Reforms in Labour Codes and Political Economy
Economic policymakers in the Union government have recently notified the four Labour Codes, which were passed by Parliament over five years ago. These Codes simplify and rationalize 29 existing labour laws. This move reflects a shift in the government's approach towards economic reforms, becoming more reform-friendly. The change began after the government’s third term commenced in June 2024, with decisions made over the past 17 months becoming more apparent.
Attempts at Civil Service Reforms
In a bid to fill senior positions in Union ministries, the government initially proposed a lateral-entry scheme, inviting applications for 45 posts. However, this initiative faced political opposition and was subsequently withdrawn, signaling reluctance to upset civil servants with reforms.
Introduction of Unified Pension Scheme (UPS)
- The Union Cabinet approved the Unified Pension Scheme (UPS) as an alternative to the National Pension System (NPS).
- UPS provides a guaranteed pension of 50% of the average monthly salary in the last year of service, with modified eligibility terms to manage fiscal impact.
- The decision saw support from various political quarters and faced minimal political resistance.
- The option to switch from NPS to UPS was extended, though most government employees chose to remain with NPS.
Deferment of Protectionist Schemes
The government has deferred the implementation of protectionist schemes, including import licensing curbs for electronic devices. Despite not being enforced yet, their existence remains concerning.
Revised Approach to Quality Control Orders (QCOs)
- The government had issued around 720 QCOs from 2016 to 2025, initially intended to ensure quality standards of imports.
- QCOs inadvertently became non-tariff barriers, undermining domestic competitiveness.
- A high-level committee recommended rolling back 208 QCOs, particularly those impacting raw materials and intermediate products, with 69 already suspended.
Taxation and Regulatory Reforms
- The taxation system has become more accommodating, with income up to ₹12 lakh becoming effectively tax-free.
- GST rationalization and easier taxpayer registration have reduced the burden on individuals and businesses.
- Committees are working to simplify rules, emphasizing stakeholder engagement through consultations.
In conclusion, these recent reforms and policy adjustments demonstrate a strategic shift in the government's approach to economic management, focusing on stakeholder engagement and easing business operations, likely leading to further reforms.
