India's Reform Journey Revisited - Bhuvana Anand, Prosperiti

What is one reform that was overlooked in 1991?

I am not enthusiastic about that question because at any given time, you can only do so many things that the politics lends itself to. The window does not allow you to do everything. On my wish list, one more thing that I would've tacked on is labor reform. It's an issue that I've thought about a lot and worried about a lot. In that, India has this massive gift of people and youth, and we've had it for a while.

We've also simultaneously put some of the most onerous labor regulations, employment regulations in the world that make it very hard to create jobs, but also to earn, to be able to take advantage of that gift of youth. For example, there are restrictions on how many hours workers can work, which means that there are restrictions on how much money workers can earn. There are restrictions on women. Women have not been allowed to work in the night shift. They're not allowed to work in so many factory processes because we were so afraid.

There are thousands of compliances, just paperwork that we've loaded onto entrepreneurs, which create a tremendous amount of fatigue and rent-seeking. We created this web of horrible labor regulation that we should have started correcting in '91 and tried to get that engine rolling even if we couldn't have corrected everything. That's my single wish item for the list.

What is one reform that India needs today?

The exact same thing. Which is, we have not solved, we have not made labor regulation less onerous. It's been 30, 35 years, and we've still not solved that problem. Correct? Now there is some conversation, and the window, the Overton window seems to have shifted where there is general recognition that, my God, this can't go on for that much longer. We've got to fix some of these things, but there are two parallel tracks on this. There is the union track, because India is a union of states, and the labor is a concurrent list subject.

That is in the form of new labor codes, which have been in suspended inanimation for the last few years. There is some cause for optimism in those codes. If and when they get passed, we might be able to at least solve some problems, do not correct for all the ills of the labor regulation, but some at least. The other track is states in the interim have also started to recognize that this is a problem we've got, and we can take advantage of competition among states. States have started to say, "Why don't I take charge and start making some of these corrections?"

That being said, it is a really fraught issue on multiple counts. There is a political issue around it because there is a strong view that labor rights are inimical to business interests. These are fundamentally opposing interests, and that rhetoric is very strong and continues to be, even though it's false. The second is the lack of knowledge and capability within the administration to be able to say, "Well, if I change this, if I make X element in the labor law more liberal, less restrictive than it is today, more flexible, what are the upside benefits that I will get from it?"

For example, how many jobs do I stand to be able to create or engender, enable? How much rent-seeking in some way can I stem back? How much income generation will happen as a result of this? How many entrepreneurs, what kind of industries will get a fillip? Therefore, what is the downstream tax benefit to the state? That kind of estimation and imagination capability is still very thin in the administration. It falls to a lot of outsiders like me, for instance, who have to step up to the breach and say, "This is a calculation. This is what your payout looks like on making what is a tough political decision happen," because there's a rainbow waiting and you just need to go towards.