Prime Minister Vajpayee’s speech at the inauguration of the 37^th Indian Labour Conference

New Delhi,
May 18, 2001

Friends, I am happy to be with you today to inaugurate the 37^th Session of the Indian Labour Conference.

    The Agenda prepared for discussion in this session of the ILC clearly spells out the Government’s commitment to labour welfare. It also presents our overall perspective on labour reforms and our specific approach to the immediate tasks on hand. I am happy to note that action has been taken on many conclusions arrived at in the last session held a year ago. I urge speedy action on the remaining decisions.

    This session of the ILC is taking place at a critical point in the development of our national economy. India has embarked on an ambitious path of nation building to meet the legitimate aspirations of our one billion citizens. The non-fulfillment of even the basic needs of a large section of our population, more than five decades after Independence, is a reality that our people find totally unacceptable. With the passage of time, this unacceptability is breeding impatience, which too is legitimate.

    Given that our country is blessed with bountiful natural resources and a large population of talented and hard-working people, there can be no reason:

• why a single Indian should go to bed with a hungry stomach;

• why a single Indian should be without a good roof over their head;

• why any Indian family should be deprived of other basic amenities of life;

• and why any Indian youth should be tormented by the worry of unemployment.

    However, if such is still the sad reality for tens of millions of our brethren, it only means that we have failed to build an economy that harnesses the full potential of our natural and human resources. It shows that our economy is forced to function under the heavy weight of many growth-hindering rules, regulations, laws, and systems. These are self-imposed constraints. They are preventing our economy from growing to its full potential and, thus, eradicate poverty and unemployment.

    It is out of this realization that our country embraced the principle of economic reforms a decade ago.

    This momentous shift in our economic thinking and policies did not mean then — nor does it mean now — that most of what India did in the first four decades of Independence was wrong. Such an interpretation of economic reforms — and I know that some sections of our intelligentsia think so — would be highly erroneous. Indeed, it would be counter-productive.

    There can be no denying that India has made significant socio-economic progress since Independence. This is primarily because of the strong and self-reliant base of industry and agriculture that was laid in the initial decades of Free India. Specifically, our impressive achievements in industrialization were due to the dominant role played by our Public Sector Undertakings. Our organized workforce made a valuable contribution to this.

    In course of time, however, our economic policies and laws developed rigidities. They failed to respond to the changing needs and opportunities, both nationally and internationally. Our private sector was shackled by many unnecessary restrictions. The worst hit were our small and medium enterprises, which have the highest potential to create employment and wealth.

    Many of our government-run undertakings, in which the country had made enormous sums of public investment, started to produce very poor or even negative returns. Similarly, our policies and laws prevented both the public sector and the private sector from effectively responding to the challenges as well as the opportunities of a rapidly integrating and highly competitive global economy. We were also slow in recognizing the revolutionary ways in which new technologies were re-designing the landscape of manufacturing, investment, business management, and trade.

    India's decision in the early ‘90s to effect economic reforms was an inescapable answer to this internal compulsion and external necessity.

    Since the early nineties, successive governments at the Centre have carried these reforms forward. Our own Government has been steadily broadening and deepening the scope of reforms. Realizing both the need and benefits of reforms, several State Governments are also moving ahead on the same path. Thus, nearly the entire political spectrum has participated in the promotion of economic reforms, indicating that a broad national consensus on the subject already exists.

    To strengthen this consensus, we must constantly review the content of economic reforms in the light of our own positive and negative experiences, as well as the experience of other countries. My Government welcomes such debate both inside and outside Parliament. It helps all of us to gain a clearer understanding of what should be done and how it should be done.

    Such healthy debate,

• which is rooted in sound economic logic,

• which is not influenced by any political and sectional considerations,

• and which is guided by the long-term interests of all constituents of the nation, will strengthen both our economy and our democratic system.

    At the same time, it will also underscore the necessity and urgency of speeding up reforms.

    During my recent visits abroad, I have seen how even countries in the developing world, which are much smaller than India, have progressed far ahead of us. Many of you too have seen or known this. The world is not going to wait for us, if we choose to be slow and half-hearted in our reform march. Delay and dithering in doing what is decidedly in the interest of the nation, is going to harm our people’s welfare.

    This will also seriously imperil India's capacity to effectively engage the world in security and other matters.

    Friends, I am being as candid as is possible on this platform because I am convinced — and I know that many of you are also convinced — that there is a lot at stake in the success of our economic reforms.

    Some of you might wonder why I am sketching this larger picture about the need to accelerate the reform process at a session of the Indian Labour Conference. I am doing so deliberately, to drive home my conviction that labour, understood in the broadest sense of the term, can make the greatest contribution to the success our reforms. I am convinced that workers and the poor will also be the principal beneficiaries of the success of our reforms.

    A sea-change is taking place in the economic environment of our country as well as the world, after the advent of the WTO. Businesses are being forced to reorient themselves to face tough competition, both within the country and globally. There is simply no alternative to raising the efficiency of our production units, reducing costs, and improving the quality of our goods and services. Needless to add, such re-orientation is impossible without the ability to restructure labour within individual businesses.

    This situation has given rise to divergent responses from employee and employer organizations. Trade unions perceive a threat to employment in economic reforms. Both private entrepreneurs and PSU managements, on the other hand, think that reforms introduced so far are not yielding optimal results because they are not fully complemented by administrative, judicial, and labour reforms.

    Similarly, workers have apprehensions that any change in the existing labour laws will place them at the mercy of employers, reducing the many rights and safeguards that they have won through years of struggle. On the other side, it is strongly argued that the present labour laws and institutions provide job security and other safeguards without any linkage to productivity and efficiency.

    I feel that there is merit in both perceptions. Recognizing the problem and its ramifications is half the battle won. Thereafter, the challenge before us is how to balance and harmonize these divergent views in the larger interests of achieving faster, multi-sectoral growth. My Government is engaged in precisely this endeavor. I seek the cooperation of trade unions and all other concerned organizations in this national effort.

    I urge all of you to view the proposed amendments to the labour laws in the broader perspective of how we can make our economy grow faster -- at a sustainable rate of eight to nine percent. To term these labour reforms as anti-labour, as some people are doing, is misleading. They are pro-labour because they are pro-employment. They seek to protect Indian industries and businesses by enabling them to become more competitive, more profitable, grow faster, and, hence, employ more people both directly and indirectly.

    Often some people put the entire blame for industrial sickness and uncompetitiveness of Indian businesses on our inflexible labour laws. This is wrong. Worse, such argument seeks to cover up willful misuse of funds and mismanagement of enterprises by the employers. The Government will take firm action against those who indulge in such criminal practices that defraud both our workers and our financial institutions.

    I would like to reassure our workers that their interests would be fully protected, even as we rationalize some of the outdated labour laws. This assurance is a natural corollary of my Government’s commitment to pursue reforms with a human face. Enterprise without empathy, commerce without compassion, and development without dignity of labour have no place in our national ethos.

    Which is why, one of the main issues for discussion in this session is, how to further expand the scope of social security for our workers. No economic development can sustain itself without an in-built assurance of social justice. At present, only ten percent of the work force, most of it in the organized sector, is covered under formal security arrangements. The Government is fully committed to expand the social security coverage to include the vast majority of workers in the unorganized sector.

    In this year’s Budget, we have announced the launch of the Khetihar Mazdoor Bima Yojana. I would request this assembly of experts to recommend how we can cast the social security net wider, especially to benefit those in the most vulnerable categories, such as rickshaw pullers, roadside vendors, and others in the informal sector, which sustains the livelihood of the largest section of our workforce.

    Social dialogue, which is the basis of our labour policy, has acquired a special relevance in the context of our resolve to implement economic reforms speedily. There is a need for continuous consultation among the Government, labour unions, employer organizations, and other social partners. Indeed, none of these dialogue partners is an adversary of the other.

    Just as economic reforms demand that the Government and managements reform themselves, they also require the trade unions to reform themselves to better serve the interests of the Indian working class. It is the collective national duty of all of us to think, plan, and work together so that we can evolve a common energizing vision to boost productivity, production, and competitiveness of the Indian economy.

    On this occasion, I would like to assure our PSU workers that their interests would be fully protected in our ongoing programme to restructure government-owned enterprises. Training and retraining for redeployment of workers is an important component of this commitment. I agree that the period of transition could be slightly difficult. Ultimately, however, the results will be rewarding for workers, their enterprises, and for the entire country.

    I am happy to note that you will also be discussing the impact of globalization on Indian industry and labour. There is a need to study this issue more closely and from various angles. Experience so far shows that globalization has an uneven and iniquitous impact on different countries. Within a country, too, it affects different sectors of the economy differently. Therefore, we need to have a deeper understanding of the cross-currents and complexities of globalization.

    Nevertheless, two things are certain. One, no country can ignore multilateral and bilateral obligations in today’s world. The need to expand regional cooperation also imposes its own imperatives. Therefore, we have to carefully calibrate the pace and extent of external liberalization to fully protect and promote our national interests. Our Government is doing precisely this.

    The other thing that I am certain about is that economic reforms will greatly benefit our country and our people. A well-conceived strategy to gain wider access to export markets, especially in developed countries, could give a big boost to Indian businesses. This will fuel faster growth and create still more employment opportunities.

    New technologies also have the potential to create new businesses, which can employ hundreds of thousands of our educated young men and women. The global dominance that our IT sector is gaining, with its promise to bring huge export earnings, is perhaps the best example that India can indeed reap the benefits of globalization.

    We are keenly awaiting the report of the Second Labour Commission, which is expected by the end of this year. I am confident that the report would throw useful light on many issues and guide the Government in its progressive evolution of policies and programmes for the welfare of labour.

    With these remarks, I declare the 37^th session of the Indian Labour Conference open and wish it all success.

    Thank you.