Modi Must Monetise Mandate, Push State-Level Reforms

One of the hurdles for new investments for micro, small, and medium enterprises is the regulatory cholesterol detaining expansion of employment. A large chunk of this is vested in labor laws.

In 2020, the union government drafted a new code for labor laws compressing existing laws into four codes – for wages, industrial relations, social security as well as occupational safety, health, and working conditions. The promise of the code is that it compresses 44 laws and shrinks the sections from over 1,450 to 1,232. These were shared with state governments between July 2020 and November 2020.

Two years later, the center is yet to implement the code as it awaits state governments to okay and adopt the new laws. Of the 28 states, nine have finalized draft notifications – of which only three are BJP-run. The new deadline for implementation now being touted is 2023.

The first time the promise of free power to farmers was used to win an election was by the Akali Dal during the Punjab assembly polls in 1997. Since then almost every party has used public funds to harvest electoral dividends.

State power distribution companies are in a queue for a third bailout in 25 years. In December 2021, the Power Ministry informed Parliament that the cumulative losses of discoms stood at Rs 5.07 lakh crore and outstanding payments to generating companies were in excess of Rs 1.56 lakh crore. The consequences are manifest – in higher tariffs for SMEs, shops, and businesses, unreliable power, dependence on inverters across homes, and loss of global competitiveness.

The question is not whether farmers should receive free power but rather how it is managed. Technology allows for a transparent efficient mechanism to insulate the business model of power supply. First, the supply of power to farmers must be metered – that this can be done using smart metering has been validated in pilot programs. Once an average consumption per hectare is established the farmer can be paid via e-Rupi which can be deployed for a person- and purpose-specific usage. The money must either come out of the state budget or the union budget.

The discoms are verily hostage to politics and the first step must be to liberate them from the regime of free power and open up last-mile delivery to competition. The Modi Sarkar has been trying to get states on board to implement the Electricity (Amendment) Bill, 2021. BJP states can sign on to the proposal and prove their reformist credentials by adopting technology for transparency and efficiency.


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