Millennium Post

Madhya Pradesh on October high

Chief minister Shivraj Singh is hopeful that the summit will open the doors for massive investments in Madhya Pradesh. Almost all the important and leading industrial houses of the country are likely to be present in the summit. According to a government spokesman, Mukesh Ambani, Essar group chairman Shashi Ruia, Videocon representative Anirudh Dhoot and several others leading industrial tycoons have given their consent to participate in the Indore meet. Besides, ambassadors and representative of foreign countries have also accepted MP government's invitation.

The chief minister has also visited South Africa and Dubai to invite industrialists to the summit.

The Indore meet has assumed extra importance after the chief minister announced that prime minister Narendra Modi had agreed to inaugurate the summit. Earlier, reports were in circulation that the prime minister  may unlikely be able  to come to Indore. After the prime minister's consent, some more business houses, which were reluctant to participate, have conveyed their willingness to attend the summit. According to a leading industrialist, Modi's presence will enable them to have firsthand knowledge about the government of India's strategy to boost industrialisation in the country. Besides ensuring prime minister's presence, the MP government has taken some more initiatives to assure industrial houses that it means business.

One such initiative relates to the reforms in labour laws. The cabinet meeting held on 22 September gave principle sanction to major amendments to simplify labour laws. Amendments have been proposed in 20 laws in favour of both labourers and entrepreneurs. Go-ahead from government of India will be sought wherever required. As a result of these amendments, entrepreneurs will be encouraged to establish industries in the state and labourers' working conditions will improve.

As per the amendments, now an employer will have to deposit Rs. 25,000 in Labourer Rehabilitation Fund if child labourers are found in the establishment. A criminal case will also be filed. Period of overtime for labourers in establishments is also proposed to be enhanced. Overtime period, in a quarter, will be increased from 75 to 125 hours. Consent of labourers for overtime will also be mandatory. Micro industries are proposed to be exempted from nine labour laws. Their inspection will be made only after advance permission from the labour commissioner has been taken. Status quo is proposed to be maintained in provisions for salaries, gratuity, bonus, ESI, provident fund, etc. for workers in these industries.

At present, a labourer becomes entitled for holidays for next calendar year after working for 240 days. As per proposed amendment, a labourer will become entitled for paid holidays after working for 180 days during the same year. In place of 61 registers, one consolidated register will be maintained under 16 labour laws and only two returns are proposed to be filed instead of 13 annually. It is proposed to exempt Gumashta establishments (those with less than 9 labourers) of unnecessary inspections. Inspections will be made only after advance permission from the labour commissioner. Powers of giving permission for filing cases under Factory Act are proposed to be vested in labour commissioner instead of inspector. Provision has been made to abolish unnecessary procedures of licence and registration under five labour laws. Licences/registrations not issued within time-limit will be deemed as issued.

Provision of compounding is proposed in labour laws, as a result of which, only fine will have to be paid and the provision for a jail term would be annulled. Madhya Pradesh Industrial Employment Standing Order Act is proposed to be implemented on the number of labourers being 50 instead of 20. Permission for layoff, retrenchment and closure will have to be taken when number of labourers is 300 instead of 100. A provision has been proposed to give 3-month notice and 3 months' salary separately in establishments with less than 300 labourers to ensure that labourers get better compensation on lay-off. This provision will inspire employers to employ over 100 labourers on regular rolls. 'Plant and machinery' will be separated from construction cost for fixation of Building and Other Construction Workers Welfare Cess.

While the proposed labour law reforms have been welcomed by industrialists, trade unions cutting across political lines have criticised them and announced their intention to launch a joint agitation against them. The lack of communication, particularly air connectivity, has been one of the major bottlenecks in boosting industrialisation. Keeping this factor in mind, the state government has been assured by the union civil aviation minister that major cities of the state will be connected with Bangalore, Chennai, Hyderabad and Pune. During his visit to Bhopal, civil aviation minister Ashok Gajapathi Raju, besides assuring more flights between Bhopal, Indore and other cities, also assured to develop Indore and Bhopal as international airports.

While labour reforms and better air connectivity will enhance the interest of big business houses to invest in Madhya Pradesh there are certain developments which may hamper the enthusiasm of industrial houses. One such factor relates to various scams which had hit the headlines in the last few months. Several political leaders, officials and also some entrepreneurs, particularly from the field of education, are in jail or facing corruption charges. The series of scams have created the impression that Madhya Pradesh is a fertile land for corruption, where they can mint money with ease.

Another negative development relates to the cash crunch being faced by the MP Government.

According to newspaper reports, ‘The Madhya Pradesh government has tightened strings of its purse to tide over an acute liquidity crisis, described by officials as 'temporary'. The shortage of cash has
forced the state finance department to issue a circular, asking departments not to incur expenditure above Rs 25 crore without its clearance.’

The cash crunch has come days before the Global Investors' Summit, aimed at showcasing the state as a major investment destination for overseas and domestic industrialists. A government official has said that the finance department's notification was in response to a 'temporary liquidity crisis' and would be withdrawn within a month. Sources in the state government said that earlier standing instructions mandated that payments above Rs. 50 crore had to be made after clearance from the finance department.

In early September, the state finance department issued the fresh circular reducing this limit to Rs. 25 crore. Sources pointed out that the bulk release of about Rs. 1,000 crore for payment as compensation to farmers has contributed to the temporary liquidity crisis. IPA
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