Reform in Practice: Bhuvana Anand (Prosperiti) on India’s Working-Hours Regulations

What is one area of regulation in India that should be deregulated?

The one issue that I think India needs to deregulate with a reasonable amount of urgency is all the provisions related to working hours, meaning how people's time can be used in a factory or in a commercial arrangement. India has some of the most restrictive working time limits anywhere in the world, from how many hours at most you can spend in the factory, all the way to what kind of premium you have to pay for overtime work. On every one of these margins, we are some of the most restrictive in the world.

And so this entire package of working hour regulations, which is normal hours, rest interval limits, overtime limits, overtime premium requirements, the inability to average the number of hours over horizons of time, as well as the rest intervals and rest breaks. This entire package of things needs to be deregulated with a reasonable amount of urgency, particularly if we want to sort of catch that last bus of manufacturing that's leaving the port. And so that, I think, needs to be paid a lot of attention.

What would a more effective alternative look like?

So there are two ways of thinking about deregulation on working hour restrictions. The first is what are competitor countries doing? And the answers, you know, sort of are quite stark. There are, we can pick between, you know, sort of Western democracies where most arrangements are based on consent and based on mutual agreement between employer and employee, right? Or we can look at Southeast Asian countries where there are more liberalized hard limits in law.

Both of these options are available to us. The funny thing is India's working hour restrictions are sometimes more restrictive than even the limits that the ILO or the International Labour Organization has prescribed. And so one low, you know, sort of hanging fruit could just simply be to mimic ILO's limits, right? Even that would make us much more competitive than we are today.

I think of all things, the single largest dividend will come from reducing our overtime premium. Our overtime premium is about 2x of normal wage today. This is the highest in the world by a long shot, right? The ILO says that number should be 1.25x. And even a 1.5x would be a reasonable settlement to arrive at.

I think these are things that we should do with urgency. And these are not hard to do. Now, there is a political challenge around this, because who will bell the cat, you know, sort of the newspaper headline that will read, sarkar ne vetan ghataya, right? That is not a trivial political challenge.

That being said, I feel like we are in a good place in terms of reform momentum. And this is something that the public will understand if we say it, you know, sort of openly, if we have a frank, reasonable conversation about this, I feel like the public will rally and will understand. So it is more doable today than it was 20 years ago.

But it's also a must do today if we don't want to lose this last window of advantage that we have.