Subramanian Swamy Says The Time Is Right For Labour Reforms In India
Subramanian Swamy on Modi’s next big focus, Ram Mandir and more.
A day after the Narendra Modi-led Bharatiya Janata Party won a majority with more than 300 seats in the Lok Sabha, BJP lawmaker Subramanian Swamy said the time is ripe to introduce labour reforms in the country.
“If you want more labour-intensive technology to be used, you should enable companies to have a modified hire-and-fire system,” Swamy said in an interview with BloombergQuint. “And the modification is that if you find that somebody is not working, you can fire him and send him back home. But you must continue to send his paycheck for three years or two years—this could be negotiated—till he finds another job.”
If the person fails to find a job within two years, he or she is anyway not fit for employment, he said. This move will nudge companies to hire much more than they are currently doing, he said.
One main criticism of Prime Minister Narendra Modi in the last five years has been its failure to create jobs. While the government claims to have created lakhs of jobs, leaked government data and independent surveys point to acute shortage of employment.
Swamy said India hasn’t reached a stage to be able to provide unemployment compensation for everyone, but it’s important to work towards it. He suggested that the money spent by corporates on employees—in the form of medical, creating schools, or buses to ferry the workers from factories, or housing—should be exempt from taxes.
“This is the way we can do both—be a little strict on the discipline for labour and work towards better productivity, and at the same time win over the labour by saying these other things we are doing for you to make your life much safer,” he said.
Ram Mandir
Swamy has been a vocal supporter of a Ram temple at the disputed site in Ayodhya. The matter is still being decided in the Supreme Court, which has tried to solve the case through mediation. Will the Modi government tread cautiously on it?
Swamy said, “There’s no caution. Ram Mandir is a problem solved. After this mediation that I was also a party to as a member of the ruling party, I can tell you that we don’t have to wait for a court verdict for at all.”
The Supreme Court cannot contend the government’s takeover of the land, but can only pass a verdict on the compensation to be given to the entitled party, he said. The entire land, including the disputed land, can be handed over to the Ram Janma Bhumi Nyas Samiti or Vishwa Hindu Parishad and they can be told to start building the temple, he said.
“I am telling my government that you don't have to ask for permission. I don't know who’s silly advice it was to tell the government that you have to take permission to handover the land.”
Swamy said the government needs talk to the leaders of the Muslim community “and tell them that masjids are shifted all over in the Arab world, why can’t they be shifted in our country? We'll give you another place and build it into a township if you like. But where Ram was born, there's only one place in the whole country and we are not going to part with it and we are handing it over for building a temple.”
He expects the sensitive and controversial matter to be solved along these lines within the next six months.
Watch the full interview here.
Here is the edited transcript of the interview:
What do you think worked in BJP’s favour this time? Themagnitude of the victory has been much higher than anticipated.
Yes, it was inevitable. This kind of a tsunami, as it is being called,because this time the elections where much more on the emotional aspect of national security, fighting corruption, national outlook for the all the same, the behavior with Pakistan, they killed our jawans. It was instantaneous and then the aeroplanes went in and bombed inside Pakistan. These all are new things. I think all these things put together, there was a feeling of pride that was one aspect. The second is between 2014 and 2019, these five years a new generation also joined the voter list. And this younger generation is getting to be, with each succeeding generation, more and more nationalistic and that we are watching on social media also. And so, they gave the, cherry on the pie so to speak, they became a sheet anchor for us. They were catalyst, they were able to persuade their mother, father, brother, sister. So, there were a lot of invisible factors that were missed out by normal, usual media and that’s why they got it wrong for quite a long time till the exit poll came. And the final result is a chemistry that has worked and not mathematics.
What are the key economic priorities that this new government needs to be addressing now?
The most important thing that needs to be done is to get the economy back on the rails. It literally derailed in these last five years. It will be to give an emotional fillip therefore we have to see what really would appeal—raising interest rates is an example for fixed deposits that would give a big boost. People have been reducing their savings because they are not able to meet their commitments. We have to encourage them to get back to savings more. Abolishing of income tax, that for a long time I have been advocating, that will be a huge psychological boost. Because it is a harassment of taxes, our party got bad name, government got bad name because of what they called as “tax terrorism”.
Third thing is that to generate more capital formation, we have to reduce interest rates on loans and the prime lending rate must go down to 9 or less than 9 percent. All these are doable, and this is how you start. Then I think the agricultural sector, we have to now start the long-term process of making them as exporters because the cost of agricultural products is cheapest in the world. But we are not able to package it, we are not able to send it to the ports on time. There is turnaround for ships is taking too long. And we should have our embassies working to market these things. So, I think these are some of the things we have to start with. In the longer run we have to increase the rate of investments to the point where after some mode where capital efficiency in the use of capital we should be able to generate 10 percent growth rate. Seven percent growth rates will not solve your unemployment problems, you need a 10 percent growth rate. For that we need to now motivate people to not only save but invest. I will not give too much importance to money from abroad, but I would place much more emphasis that the Indians should get back what they are known to be doing for centuries that is save and save and save.
What are implications of the U.S.-China trade war on India?
I think I have been advocating for some time, some of my textbooks which have been prescribed in universities that China’s growth model was essentially at the core importing semi-processed good from East Asia, adding value and then reexporting it to Europe and America. And the East Asian countries had stopped being able to directly export to Europe and America because their labour cost had gone up substantially. China’s manufacturing sector is actually very little indigenous, its mostly foreign financed or joint ventures or Chinese companies adding value.
So, I thought India should be more concerned not with the U.S.-Chinese snafu or their conflict but much more to persuade East Asian countries to come and do the processing in India. And they would prefer it because we got strong intellectual property regime. We also have courts and contracts cannot be cancelled at a moment’s notice. So, they would like to come but our infrastructure is awful. In 5 years, Nitin Gadkari did a lot of good work but still in term of smooth movements within that infrastructure that must be aimed at. The day we do that that’s the end of China, because China is still not able to rebalance its economy and still lies on this Foreign exchange inflows that comes between the cost they pay to the semi processed goods and the revenue they get by selling it abroad.
One didn’t see in the previous term, the economic vision, would you be willing to take up the job in government this time?
I don’t want to say that I am willing. As a member of the party I will accept anything they give but unless they ask me to travel abroad. Like Narendra Modi asked me to become chair president of the BRICS Bank in Shanghai, I said I just left America and come here to settle in India, and I am not going to go about it. So, anything that they give me which uses my expertise, I certainly would be very happy and willing, but I am not going to ask for it.
Do you think the time has come for India to look at second generation of reforms on areas like labour?
Yes, it is. The more important thing is that if you want to have labour intensive technology to be used, so far people have been discouraged in the industrial world because these labour unions have been a headache. Over the years it has become easier. But you should really enable the companies to be able to have a modified firing system, a hire-fire system and the modification is that, if you find that somebody is not working you can fire him and send him home but you must continue to send his paycheck for 3 years or 2 years till he finds another job. And if they can’t find another job in two years then he is not fit to be employed anyway anywhere.
So, if you do that, I think people, companies will employ much more people than they are presently doing so. That kind of labour reform, I don’t think we have yet reached the situation where we can give unemployment compensation and things like that for everybody, but we must begin to start moving in that direction.I would say perhaps the tax advantages for the corporate sector should be for whatever they build in terms of schools, buses to ferry the workers to the factory, housing so on. All these things should be liberally, the total amount that the company spend for their employees on medical and all, these should be made tax exempt. This is the way I think we can do both—stick to discipline on labour and work towards better productivity and at the same time win over the labours saying that these are the things we are doing for you which makes your life safer.
This massive mandate of BJP in Karnataka also puts pressure on Kumaraswamy government there, do you think it will survive?
It shouldn’t survive. See it was wrong in the first place because we were the single largest party and we were 4 or 5 short of the majority. This matter went to the Supreme Court and we had an awful lawyer who said that, he was ready for floor test within 24 hours. The governor had given you 15 days and we would have got the majority. But there was some undercurrent, perhaps somebody didn’t want Yedyurappa to be CM, I don’t know what the problem was but it was a very bad thing to have been done. And in that short period, the people who are, I am not going to talk about breaking Congress or anything, within the framework of the defection law, I think the JDS would have been forced to come with us and we could have had them as partners in the Chief Ministership. But we missed that chance. Now it’s quite clear that BJP is solid like a rock while these people are fighting like cats and dogs as they say, and it’s only the matter of time, it will not even take more than a week before this government falls and our party is called to form an alternative government.
On matters like Ram Mandir, Article 370. Do you think the Modi administration would move forward or it will exercise caution?
No, there is no caution. Ram mandir is problem solved after this mediation proceedings in which I was also a party, I had to make a presentation. We as a ruling party will tell you that we don’t have to wait for a court verdict at all. Narsimha Rao’s government has nationalised the entire land and he used the act which he then modified separate act, which was zamindari system, where zamindars where going to court. So, to prevent the court the Article 300A was introduced in our constitution which said that government has eminent domain, means it can nationalise any land of anybody in the public interest. So, in the public interest he had nationalised the entire land including that disputed area. So, all that the Supreme Court can do in such a matter, if you nationalise the land, compensation should be adequately paid and if they cannot pay then they can come to court. But the court cannot challenge the taking over the land by the government. So, the government has the 67.07 acres of the land and the disputed area is only 0.3 acres and I am telling my government that you don’t have to ask for the permission.
I don’t know whose silly advice it was to tell the government to take the permission. This entire land including the disputed land can be handed to Ram Janma Bhoomi Nyay Samiti or Vishwa Hindu Parishad’s body for that. It is that simple. Start building the temple and inform the Supreme Court in the appeals that are pending before you that we will give compensation to that party who you say has the title. They will not get the land because the land belongs to the government now and therefore the matter is solved. And the government has to talk to the various Muslims leaders and tell them that Masjid’s are shifted all over the Arab world why they can’t be shifted in our country. We will give you another place and build it into a township if you like, but where Ram was born there is only on place in the country therefore, we are not going to part with it and we are handing it to building a temple. The matter can be solved along these lines in next six months I believe