FRE) would be released in end-February 2025; the Second Revised Estimate (SRE) and Third Revised Estimate (TRE) would be released exactly one and two years thereafter, that is, in February 2026 and February 2027, respectively.

Thus, as per the current practice, the final estimates for GDP and GDP growth are available only three years after the end of the respective fiscal year.

This practice raises certain inevitable questions. Does it really need to be such a long-drawn process? Does the release of six different estimates over a three-year period ensure better accuracy? Is there a case to consolidate some of these iterations and move to only three estimates: an early estimate; a provisional estimate; and a revised estimate, spread roughly over a period of a year-and-a-half?

In order to answer these questions, we analysed the data for four recent years for which all the six estimates are available (Table 1).

Three features of the various estimates stand out from this analysis, which then lead to three corresponding recommendations.

First, given the limited time in the interregnum between the FAE and the SAE, the two estimates are very similar. In fact, in two of the four years, the two estimates were identical. The SAE was upgraded by 0.1 percentage points in one year, and downgraded by 0.2 percentage points in another year.

This pattern lends itself to the obvious recommendation that the FAE and SAE should be merged into one estimate. One may simply release these numbers as the Advance Estimate in February, around the time when, as per the current process, the SAE is released.

Second, once all the data available up to two years after the end of the fiscal year has been utilized to prepare the SRE, very little new information is available in the subsequent year. Therefore, unsurprisingly, the SRE and the TRE have also been quite similar to each other.

As can be gleaned from Table 1, the SRE and TRE were identical in one of the four years; the TRE was upgraded by 0.1 percentage point in one year and by 0.2 percentage points in another year; and was downgraded by 0.2 percent in one year. These revisions have not only been rather minor, but in the medium term, they mostly even out, as a result of which the size of the economy is not impacted in any specific direction.

Therefore, doing away with TREs would be largely inconsequential for the accuracy of the estimates, but it would instead make the process shorter, nimbler, and more streamlined.

A final recommendation would be to combine the FRE and SRE into one estimate. The GDP estimates are revised significantly between these two estimates. The SRE, underpinned by more detailed information, is more accurate than the FRE. It would thus be prudent to release the combined estimate at an appropriate time between the two currently designated periods. If the data collection and its compilation can be accelerated with some effort, one could perhaps achieve a reliable revised estimate about 14-15 months after the fiscal year has ended.

A transition step may be go to four estimates first by eliminating the FAE and TRE; and subsequently go to three estimates by merging the FRE and SRE within two years.

Figure 1 graphically depicts the existing and recommended processes of arriving at the GDP estimates.

The final slate would then look as follows: an Advance Estimate, a Provisional Estimate, and a Revised Estimate, all three estimates would be available within a span of 16 months. Simple, precise, and agile.

The writer is director general of NCAER, and a member of the Economic Advisory Council to the Prime Minister of India. Shubhashree Jha contributed to this piece.

The number recently put forth by a government-constituted task force represents, at best, an interim assessment till the final report is out.

The National Council of Applied Economic Research (NCAER) released a report on “Logistics Cost in India Assessment and Long-term Framework” on December 14, 2023. The report is an outcome of a consultative approach adopted by a task force constituted by department for promotion of industry and internal trade (DPIIT) in April 2023. The members of the task force included representatives from the Asian Development Bank, NITI Aayog, ministry of statistics and programme implementation (MoSPI), academia (Asia Pacific School of Logistics & Graduate School of Logistics, Inha University of Korea), logistics industry stakeholders (Indian National Shipowners Association, National Industrial Corridor Development Corporation, Aviapro Logistic Services, All-India Transporters’ Welfare Association, Warehousing Association of India), logistics division of the DPIIT, and NCAER.

The task force was set up with the purpose of arriving at an estimate of the logistics cost incurred by India, which can be relied upon and which is based on the available facts and takes into account industry’s experiences. The NCAER’s 2023 report attempts to achieve this goal. The hitherto available estimates included NCAER’s 8.9% of GDP for 2017-18; CII’s 10.9% of GDP in 2015; and Armstrong and Associates’ 13.0% of GDP in 2016. The A&A estimate is also the most widely circulated number, and became the basis of the National Logistics Policy’s agenda to reduce the logistics cost to global benchmarks by 2030.

But, the NCAER’s new study found that the logistics cost as a percentage of GDP has been a single-digit number since at least 2011-12. That is good news, but does this mean that India already meets the global benchmarks?

While the logistics costs, most commonly expressed as a percentage to GDP, have been estimated for some countries, there is uniformity neither in the methodology of estimation nor on definition of logistics. This means that the constituents of logistics cost can vary across different studies. Most commonly included constituents are transportation, warehousing including cost of carrying inventories, insurance, and administrative cost (the sub-constituents of which can also vary).

This study estimates the cost of most significant constituents of logistics, that is, transportation and warehousing including cost of carrying inventories, using the data published by the government—Supply and Use Tables (SUT) and National Accounts Statistics (NAS). It imputes the cost of the remaining constituents by referring to the NCAER 2017-18 study and assuming that the contribution of the remaining constituents to total cost continues to be the same as it did in 2017-18. Therefore, the study does consider all the constituents of the logistics cost, commonly covered in other countries, through direct or indirect sources.

A quick exercise comparing the transportation and warehousing costs of India with that of the US, using the two countries’ similar sources—that is SUTs—finds that while these constituents were about 6% of GDP for India, the same were just about 3% of GDP for the US, in 2015. With remaining and less prominent constituents added, total cost is less likely to exceed 8-9% for India and 5-6% for US. In contrast, A&A estimated India’s logistics cost to be 13% of GDP and the US’s cost at 8.2% in 2016. These estimates, therefore, appear to be on a higher side across the countries.

Also, the metric of expressing the logistics cost, as a percentage to GDP, is not really an ideal metric. A services-driven economy is expected to have lower logistics cost. Also, an economy dependent predominantly on road transport is expected to have, ceteris paribus, higher logistics cost. Ideally, if the countries strive to reduce their logistics cost, effort should be made towards gradually reducing the absolute cost as a percentage of sales of goods, that is, agriculture and manufactured goods. This can most commonly be achieved, among other ways, through infrastructural development, removal of congestion points, modal shift towards rail and waterway, and reduction in administrative costs. Among these, modal shift towards rail and waterway is very critical not only for reducing logistics cost but also for reducing the carbon footprint.

This task force unanimously concluded that the most appropriate way to estimate logistics costs would be through a comprehensive study, comprising a primary survey and the compilation of relevant secondary data, along with the use of real-time Big Data (e.g., e-way bill data on freight transport costs, FASTag data on the movement of consignments along their routes) to identify bottlenecks (in terms of time and cost). The findings of this comprehensive study should provide (i) a plausible estimate of total logistics costs in India, and (ii) disaggregated information on logistic costs associated with various product groups and supply chains, and across different locations within India. Such disaggregated information would enable policymakers to identify priority areas for reducing logistics costs.

Pending the completion of such a comprehensive study, the 2023 report presented an interim assessment using readily available government data to arrive at a reliable aggregate estimate of India’s logistics costs. This estimate should best be used as a baseline estimate so that the progress of interventions made under the National Logistics Policy can be appropriately tracked.

Munjal and Pohit are the Professors at NCAER, New Delhi. Views are personal.