Relevance: mains: G.S paper III: Indian Economy
Context
- Raises concern the latest and the most serious being the law passed by the Andhra Pradesh government to reserve 75 per cent of jobs in an enterprise to locals.
- The trigger for this politically rewarding but otherwise a debilitating move is an economy which is witnessing a ‘job-less’ growth, coupled with an agricultural sector that is in deep distress.
- The sight of people from other States ‘taking away’ their jobs has caused heartburns among a section of the society that has felt left out.
Little benefit
- The Andhra Pradesh Employment of Local Candidates in the Industries/Factories Act 2019 insists that every enterprise, new and existing, should reserve 75 per cent of jobs for locals. Existing industries have three years to comply with the law.
- If the businesses do not find qualified people for employment, they should train them in that time. For that purpose, the State will set up skill-development centres.
- Those not complying have been warned of penal action.
Why the law is bad?
- It is unconstitutional. Article 19 of the Indian Constitution guarantees free movement. An Indian can work and live in any part of the country.
- It also ignores a Supreme Court order which caps reservation to a maximum of 50 per cent. That apart, the policy is not borne out by facts.
- The census data on migration paints a different picture. While the stock of inter-State migration between 2001 and 2011 has risen from 41 million to 54 million, as a share of the total population, it has remained at 4 per cent.
- In fact, in majority of India’s districts, inter-State workers account for less than 1 per cent of urban workers.
- Most migration, the data suggests, happens within a State. Thus, this law serves little purpose.
Skilling workforce
- To passing a law that mandates employment of locals for all industries will be counter-productive.
- Lack of qualified people appears to be the only answer.
- To compete in a highly competitive market such as India, you need to produce a world-class product and that cannot be done without quality workforce.
- It is quite understandable that the newly carved out State of AP will take some time to build the necessary infrastructure, skill its manpower and build the supply chain that a highly industrialised environment demands.
- But in the absence of these, such protectionist policies will only leave it industrially backward, as investors would prefer to invest elsewhere in the country.
- Its leadership position at the top of the ‘Ease of Doing Business’ ranking in the country is already at stake.
Investments at stake
- Policymakers in AP are forgetting that there is intense competition among the States in India to attract investment.
- Every State is offering incentives these days and what is tipping the scale is quality of manpower.
- AP’s policymakers have a shining example in their own State – Sri City.
- This industrial township, spread over 100 square kilometres, has investments from over 180 companies from across 27 countries.
- The brands here include the likes of Cadbury, Pepsi, Isuzu, Alstom and Kelloggs.
- The question they should ask themselves is that would these investments have come if the township was not located just 55 kilometres off Chennai, with a bulk of the employees travelling from the city to work there.
- At a time when the world is moving towards Industry 4.0, where technology plays a critical role, skilled manpower happens to be the key differentiator.
- Such retrograde policies will only leave the State industrially backward and widen the inequality when it comes to economic development.
Conclusion
- A better approach for the AP government would be to identify focus sectors (based on the State’s inherent strengths) for investment, unveil attractive sector-specific policies with incentives that will be too good for investors to ignore and initiate a large-scale skilling programme in consultation with the industry to skill the workers for employment in these sectors.
- Only such progressive measures will ensure that investors will flock the State, employ the locals and catalyse its rapid economic development.
- As things stand now, none of these are likely to happen.