Modi Stun Gun: Next Bullet After Demonetization?
The aggression with which PM Modi announced and then implemented Demonetization stunned the entire nation. In spite of facing opposition and implementation challenges, he decided to power through and innovate to adapt as per the situation. Unlike the land acquisition bill, this time he did not succumb to the united opposition. Current government looks more determined than before to make this happen no matter what challenges emerge.
The determination was also evident in the way the government went out of its way to mobilise the opposition and completely isolated Congress to get the nod for GST implementation. These two major reforms and the result in the upcoming assembly elections in UP, Punjab & Gujarat will drive the way this government will function in the second half of its tenure. It appears that the government has decided to fast track its reform agenda and power through any opposition that might come in their way.
The next major agenda on their table has been long overdue labour reforms. There has been strong opposition from various trade unions as they fear that the reforms might be employer friendly and will take rights away from the workers. From the time of its inception, the labour movement has been a tug of war between these two parties. Employers have been complaining that the labour laws are not business friendly and hence need to be revised as they give too much power to the workers. They also allege that these laws are too complicated, require redundant and meaningless compliance hence should be changed for improving the ease of doing business in India.
Just like GST & demonetization, labour laws reform is another controversial topic that no previous government has dared to address. With labour unions showing their resentment and the left/opposition likely to vehemently oppose the reforms, it is yet to be seen if Modi government has what it takes to bell this cat. The recent Demonetization experience just before crucial assembly elections and the way they have stood their ground in spite of nationwide agitation displays that this might happen after all.
Labour reform will bring a positive change to the mood of the nation as the businesses will be more motivated to open new factories. The growth of small factories will also bring in new employment and push the economy towards a steep growth. The systems will be more streamlined and the inspector raj will be all but abolished from the country. The self regulation will mean companies do not have to explain themselves to every inspector that visits their premise.
While this will make complying easier, it will mean that non-compliance will be easily tracked and consequences will be far more stringent. Stringent penalties of non-compliance is the balancing act as this will give the message that the government is not favouring big businesses a claim that opposition has been levying against the Modi government. The penalty for undisclosed income during monetization was another example of the intolerance towards the non-compliance. Companies may be given very little time to bring their house in order and there might be audit of employers failing to comply which may date back to the date of their incorporation. The best way to prepare for this is to stay on top of your compliance. Using a compliance solution like CompliCheck will help the companies keep track and manage their compliance easily.
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