REPORT OF THE NATIONAL COMMISSION ON LABOUR GOVERNMENT OF INDIA MINISTRY OF LABOUR AND EMPLOYMENT AND REHABILITATION 1969
Contents
Main Conclusions and RecommendationsChapter I: Introduction
Chapter II: Framework of Indian Society
Chapter III: Economic Trends since Independence
Chapter IV: Indian Workers-Adaptation to Change
Chapter V: Perspective for Development
Chapter VI: Our Approach
Chapter VII: Recruitment - Agencies and Practices
Chapter VIII: Training, Induction and Workers' Education
Chapter IX: Working Conditions
Chapter X: Labour Welfare - I
Chapter XI: Labour Welfare - II
Chapter XII: Housing
Chapter XIII: Social Security
Chapter XIV: Wages and Earnings - A Factual Review
Chapter XV: Wage Policy - Assessment and Issue
Chapter XVI: Minimum Wages
Chapter XVII: Incentives and Bonus
Chapter XVIII: Rationalisation and Automation
Chapter XIX: Machinery for Wage Fixation/ Protection
Chapter XX: Workers' Organisations
Chapter XXI: Employers' Organisations
Chapter XXII: State and Industrial Relations
Chapter XXIII: Industrial Relations - I
Chapter XXIV: Industrial Relations - II
Chapter XXV: Labour in Public Sector
Chapter XXVI: Government (Industrial) Employees
Chapter XXVII: Employment of Women and Children
Chapter XXVIII: Agricultural Labour
Chapter XXIX: Unorganised Labour
Chapter XXX: Labour Administration
Chapter XXXI: Labour Statistics, Research and Intelligence
Chapter XXXII: India and the ILO
Chapter XXXIII: Legislative Amendments
Acknowledgements
Minute of Dissent
Explanatory Notes
Appendix
Index
Main Conclusions and Recommendations
1.1INDIAN WORKER—ADAPTATION TO CHANGE
(Recommendations which are not unanimous or which are subject to a minute of dissent are marked with an asterisk (*)).
1.Over the last twenty years, the trend towards stabilisation of industrial labour has strengthened. A worker today is far more urban in taste and outlook than his predecessor. The idyllic notion of a "village nexus" has receded to the background. 4.10
2. A vast majority of the workers in cities are committed to factory employment. In older industries a second or even third generation of workers has emerged. A self-generating working class with its roots in the industrial environment in which a worker is born and bred is growing in strength. 4.11
3. The industrial worker of today has acquired a dignity not known to his predecessor. He has now a personality of his own. He shares the benefits, albeit meagre, which a welfare state with a vast population and inadequate resources can at present offer. 4.12
4. With the changing industrial landscape, growth of new industrial townships and dispersal of activity, a process of industrial 'culturalization' of the working class has set in. 4.13
5. The process of urbanisation has led to difficulties in four areas:
(a) housing,
(b) transport,
(c) civic amenities and
(d) distribution controls, all these having affected workers' attitudes. 4.18
6. A worker is now conscious that education is essential for improved earnings. He is keen about self-education at adult literacy centres. He is even more keen about the education of his children and their future. The role of political parties and trade unions in making workers aware about their surroundings has been significant. 4.27
7. The handling of labour-management relations is getting increasingly professionalised, though such professional handling by itself is not adequate. 4.33
8. Disputes between employers and workers have been taking a legalistic turn, mainly because of the emphasis on adjudication through industrial tribunals and courts. Litigious attitude on the part of both employers and workers creates situations in which the employers gain because implementation of awards is sometimes postponed, and lose because the unsettled issues pending before tribunals/courts also unsettle workers and introduce inhibitions in improving production. 4.34
9. With rapid growth of small industries and the difficulty in organising labour, many unfair labour practices to the disadvantage of labour have thrived. 4.38
10. Over the years, the profile of agricultural labour has perceptibly changed. He is politically conscious. His aspirations are higher than before; he is responsive to the opportunities for change and development. Attachment to land and the rural way of life, so common with the village elders, do not hold the same fascination for the village youth. There is some restlessness, among those who aspire to migrate, about the slow pace of development of non- agricultural work.
4.41 & 4.42 RECRUITMENT-AGENCIES & PRACTICES Recruitment Methods
11. On the whole, impersonal methods of recruitment are gradually gaining ground in the organised sector. Recruitment through contractors still operates, though on a reduced scale, in mines and plantations. The exploitative character of such agencies of supply is on the decline because of the spread of awareness among those seeking employment. 7.29
NOTE : Figures at the end of each recommendation indicate paragraph numbers in the body of the Report. 1.2
12. (a) Over the last twenty years, the National Employment Service has played a useful role in bringing together employers and work-seekers.
(b) With the development of related programmes like collection and dissemination of employment market information, employment counseling and vocational guidance, occupational and job research, and preparation and application of aptitude tests, the National Employment Service has developed into a multi- functional placement agency,
(c) The National Employment Service should be extended in a phased manner over the next ten years to all towns with a labour force of ten thousand and more so that rural workers may take increasing advantage of this service. 7.30 & 7.32
13. (a) The National Employment Service has to be a free and voluntary organisation. Employers should not be required to pay for the assistance given to them in the matter of recruitment. Expenditure on items of work which are an integral part of the Service should be a charge on the Government.
(b) Every effort should be made to abolish the operation of unauthorised agencies in recruiting labour from eastern U.P. for mines in West Bengal, Bihar, Orissa, Andhra Pradesh and Madhya Pradesh. 7.24 & 7.26 Employment Service Administration
14. Uniform standards, policies and procedures will be needed in all States to enable the National Employment Service to work as a well-knit and coordinated organisation throughout the country. Programmes for
(i) occupational research,
(ii) vocational guidance and employment market information,
(iii) special surveys and studies, and
(iv) forecasting of manpower supply and demand, should be speeded up. 7.34
15. The National Employment Service has to be strengthened to help efficient utilisation of manpower and particularly critical skills required for planned economic growth. The national character of the service should be fostered and strengthened for this purpose. 7.35
16. Provision of gainful employment to physically handicapped/disabled persons should form part of an enlightened social policy. To the extent possible, employers should accept it as a matter of industrial ethics to rehabilitate persons disabled because of industrial accidents. Rehabilitation Homes for the physically handicapped should be provided jointly by employers and Government. 7.37 & 7.38 "Sons of the Soil"
17. A solution to the problem of "sons of the soil" has to be sought in terms of the primacy of common citizenship, geographic mobility and economic feasibility of locating industrial units on the one hand and local aspirations on the other. 7.50
18. Young persons from families whose lands are acquired for industrial use should be provided training opportunities for employments likely to be created in new units set up on these lands. 7.52
19. To remove unjustified apprehension among local candidates, the following steps should be taken to supervise implementation of the directive of the Government of India on recruitment in public sector projects :
(i) While recruiting unskilled employees, first preference should be given to persons displaced from the areas acquired for the project; next should be preferred those who have been living within the same vicinity.
(ii) Selection of persons to posts in lower scales should not be left entirely to the head of the unit. It should be through a recruitment committee with a nominee of the Government of the State within which the unit is located as a member of the committee.
(iii) In the case of middle-level technicians where recruitment has to be on an all- India basis, a member of the State Public Service Commission should be associated in making selection in addition to the State Government Official on the Board of Directors.
(iv) Apart from the report sent to the concerned Ministry at the Centre, the undertaking should send a statement to the State Government at regular intervals, preferably every quarter, about the latest employment and recruitment position. 7.53
20. The steps recommended above should apply equally to recruitment in the private sector, though the mechanism to regulate recruitment in the private sector will necessarily differ from that in the public sector. 7.54
1.3 TRAINING, INDUCTION AND WORKERS' EDUCATION Training
21. (a) The Training and Employment Organisations in the State should be under the State Labour Department, (b) There should be uniform minimum qualifications and comparable enhancement prospects for instructional staff and uniform vocational standards of training in all States, (c) A sustained publicity of the programmes and achievements of the employment and training services should be organised in order to convey their full importance to employers/ trainees and the public. 8.25, 8.26 & 8.28 22. (a) Both shortages and surpluses reflected in the employment exchange statistics are somewhat unreal in certain trades/areas. Where shortages are reported, the employer does not necessarily accept a trained worker ; a reported surplus is, at times, due to lack of inclination on the part of a trained worker to move out. (b) The National Classification of Occupations of the Directorate-General of Employment and Training should be put on a basis which will help a better assessment of supply from training institutes and demand from employers, (c) A closer liaison than at present between employers' organisations and persons who represent them on trade committees of the National Council for Training in Vocational Trades is required to make technical training need-based. 8.14 & 8.18 23. The main burden of training of workers should necessarily fall upon industry. The States should supplement rather than supplant the activities of employers in this matter. It should step in only in such fields and areas where employers cannot undertake training programmes. The State Apprenticeship Adviser should be appointed as the Authority for registering the training schemes organised by employers. 8.21 & 8.24 24. Introduction of new machines renders traditional skills obsolete and possibly creates shortages in new ones. Facilities should be provided by the plant authority for retraining of employees. A system of granting study leave to a worker to equip himself for senior levels of responsibility should be introduced ; this will facilitate internal promotion and make for better industrial relations. 8.16 & 8.19 Induction 25. It will add to the satisfaction of a new worker if relevant facts about his place of work, management and its policies are communicated to him through the management itself. 8.33 Promotion 26. (a) Where promotions are not based on known standards, the management should evolve a promotion policy in consultation with the recognised union where it exists, (b) As a general rule, particularly among the operative and clerical categories in the lower rungs, seniority should be the basis for promotion. In respect of middle-management, technical, supervisory and administrative personnel, seniority-cum-merit should be the criterion. For higher managerial, technical and administrative positions, merit alone should be the guiding factor. 8.36 & 8.37 Workers' Education
27. (a) The present scheme of workers' education, like any other scheme, is not altogether per fect and there is need for improving and strengthening it.
(b) The programme for production of literature by the Central Board of Workers' Education should be not only intensified but improved.
(c) As an aid to the workers' education programme the Government should undertake an extensive adult literacy programme for eradicating illiteracy among workers. 8.48 & 8.52 28.
(a) The Central Board of Worker's Education should, as early as possible, allow the programme of workers' education to be formulated and implemented by trade unions,
(b) For this purpose, current procedures and rules for giving aid to unions for workers' education should be simplified and adapted to the structure and needs of unions consistent with accountability of public funds,
(c) Employers should cooperate with unions by giving workers such facilities as are made available by them for the programme under the Board. 8.55 29. National trade union centres should draw up a suitable programme for union officials and union organisers in collaboration with universities and research institutions. It should cover practical field work and education in the fundamentals of trade unionism, industrial relations, labour laws and evolution of the country's economy. The Government should encourage universities to provide extension courses for the benefit of union leaders and organisers. 8.56
1.4 30. (a) The Board of Governors of the Central Board of Workers' Education should be presided over by a nominee of the trade unions. The Director of the Scheme should also be a trade union nominee, (b) The Central Board should have on it a representative of the public sector; in granting this representation, the present arrangement by which the largest single representation on the Board is ensured for workers should not be disturbed, (c) Subject to the changes in the constitution and functions of the Board as proposed, the Board should be put on a continuing basis in respect of its tenure. 8.57 & 8.59 WORKING CONDITIONS Safety 31. (a) Statutory provisions about safety and safety equipment are adequate. Effective enforcement is what is needed, (b) A safety officer should be appointed in all factories employing 1,000 or more workers or where the manufacturing process Involves special industrial hazards, (c) A standing committee consisting of users of machines, machine manufacturers and safety experts should be set up to introduce built-in safety features at the stage of manufacture of equipment and machinery, (d) States which have not yet formed safety councils or introduced safety awards should do so. Safety councils should be set up for all major industries and for those involving hazardous occupations. 9.24(i) & (x);9.26(i) & 9.48 32. Employers' organisations and trade unions should take more interest in safety promotion. Safety Committees should be set up in every factory employing 100 or more workers. The factory inspectorate should advise and assist employers in drawing up induction and training programmes in safety. The training programme should cover managerial personnel, supervisors and workers. Periodic training courses in accident prevention designed for safety officers, supervisors and middle management should be organised by the factory inspectorates. 9.24(v), (viii) & (ix); 9.25 (i) & (iii) 33. The workers should be compensated for loss of wages suffered by them during closures of mines on account of violation of safety standards. 9.27 34. A fully qualified Safety Officer should be appointed at each port. The Dock Workers' (Safety, Health and Welfare) Scheme, 1961 and the Indian Dock Labourers' Regulations, 1948 should be merged into one enactment covering all workers. 9.28 (i) & (iii) Inspectorate 35. (a) The frequency of inspection of factories has not been adequate. About a fifth of the units go uninspected, (b) The 'norm' of 150 factories per inspector for determining the strength of the inspectorate should be re-examined, (c) The factory inspectorate requires diversification with staff drawn from different academic disciplines. For routine functions and follow-up, it should be possible to use persons with non-engineering qualifications, (d) The inspection and registration fees should be fully used by the State Governments for expanding the inspectorate and making it more efficient. 9.17, 9.10, 9.11 & 9.14 Hours of Work 36. (a) The current requirements of the economy do not permit immediate reduction in working hours. As conditions improve, working hours should be brought down to 40 a week but in two stages; in the first they "should be brought down to 45. (b) Working hours during the night shift should be reduced. A credit of ten minutes should be given for each hour of work in the night shift. Six hours' work should thus entitle a worker to extra payment for one hour. (c) It is not necessary to relax restrictions on the duration or nature of overtime work. 9.36 & 9.40 37. The Plantations Labour Act, 1951 should be amended to reduce the prescribed hours of work from 54 to 48,
9.38 38. The Railway Administration should examine once in five years all cases of classification of railway servants under the Hours of Employment Rules in Railways. 9.39 Holidays 39. Uniformity in the number of paid national and festival holidays is desirable. Every employee should be allowed in a calendar year 3 national and 5 festival holidays. 9 43 40. The penal provisions should be made stringent so that their deterrent effect is felt. Serious offences should be made cognizable. 9.22 LABOUR WELFARE 41. The concept of labour welfare is dynamic; its content will be different from region to region even within a country. 10.4
1.5 42. Contract labour should be entitled to use the welfare facilities which are meant for direct workers under the existing legislation. The standard of facilities for direct workers should not suffer on this account. 10.31 43. Inspection of welfare aspects of the law docs not require any technical knowledge or engineering qualifications. This can be best handled with the assistance of the recognised union or with the help of a works committee where it operates. 10.31 Welfare Officers 44. The welfare officer has to be a maintenance engineer on the human side; he does not have job satisfaction at present, since welfare is not accorded adequate importance in an industrial unit. His presence is treated more as a statutory requirement to be tolerated. The officer should not be made to handle, on behalf of management, disputes between management and workers. 10.23 & 10.40 Creches 45. (a) The standard of creches in a majority of factories and mines needs to be improved, (b) The limit of 50 women workers, which makes the provision of creche obligatory in factories and plantations, should be brought down. The limit should be prescribed taking into account local considerations or on the basis of 20 eligible children of working mothers who are to avail of this facility. Children of women workers employed by con tractors should also be covered by this facility. 10.32 & 10.33 Canteens 46. (a) Even after years of development, canteen and rest shelters have not received adequate attention from management, (b) The present employment limit for making the employer set up a canteen compulsorily should be brought down to 200 in units where there is an established demand for a canteen from a majority of workers. (c) It should be automatically obligatory on the employer to provide a canteen whenever the employment exceeds the prescribed limit. The need for notifying the establishment should be done away with. (d) Establishments which operate over a wide area should consider the running of a mobile canteen, (e) Canteens should provide at least one balanced meal a day. 10.25 & 10.35 47. (a) Workers should preferably run the canteens themselves on a cooperative basis. In any case, they should be associated with canteen management, (b) Wherever canteens are run on a cooperative basis, employers should give subsidies in the shape of free accommodation, fuel and light, utensils and furniture. 10.35 48. Habitual non-compliance with statutory provisions regarding sanitation, first-aid boxes, washing and bathing facilities, facilities for storing and drying clothes, rest shelters, drinking water and seating facilities should attract penalties. 10.36 Factories 49. (a) Effective steps should be taken for periodic medical examination of factory workers so that timely diagnosis and treatment of occupational diseases will be possible. This should be a charge on the employer ; in respect of non-occupational diseases, medical examination and treatment should be the responsibility of the Employees' State Insurance Corporation, (b) Standards of schooling facilities available in the welfare centres run by Government should be improved and new schools set up. Employers should provide scholarships to deserving children of their workers. 11.19 Mines
50. (a) A General Miners' Welfare Fund should be created to undertake welfare activities in medical, educational and recreational fields in respect of workers in all mines, (b) Finances for the Fund should be arranged by the levy of a cess based on the prices which the minerals fetch, (c) What has been said in (b) above should not delay the setting up of welfare funds for certain minerals, the proposals for which are under examination of Government. 11.22 & 11.23 51. Periodic medical check-up of coal miners should be a part of the activity of the Coal Mines Labour Welfare Fund. Funds should be allotted more liberally for acquiring essential apparatus for detecting and curing diseases. 11.21 52. There should be no discrimination in welfare facilities between persons recruited through the Gorakhpur Labour Organisation and those selected locally. Also, workers recruited through the GLO should have all the privileges which workers selected through other agencies have. 7.25 & 11.24
1.6 Plantations 53. (a) The Plantations Labour Act, 1951 should be extended in a phased manner to cover as many plantations as possible, (b) Disparities exist, even within the same region, in the standard of medical facilities to plantation workers, (c) Even where detailed rules under the Plantations Labour Act, 1951 have been laid down, non observance of the rules is a matter of complaint. (d) To ensure that hospitals in plantation areas are properly equipped and disparities in standards of medical facilities are reduced, the State Governments should prescribe a list of drugs, medicines and equipment for the hospitals, (e) Suitable arrangements need to be made for detection and treatment of occupational diseases among plantation workers, (f) Priority should also be given to family planning programmes, (g) State Governments should ensure that facilities for education of children of plantation workers are provided by the employers. 10.37, 11.11(a) & 11.25 Ports and Docks 54. (a) Welfare facilities provided under the Dock Workers' (Safety, Health and Welfare) Scheme, 1961 should be strictly enforced by the Port Authorities and the Dock Labour Boards. These facilities should be extended to casual and contract workers, (b) Welfare activities undertaken by the Port Trust Employees' Welfare Fund should also be extended to cover casual and contract workers, (c) Sufficient financial powers should be delegated to the management of canteens in Ports and Docks to ensure their smooth running, (d) Canteen facilities should be provided by the Port Authorities and Dock Labour Boards to night shift workers and workers who have to perform duties mid-stream, (e) Launches should be provided to port workers who are required to work mid-stream, (f) Port authorities and Dock Labour Boards should either open schools or arrange adequate transport for workers' children where schooling is not available within a convenient distance of the housing colony. 10.38, 11.26 & 11.29 Road Transport 55. Government should persuade employers to provide jointly basic amenities to transport workers, such as canteens, and rest shelters, at places where their headquarters are located. 10.39 Adult Education 56. Special efforts are required to be taken by the State to remove illiteracy among workers in plantations and mines. 11.30 Family Planning 57. (a) While many employers voluntarily provide additional incentives to workers to promote family planning, there is need for other employers to follow this example, (b) Financial assistance provided under the schemes for promoting family planning should become available to hospitals run by the employers, (c) Employers' and workers' organisations doing family planning work should be eligible to receive direct assistance from the Government in the same manner as other voluntary organisations. 11.31 Co-operatives Stores/Credit Societies 58. (a) Government should start fair price shops. Setting up of cooperative shops should be encouraged. Accommodation should be given by the employer, (b) In the initial stages, employers should give financial assistance to cooperative credit societies. 11.32 & 11.33 Labour Welfare Boards 59. (a) Constitution of tripartite and autonomous Statutory Labour Welfare Boards, as in some States, has resulted in efficient management of welfare centres and in workers taking adequate interest in the activities of such centres, (b) Similar Boards should be set up elsewhere, (c) Trade unions doing approved welfare work should be given subsidies by the Board. 11.27 & 11.34
Transport to and from the Place of Work 60. (a) The State and the local bodies should improve the local transport services to enable the worker to reach his place of work in time. (b) Special transport services should be arranged for the convenience of night shift workers, (c) Working hours in different units situated in major industrial centres like Bombay and Calcutta should be suitably staggered to enable the State or the local body to provide transport services. 11.29 & 12.62 HOUSING 61. Housing for industrial workers requires on the one hand the resources of the employer who wants to use them for more production and, on the other, the resources of the State where considerations of equity make it difficult for industrial housing to secure adequate priority. It is necessary, for progress in this matter, that Government should take the responsibility with
1.7 assistance from employers. Also, higher priority should be given to housing in the country's plans. 12.1, 12.47 & 12.48 Provision of Land 62. The State Governments and local authorities should undertake the responsibility for speedy development of land for housing and make it available in a large measure to approved construction agencies at economic cost. Effective coordination to control all land development, town planning and house building activities at the State level is necessary. 12.56 & 12.57 Housing Boards 63. (a) Housing Boards should be set up in States where they do not exist. The Central Government should continue to finance these Boards as at present, but on a much larger scale. (b) A Central Housing Board should also be set up to coordinate the activities of the State Boards, (c) All these Boards should be broad-based in their composition. They should represent a cross-section of the community, including labour, (d) Housing Boards should continue charging the rent at the present scale i.e., about 7 1/2 per cent of the cost but minus the subsidy. (e) The tenants in the tenements constructed by the Boards should be encouraged to buy over houses on hire-purchase system so that capital is recouped and becomes available for new construction. 12.52 to 12.55 & 12.60 Housing Cooperatives 64. The State should encourage the development of Cooperative Housing Societies among industrial workers. Both Government and the employers should advance loans to the cooperative societies or their members at concessional rate of interest. 12.58 & 12.59 Urban Housing 65. (a) The existing Subsidised Industrial Housing Schemes should continue, though its progress in the last fifteen years has not been satisfactory, (b) Adequate fiscal and monetary incentives should be provided to employers to encourage them to build houses for their employees. (c) Incentives for workers' housing by employers should be so designed as to keep rents within a range of 10 per cent of the workers' earnings. 12.50 & 12.60 66. There should be no extension of the area of legal compulsion on employers in the matter of housing beyond what exists today. However where legal compulsion already exists, as in the mining industry in Bihar and Orissa, similar compulsion should be extended to the same industry in other States also. 12.46 & 12.64 Housing in Mines 67. Housing activities of the Coal Mines Labour Welfare Fund Organisation may have to be supplemented by those of State Housing Boards or local bodies. The proposed General Miners' Welfare Fund should offer assistance to employers in the shape of subsidy for housing. 12.63 & 12.64 Housing in Plantations 68. The Plantations Labour Act. 1951 should be amended suitably so as to provide houses for such plantation workers who do not reside within 5 kilometers from the periphery of the estate but who wish to be accommodated on the estate. 12.65 Rural Housing 69. The existing housing schemes for backward and depressed classes, whether in rural or urban areas, should continue and should be implemented expeditiously. 12.66 SOCIAL SECURITY
Workmen's Compensation 70. All workmen, including supervisors employed in the occupations covered under the Workmen's Compensation Act, 1923, should be eligible for compensation for work injury. Wage limit for eligibility should be removed. 13.22 71. A scheme of Central Fund for Workmen's Compensation should be evolved. All employers who are subject to the Workmen's Compensation Act should pay to this fund a percentage of total wage as monthly contributions to cover the cost of the benefit and of administration. The fund should be controlled by the Employees' State Insurance Corporation. Periodic cash payments may be made to injured workers and their dependents by the Corporation through its local offices in the same way as payments are made at present for various benefits under the ESI Scheme. Medical care to injured workers should be provided by the Corporation. A similar
1.8 arrangement in respect of mines may be made by the Welfare Commissioners who control various welfare funds for coal, mica and iron ore mines. 13.24 72. (a) Under the present conditions, while an able-bodied worker can claim and obtain retrenchment compensation for being surplus, an injured or disabled workman is thrown out without adequate payment because accident or disease has incapacitated him. This legal anomaly requires to be removed, (b) A worker should be entitled to higher compensation for disablement resulting from industrial accidents. It should be in the form of subsistence allowance in cases where the worker remains unemployed because of the disablement. 13.25 Maternity Benefit 73. A scheme of Central Fund may be evolved for maternity benefit on the lines suggested for workmen's compensation. Pending the creation of this Fund, the Maternity Benefit Act, 1961 should be adopted in all States as early as possible. 13.26 (iii) Employees' State Insurance Scheme 74. The recommendations made by the ESIC Review Committee should be implemented expeditiously. 13.43 75. Full-fledged medical colleges should be started at places where there are large and well- equipped ESI hospitals, either directly by the ESI Corporation or by the State with help from the Corporation. In case the Corporation contributes financially to medical training, the trainees should be under an obligation to serve the ESI Scheme for a specified period which should not be less than 5 years after achieving full qualifications. The ESI hospitals should also be utilised for the training of nurses and other para-medical staff. 13.45 76. Surplus beds, if any, in ESI hospitals may be made available for the use of the general public, on payment by the State Governments. 13.46 77. The wage limit for exemption from payment of employees' contribution should be raised to Rs. 4 per day. 13.45 78. A scheme of 'no-claim bonus' for insured persons who do not claim any benefit during a year should be evolved. 13.50 79. The constitution of regional boards should be amended for giving increased representation to employers and employees and for nomination by the ESI Corporation of Chairmen of the Boards by rotation. The Boards should be given adequate powers to enable them to exercise effective control on the working of the scheme in the respective regions. 13.51 80. The ESI Corporation should make a suitable contribution to the National Safety Council as part of its programme of integrated preventive and curative services. 13.52 Provident Funds 81. The Act at present does not apply to establishments employing between 10-20 persons. It should be extended to these establishments and the minimum rate of contribution therein fixed at 6 1/4 per cent. 13.60 *82. (a) Wherever the present rate of contribution is 6 1/4 per cent, it should be raised to 8 per cent; and where the existing rate of contribution is 8 per cent, it should be raised to 10 per cent. (b) Conversion of a part of provident fund into retirement-cum-family pension is desirable. In cases where the rate of contribution is raised to 10 per cent from employers and employees, a
portion of the contribution should be converted into pension. Pensionary benefits should be worked out on the basis of 4 per cent to start with; the remaining 16 per cent should be paid back as provident fund accumulations. 13.60 & 13.62 83. Power should be vested in the Provident Fund Commissioners and other officers of the Organisation to sanction prosecutions and issue certificates for the recovery of provident fund dues through the Collectors as arrears of land revenue. Penalties for defaults in payment of P. F. dues should be made more stringent. Defaults should be made cognizable under the I.P.C. Arrears of provident fund should be made the 'first charge' on the assets of an establishment/factory at the time it is wound up. 13.60 84. The provident fund accumulations should be invested in securities yielding higher interest as far as possible consistent with the security and
1.9 safety of funds, to enable the members to get a higher rate of interest. 13.61 Lay-off and Retrenchment Compensation 85. A long-term solution for the contingency of unemployment lies in adopting a scheme of unemployment insurance for all employed per sons. The present provisions for retrenchment and lay-off compensation should continue during the transition period. 13.66 (iii) The Dock Workers (Regulation of Employment) Act, 1948 86. A comprehensive statute should be enacted bringing together the various provisions of the Indian Dock Labourers Regulation, 1948 and the Dock Workers (Safety, Health and Welfare) Scheme, 1961 for safety, health and welfare of dock workers. The definition of 'dock worker' in Dock Workers (Regulation of Employment) Act, 1948 should be amended with a view to making it more explicit and comprehensive. 13.67 (vi) & 9.28 (iii) Integrated Social Security 87. (a) The aim should be to work gradually towards a comprehensive social security plan by pooling all the social security collections into a single fund from which different agencies can draw upon for disbursing benefits according to needs, (b) It should be possible over the next few years to evolve an integrated social security scheme which will, with some marginal addition to the current rate of contribution, take care of certain risks not covered at present. This will be limited to the benefits of (i) provident fund and retirement/family pension, and (ii) unemployment insurance. 13.72 & 13.75 WAGES AND EARNINGS A Factual Review 88. Subject to the limitations of statistics of wages and earnings, it would appear that among the industrial workers the maximum gain in real wages in the last twenty years was secured by coal miners. Plantation workers also gained, though not to the same extent. Workers in mines other than coal, factory workers and railway employees followed in that order. Bank employees among the 'white collar' workers secured better scales of pay in the latter part of the period. 14.37 89. (a) Arrangements for standardisation of occupational nomenclature and a periodic wage census should be made. (b) Steps should, therefore, be taken, wherever necessary, to standardise job classifications and reduce differentials to suitable limits on a scientific basis. 14.40 & 15.31 WAGE POLICY—ASSESSMENT AND ISSUES 90. Developments in the field of wage/salary structure in Government influence the wage fixing authorities in the industrial sector and vice versa. It is possible that this aspect of inter relationship will continue to have an impact on any policy leading to remuneration for work. 15.9 91. Increases in money wages of industrial workers since Independence have not been associated with a rise in real wages nor have these been commensurate with improvements in productivity. Wage costs as a proportion of total costs of manufacture have registered a decline and the same is true about workers' share in value added by manufacture. 15.18 92. (a) In any economy, sectoral productivities are bound to differ due to differences in skills, technology and capital. Wage differentials are inevitable, but the extremes that reflect imperfections of the market and inadequacies of measurement should be avoided, (b) While changes in real per capita income reflect changes in productivity of the economy as a whole, wage variations in any particular sector may not always be based on productivity changes, (c) The disparity between industrial and other wages may not be due to the fact that the former are disproportionately high, but because the latter are disproportionately low. A certain amount of
disparity between industrial and agricultural wages is necessary and must continue for the general health of the economy, (d) The earnings of the self-employed persons cannot be taken as a criterion to determine wages of a worker required to put in full-time work. 15.22,a,b,&c. 93. Wage changes beyond a certain level must reflect productivity changes. The application of this principle presents difficulties as contribution to productivity levels and changes therein are not easy to measure. 15.22 (d)
1.10 94. (a) Issues concerning wage policy are inter-related on the one hand with broader economic decisions and on the other with the goals set for social policy, (b) The wage policy has to be framed taking into account such factors as the price level which can be sustained, the employment level to be aimed at, requirements of social justice and capital formation for future growth, (c) It has also to take into account the structural features of the economy and has to be in accord with the pattern of income generation and distribution as envisaged in the development plans. 15.24, 15.26 & 15.27 95. (a) Commensurate with checks and restraints on consumption required for sustaining the growth process, the standard of living of the worker has to improve. A democratic society with ideals of social justice will have to reconcile considerations of equity and fairness with economic compulsions, (b) Wage policy should aim at a progressive increase in real wages. At the same time, any sustained improvement in real wages cannot be brought about without increasing productivity. 15.28 & 15.30 96. Our economy will have to be for long a dual economy with a large range of capital and labour intensive techniques. Wage policy should foster an appropriate choice of techniques so as to maximise employment at rising levels of productivity and wages. 15.29 & 15.31 97. (a) The present practice for mitigating hardship due .to rise in cost of living is to pay dearness allowance over and above the basic pay. It is possible that this practice of adjustment of wages may conceivably lead to inflation. Keeping living costs under check should therefore form an integral part of wage policy, (b) Social considerations cast an obligation to mitigate through some adjustment mechanism the hardships caused by price increase to at least the vulnerable sections of labour. 15.34 & 15.35 98. Different institutional arrangements for wage fixation may be needed for different groups. In one case, it could consist of Commissions/ Boards for framing wage awards; in others, bipartite arrangements between workers and employers may work. In still other cases, a tripartite machinery may be appropriate. All these can co-exist, depending upon the tradition and experience which are built up for utilising them. 15.37 99. The main aim of wage policy as envisaged is to bring wages in conformity with the expectations of the working class and in the process seek to maximise wage employment. 15.38 MINIMUM WAGE Statutory Minimum Wage 100. Once the minimum rates of wages are fixed according to the procedure prescribed under the Minimum Wages Act, 1948, it is the obligation of employers to pay the said wages irrespective of the capacity to pay. 16.2
*101. The appropriate Government should revise wages prescribed under the provisions of the Act at least once in every three years. If as a result of adverse price situation wage rates require adjustment within three years the local authority should make such adjustment. 16.13 102. The Schedules to the Minimum Wages Act should be periodically revised so that employments) which cease to employ sweated labour are deleted and such employment (s) as employ sweated labour are added to the Schedule. The employment limit for enabling a State Government to fix minimum wage for a particular employment included in the Schedule to the Act should be reduced from 1000 to 500 in the whole State. 16.14 103. The criteria in regard to minimum wage fixation will necessarily have to be flexible. Laying down a rigid cash equivalent of the content of statutory minimum wage, whose coverage is essentially transitional under conditions of development, would not serve any useful purpose. 16.15 National Minimum Wage 104. A national minimum wage in the sense of a uniform minimum monetary rate of remuneration for the country as a whole is neither feasible nor desirable. It may be possible, however, that in different homogeneous regions in each State, a regional minimum could be notified. An effort should be made to fix such regional minima. 16.17 Need-based Minimum 105. The need-based minimum wage and the wages at the higher levels of fair wage, may and
1.11 can be introduced by convenient and just phasing, keeping in mind the extent of the capacity of the employer to pay the same. This has to be a pragmatic process which the wage-fixing authorities will have to keep in mind. In fixing the need-based minimum which is in the range of the lower level of fair wage, the capacity to pay will have to be taken into account. Every worker in organised industry has a claim to this minimum and the onus of proving that the industry does not have the capacity to pay it should lie on the employer. 16.31 Dearness Allowance 106. There should be periodic adjustment of wages taking into account changes in cost of living. It would be best to leave it to the wage fixing authorities to choose the index (local or all-India) they consider suitable for the purpose of linking dearness allowance. Neutralisation at the rate of 95 per cent should be granted against the rise in cost of living to those drawing the minimum wage in non-scheduled employments. This rate of neutralisation for minimum wage earners in non-scheduled employments should not be allowed to have any adverse effect on the rates of dearness allowance already prevailing on the basis of agreements/awards. The higher rates of neutralisation already achieved should be protected. The capacity to pay is not a relevant consideration for payment of dearness allowance at the minimum level. A five point slab with reference to the consumer price index (base year 1960) on the basis of the current all-India series or the current (1960) centre series would be appropriate for adjustment in dearness allowance. This recommendation should not affect employees who are at present getting point to point neutralisation. 16.36, 16.43, 16.47, 16.48,16.51 & 16.52 107. The amount of dearness allowance to be paid to employees having emoluments higher than the minimum wage should be the same as given to employees at the minimum. Employees who are getting dearness allowance at present higher than what is admissible on the basis now suggested will not be deprived of that; though for any additional increases in the cost of living, they will be entitled only to the same amount of dearness allowance as is given to persons receiving the minimum wage. 16.49
108. It would be more practical to merge dearness allowance with basic wage at the base year of the revised series of working class consumer price indices which will be constructed on the basis of family living surveys proposed to be conducted in 1969-70. In the interim, (i) all future wage claims should be dealt with on the basis of the 1968 price level and (ii) ground should be prepared for introducing a consolidated wage (basic + D.A.) as at the base period of the proposed (1969-70) series of consumer price index numbers. The aim of such merger should be to rationalise the existing wage structure and make basic wages more realistic than at present. This merger should not be construed to imply ipso facto any basic change in real wages or con ferment of additional benefit. The piece-rates would have to be adjusted to the merged wage in such a way that current differentials in the total wage are not unduly disturbed. 16.41 INCENTIVES AND BONUS Incentive 109. (a) The application of incentive schemes has generally to be selective and limited to industries and occupations in which it is possible to measure, on an agreed basis, the output of workers or a group of workers concerned and in which it is possible to maintain a fair degree of control over the quality of production, (b) Incentive schemes should cover as many employees of an undertaking as possible and need not be confined only to operatives or direct workers. The inclusion of supervisory personnel as beneficiaries of incentives can have a vital role in improving efficiency, (c) A careful selection of occupations should be made for introduction of incentive schemes with the assistance of work study teams, the personnel of which commands the confidence of both sides, (d) The scheme should be simple so that workers are able to understand its full implications, (e) Managements should take steps to guard against the impact on incentive schemes of certain unfavourable external factors such as non-availability of raw materials, components, transport difficulties and accumulation of stocks, (f) Production should not be organised in a manner which will give incentive wage on one day and unemployment on the next. A fall-back wage can be a safeguard against it. 17.9 & 17.12 110. The objective of increasing productivity must be raised to the level of a high national purpose. 17.13 & 17.15 111. The system of annual bonus has come to stay and may continue in future. While the quantum of bonus can be settled by collective bargaining, the formula which may serve as a
1.12 guideline for such settlement has to be statutory. The Payment of Bonus Act, 1965 should be given a longer period of trial. Some establishments which used to pay bonus before the passing of the Payment of Bonus Act have stopped paying bonus because the Act does not apply to them. These establishments should not stop bonus payments merely on this account. Government should consider the feasibility of making a suitable amendment to the Act in respect of such establishments. 17.31 & 17.33 RATIONALISATION AND AUTOMATION 112. (a) Though rationalisation and automation could be regarded as two separate concepts, the effect they have on employment and labour is similar, though not of the same magnitude. In a sense, automation could be considered a part of the wider concept of rationalisation. (b) Rationalisation and automation have an important role to play in the developing countries. They are expected to stimulate economic development; mass production will create more demand for raw materials and components, and in the process help generate employment in the long run. (c) The extent to which automation will lower prices and raise wages may depend on how the gains in the productivity are shared, (d) Automation has to be socially guided so that the country's resources are properly allocated and disequilibrium in its factor- goods markets is not aggravated. 18.3, 18.5, 18.7 & 18.8 113. (a) Impact on employment is the most important short-term economic aspect of automation. Employment for any level of output declines with automation, (b) If the general rate of growth of the economy is high and the level of output is increasing while arrangements for retraining are pre-planned, re-deployment of the unemployed will be possible, though locational adjustments will still be necessary. (c) Adequate care will have to be taken to see that the traditional labour-intensive sector which provides employment to a large labour force continues to exist, and in fact thrives, side by side with the development of the modern large-scale capital intensive sector, (d) This dualism will have to continue for quite some time to come. (e) The effect of selective introduction of labour-saving techniques on total employment is not likely to be harmful as is usually apprehended, provided the rate of growth is sufficient to absorb the surplus labour, (f) A phased introduction of more advanced technological and labour-saving techniques and devices has to be initiated guaranteeing simultaneously that employment opportunities do not suffer, (g) The phasing has to be gradual so long as the economy does not enter an expansionary phase in which the rate of growth will be adequate to absorb the labour force. 18.10, 18.25 & 18.28 114. Any scheme of automation should satisfy the following conditions : (i) it accommodates labour that may be rendered surplus ; (ii) it results in higher productivity and efficiency ; (iii) it improves the level of earnings of the workers by ensuring to them an equitable share in the gains due to automation, and (iv) it leads to reduction in cost and benefits the community. 18.25 115. Automated processes which depend upon indigenous equipment would be preferable to those which require foreign equipment. Stress should be laid on manufacturing indigenous machinery of the improved type. 18.27 116. The process of automation and rationalisation should be introduced in consultation with the workers' representatives and carried out in suitable stages. It should, however, be ensured that the country's technological advance is not impaired. 18.28
117. A quantitative basis for sharing the gains of productivity is provided by the National Productivity Council formula reproduced below. While the percentages in it could be settled by mutual agreement, the underlying principles appear to be sound. "After making a provision in the interest of the consumers which should not exceed 20% wherever this is necessary, out of the balance of the gains of productivity, labour will receive half in those industries where their wages clearly correspond to a fair or living wage except that (a) where the wages are at a level below either the fair wage or the need-based minimum wage, the share of labour will be larger to be decided by mutual agreement, and (b) where the industry has clearly built up a large free reserve, the share of labour will also be higher than the 50% mentioned above. Of the share thus available for distribution after a provision for consumers and labour
1.13 has been made a portion will be reserved for the development of the industry and the rest will be available for remunerating capital." NOTE : Where no provision is actually made for the consumer, the amount will be available for distribution to labour and capital. 18.36 & 18.32 MACHINERY FOR WAGE FIXATION / PROTECTION Wage Fixing Machinery in Sweated Industries 118. (a) The Committee method of fixation of minimum wages under the Minimum Wages Act, 1948 which gives satisfaction to the parties because of their having a part in deciding what to pay or what to accept should be followed in preference to the method by which wages are notified by authorities, (b) There should be a common Chairman for Committees set up for fixation or revision of minimum wages in allied scheduled employments to facilitate expeditious decision and better coordination. (c) The Committees so set up should be required to report within three months, (d) There should be a common permanent secretariat for these committees to expedite fixation and revision of minimum wages. It should be entrusted with the task of prior collection and collation of relevant data. 19.4 & 19.5 Machinery for Wage Fixation in the Organised Sector 119. (a) Wage Boards have done some useful work and they should continue, (b) They have attempted fixation of wages within the broad framework of the Government's economic and social policy. 19.10, 19.20 & 19.26 120. There need be no independent persons on the Wage Board. If considered necessary, an economist could be associated with the Board, but only as an assessor. 19.26(i) 121. (a) The Chairman of the Wage Board should be appointed by common consent of the parties, wherever possible, (b) For appointment of Chairmen of Wage Boards, an agreed panel of names should be maintained by the proposed National/State Industrial Relations Commissions, (c) He should preferably be drawn from the members of the proposed National or State Industrial Relations Commissions, (d) In case a Chairman is appointed by the consent of both the parties, he should arbitrate if no agreement is reached in the Wage Board, (e) Where the Commission is unable to prepare a panel of agreed names, Government will appoint the Chairman, (f) A person should not be appointed as Chairman of more than two Wage Boards at a time. 19.26(ii) 122. The Wage Boards should normally be required to submit their recommendations within one year of their appointment. The date from which the recommendations should take effect should be mentioned in the recommendations itself. The recommendations of a Wage Board should remain in force for a period of five years. 19.26 (iii) & (iv) 123. (a) A Central Wage Board Division should be set up in the Union Ministry of Labour and Employment on a permanent basis to service all wage boards, (b) This Division should lend the necessary staff to the wage boards and also supply statistical and other information needed by them for expeditious disposal of the work. 19.26(vi) Machinery for Protection of Wages 124. (a) The operation of the Payment of Wages Act has benefited the working class. Non- payment of wages or even unauthorised deductions are now not as common as before, (b) Mal- practices, however, do prevail but mostly in the unorganised and small scale industries, where the arm of law does not reach and where workers have little awareness of their rights. (c) Where payment is on the basis of piece rates, there is no guarantee that work is properly measured/weighed. The incidence of such practices particularly in mines and plantations
requires to be checked, (d) The purpose of laying down a machinery for evolving a proper wage structure is defeated if mal-practices in the payment of wages cannot be checked. 19.27, 19.31 & 19.32 125. (a) While it is necessary that strict quality standards should be maintained, a remedy has to be found for unfair deductions, (b) Cases where sub-standard work is not paid for, and yet the product is sold in the market at a slightly lower rate yielding a margin for the employer even after paying a wage for it at a reduced rate do exist in small establishments. These call for a suitable remedy. 19.33 126. Implementing authorities should be more vigilant in case of units where mal-practices are likely to be common. In small establishments in the more traditional industries, mal-practices
1.14 could be cancerous and in such cases more drastic remedies should be thought of. 19.34 127. Government should have the necessary powers to raise, as and when required, the present limit of Rs. 400 per month below which the Payment of Wages Act, 1936 is applicable. 19.36 WORKERS' ORGANISATIONS 128. The basis on which a trade union should be organised is a matter to be determined by workers themselves, in the light of their own needs and experience. They have to grow according to the dictates of their members, but within the constraints set on them by the law of the land. 20.19 129. (a) Formation of craft/occupation unions should be discouraged. Craft unions operating in a unit/industry should amalgamate into an industrial union, (b) Where there is already a recognised industrial union, it should set up sub-committees for important crafts/occupations so that problems peculiar to the crafts receive adequate attention. 20.21 130. Formation of centre-cum-industry and national industrial federations should be encouraged. 20.22 131. Apart from paying attention to the basic responsibilities towards their members, unions should also undertake social responsibilities such as (i) promotion of national integration, (ii) influencing the socio-economic policies of the community through active participation in the formulation of these policies, and (iii) instilling in their members a sense of responsibility towards industry and the community. 20.38 132. (a) There should be no ban on non-employees holding positions in the executive of the unions, (b) Steps should be taken to promote internal leadership and give it a more responsible role. (c) Internal leadership should be kept outside the pale of victimisation, (d) To hasten the process of building up internal leadership, the permissible limit of outsiders in the executives of the unions should be reduced, (e) Ex-employees should not be treated as outsiders. 20.50, 20.52 & 20.53 133. Unity in the trade union movement has to grow from within. Our recommendations regarding recognition of a union as a sole bargaining agent by statute, building up of internal leadership, shift to collective bargaining as the main method of settlement of disputes and the institution of an independent authority for union recognition will hasten the process of reducing inter-union rivalries. 20.58 134. Intra-union rivalries are best left to the central organisation concerned to settle. The Labour Court should step in at the request of either group or on a motion by the appropriate Government, in cases where the central organisation is unable to resolve the dispute. 20.58 & 20.84 135. (a) Closed shop is neither practicable nor desirable. Union shop may be feasible, though some compulsion is in-built in this system also. (b) Neither should be introduced by statute. Union security measures should be allowed to evolve as a natural process of trade union growth, (c) An enabling provision to permit check-off on demand by a recognised union would be adequate. 20.64, 20.65 & 20.70 136. Trade union registration should be made compulsory for all plant unions/industrial federations, but not for the central organisations. 20.76 137 (a) The minimum number required for starting a new union should be raised to 10 per cent (subject to a minimum of 7) of regular employees of a plant or 100, whichever is lower, (b) The
minimum membership fee of a union should be raised from the present level of 25 paise per month to Re. 1 per month. 20.29 & 20.78 138. The Registrar should be time-bound to take a decision regarding grant/refusal of registration. He should complete all preliminaries leading to registration within thirty days of the receipt of application, excluding the time which the union takes in answering queries from the Registrar. 20.82 139. The registration of a union should be cancelled if (i) the annual return discloses that its membership fell below the minimum prescribed for registration, (ii) the union fails to submit its annual return wilfully or otherwise, and (iii) the annual return submitted is defective in material
1.15 particulars and these defects are not rectified within the prescribed period. 20. 78,20.80 & 20.81 140. (a) An appeal should lie to the Labour Court over the Registrar's orders of cancellation of registration, (b) Application for re-registration should not be entertained within six months of the date of cancellation of registration. 20. 81 & 20.83 EMPLOYERS' ORGANISATIONS 141. Public sector undertakings should be encouraged to join their respective industrial associations. There is an equally strong case for cooperatives to join such associations. 21.8 142. Registration of employers' organisations should be made compulsory. Arrangements should be made through the Industrial Relations Commission for certification of employers' organisations at industry/area level for purposes of collective bargaining. 21.9 & 21.15 143. (a) Multiplicity of organisations at the national level has not been a problem with employers' organisations. The main organisations have come together under the Council of Indian Employers, but the All-India Manufacturers' Organisation is outside the Council. It will be desirable if the Council of Indian Employers brings this organisation also within its fold. (b) Multiplicity of organisations within an industry is not conducive to collective bargaining. Wherever at present there is more than one organisation dealing with an industry, these should be amalgamated into a single organisation and the first step in this direction would be the constitution of Joint Committees to deal with problems of the industry as a whole or to negotiate on behalf of the industry at that level. 21.7 & 21.15 144. Employers' organisations should encourage collective bargaining. They should also encourage voluntary arbitration and wean away reluctant employers from recourse to third party intervention. 21.24 145. Regular and scientific arrangements for training of supervisors and middle management personnel in the art of handling labour should receive due attention from employers' organisations. 21.25 146. Employers' organisations should build up their internal consultation system in such a manner that all matters which have far-reaching impact on members are scrutinised by the constituents prior to any decisions that might be taken at the national level. 21.31 147. From the view-point of labour-management relations, employers' associations should: (i) undertake promotion of collective bargaining at various levels; (ii) encourage observance and implementation by their members of bipartite and tripartite agreements in real spirit and form;
(iii) expedite implementation of wage awards by members; (iv) work towards elimination of unfair labour practices by employers; (v) encourage adoption by members of personnel policies conducive to productivity and industrial peace; (vi) promote rationalisation of management or organisation to improve productivity; (vii) arrange employers' education (a) in the concept of labour partnership in industry, (b) for ensuring identity of interests of labour and management, and (c) for promoting harmony in the goals of industry and the community, and (viii) work towards the collective welfare of its members through training, research and communication in the field of labour- management relations. 21.26 STATE AND INDUSTRIAL RELATIONS Role of the State 148. Industrial relations affect not merely the interests of the two participants, labour and management, but also the social and economic goals to which the State addresses itself. To regulate these relations in socially desirable channels is a function which the State is in the best position to perform; such regulation has to be within limits. 22.8 149. Where standards of good employment are disparate, the State seeks to set them with a view to influencing employers in the private sector. 22.12
1.16 150. Consultation with State Governments in the formulation and implementation of labour policy becomes essential in a country with a federal constitution with 'labour' in the 'Concurrent List'. 22.13 Tripartite Consultations 151. (a) Tripartite consultation has its value for setting uniform norms' to guide industrial relations. The Indian Labour Conference/Standing Labour Committee/Industrial Committees which have been set up in recognition of this fact must remain advisory in character. The conclusions/ recommendations reached by them should be treated as deserving every consideration, (b) To make the process of reaching consensus more consultative, the Government should restrict its influence on tripartite deliberations. 22.29 & 22.30 152. Tripartite decisions should be taken in two stages on the lines of the procedure followed by the International Labour Organisation. There should be a preliminary but detailed discussion on the subject in the first stage. The conclusions recorded at this preliminary discussion should be widely publicised and comments on them encouraged. On the basis of these comments, the tripartite should frame its recommendations in the second round of discussions. 22.30 153. Industrial Committees should meet more often to examine specific issues connected with the concerned industry. Such general decisions as are taken in the ILC/SLC should be tested for their applicability in industrial committees and difficulties in implementation taken back to the general forum. 22.31 154. Tripartite discussions should last longer and should be supported by a good deal of spade work in the Committees of the Conference. The SLC should meet more often and the ILO less frequently but for longer duration. 22.32 155. The representation at the tripartite should be restricted as a first step to those central organisations only which have a membership of at least 10 per cent of the unionised labour force in the country. There should be a review every three years to accord representation to organisations on this basis. 22.33 156. A fairly senior officer of the Labour Ministry should be designated as Secretary to the Conference. He should have adequate staff support; his functions will be to project and meet the informational needs of the ILC/SLC and industrial committees, as well as to coordinate the information available. 22.36 Common Labour Code 157. Considering the variety of subjects, presently covered under labour legislation it will not be practicable to formulate a common labour code, having uniform definitions all through and applying to all categories of labour without any distinction. Since 'labour' will continue in the 'Concurrent List', adjustments to suit local conditions in different States will have to be allowed. These adjustments in some cases may not necessarily conform to the letter of a common code. 22.48 158. In order to bring about a feasible degree of simplification and uniformity in definitions, it should be possible to integrate those enactments which cover subjects having a common objective. This will mean a simplification of the existing framework of labour laws. 22.49 159. There appears to be no valid ground for narrowing the scope of the definition of 'industry' under the I. D. Act, 1947, as it stands today. In fact, there is a case for enlarging its scope so as to cover teaching or educational institutions or institutes, universities, professional firms and offices, etc., whose employees are at present denied the protection of the provisions of the
Industrial Disputes Act. However, the definition of 'industry' should be extended in scope by stages and in a phased manner over a reasonable period, depending upon the administrative arrangements which could be made to meet the requirements of the law and upon the consideration of a number of other relevant factors. The arrangement for settlement of disputes may have to be different in such employments. 33.6 160. The definition of the word 'workman' under the I. D. Act should be based on functional as well as remuneration criteria. While only managerial and administrative personnel may be excluded irrespective of their salary, supervisory and other personnel whose remuneration exceeds a specified limit could also be reasonably excluded. This limit, which is Rs. 500 p.m. at present, could be raised in such a way as to put an end to the present anomaly of very highly paid personnel resorting to industrial action and seeking protection under the provisions of the Act. Raising of the wage ceiling will be particularly justified in view
1.17 of the fact that in industries using advanced technology wages of many of the workers, particularly in the supervisory cadres, are found to be very much in excess of the prescribed maximum of Rs. 500. 33.12 161. The definition of the term 'strike' under the I. D. Act is quite comprehensive and may not require any change. The forms of labour protest such as 'go-slow' and 'work-to-rule' may be treated as misconduct or unfair labour practices under the Standing Orders. 33.16 162. Items like bonus, contributions to provident fund, and other benefits and gratuity on termination of service (where gratuity has become a term of service under an award or settlement), have all become regular elements of workers' remuneration and should, therefore, be included as part of a worker's wage. 33.19 INDUSTRIAL RELATIONS—I Collective Agreements—Collective Bargaining 163. In the absence of arrangements for statutory recognition of unions except in some States and provisions which require employers and workers to bargain in 'good faith', it is no surprise that reaching of collective agreements has not made headway in our country. Nonetheless, the record of reaching collective agreements has not been as unsatisfactory as it is popularly believed. Its extension to a wider area is certainly desirable. 23.12 & 23.14 164. There is a case for shift in emphasis and increasingly greater scope for and reliance on collective bargaining. Any sudden change replacing adjudication by a system of collective bargaining is neither called for nor is practicable. The process has to be gradual. A beginning has to be made in the move towards collective bargaining by declaring that it will acquire primacy in the procedure for settling industrial disputes. 23.36 165. Conditions have to be created for promotion of collective bargaining. The most important among them is statutory recognition of a representative union as the sole bargaining agent. The place which strike/lock-out should have in the overall scheme of industrial relations needs to be defined; collective bargaining cannot exist without the right to strike/lock-out. 23.37 Conciliation 166. (a) Conciliation can be more effective if it is freed from outside influence and the conciliation machinery is adequately staffed. The independent character of the machinery will alone inspire greater confidence and will be able to evoke more cooperation from the parties. The conciliation machinery should, therefore, be a part of the proposed Industrial Relations Commission. This transfer will introduce important structural, functional and procedural changes in the working of the machinery as it exists today, (b) There is need for certain other measures to enable the officers of the machinery to function effectively. Among these are: (i) proper selection of personnel, (ii) adequate pre-job training, and (iii) periodic in-service training. 23.22 Voluntary Arbitration 167. With the growth of collective bargaining and the general acceptance of recognition of representative unions and improved management attitudes, the ground will be cleared, at least to some extent, for wider acceptance of voluntary arbitration. 23.26 Gherao 168. 'Gherao' cannot be treated as a form of labour protest since it involves physical coercion rather than economic pressure. It is harmful to the working class and in the long run may affect national interest. 23.41
169. In certain essential industries/services where a cessation of work may cause harm to the community, the economy or to the security of the nation itself, the right to strike may be curtailed but with the simultaneous provision of an effective alternative, like arbitration or adjudication, to settle the disputes. 23.43 170. The effects that flow from cessation of work warrant the imposition of certain restrictions on work-stoppages. Every strike/lock-out should be preceded by a notice. A strike notice to be given by a recognised union should be preceded
1.18 by a strike ballot open to all members of the union concerned and the strike decision must be supported by two-thirds of members present and voting. 23.44 & 23.45 Union Recognition 171. It would be desirable to make recognition compulsory under a Central law in all undertakings employing 100 or more workers or where the capital invested is above a stipulated size. A trade union seeking recognition as a bargaining agent from an individual employer should have a membership of at least 30 per cent of workers in the establishment. The minimum membership should be 25 per cent if recognition is sought for an industry in a local area. 23.50 172. The proposed National/State Industrial Relations Commission (Recommendations 175- 177) will have the power to decide the representative character of a union, either by examination of membership records, or if it considers necessary, by holding an election by secret ballot open to all employees*. The Commission will deal with various aspects of union recognition such as (i) determining the level of recognition—whether plant, industry, centre- cum-industry—to decide the majority union, (ii) certifying the majority union as a recognised union for collective bargaining and (iii) generally dealing with other related matters. 23.56 173. The recognised union should be statutorily given certain exclusive rights and facilities, such as right of sole representation, entering into collective agreements on terms of employment and conditions of service, collection of membership subscription within the premises of the undertaking, the right of check-off, holding discussions with departmental representatives of its worker members within factory premises, inspecting, by prior agreement, the place of work of any of its members, and nominating its representatives on works/grievance committees and other bipartite committees. 23.57 174, The minority unions should be allowed only the right to represent cases of dismissal and discharge of their members before the Labour Court. 23.59 Industrial Relations Commission 175. The present arrangement for appointing ad hoc industrial tribunals should be discontinued. An Industrial Relations Commission (IRC) on a permanent basis should be set up at the Centre and one in each State for settling 'interest' disputes. The IRC will be an authority independent of the executive. 23.61 176. The National Industrial Relations Commission should be appointed by the Central Government for industries for which that Government is the appropriate authority. The National IRC would deal with such disputes which involve questions of national importance or which are likely to affect or interest establishments situated in more than one State. Its scope should be broadly the same as that of National Tribunals under the Industrial Disputes Act, 1947. 23.63(i) 177. Each State should have an Industrial Relations Commission for settlement of disputes for which the State Government is the appropriate authority. 23.63(ii) 178. The main functions of the National/ State IRCs will be (a) adjudication in industrial disputes, (b) conciliation, and (c) certification of unions as representative unions. 23.63 (iii) 179. The Commission should be constituted with a person having prescribed judicial qualifications and experience as its President and an equal number of judicial and non-judicial members; the non-judicial members need not have qualifications to hold judicial posts, but should be otherwise eminent in the field of industry, labour or management. Judicial members
of the National Industrial Relations Commission, including its President, should be appointed from among persons who are eligible for appointment as judges of a High Court. 23.63(v & vi) 180. The Conciliation Wing of the Commission will consist of conciliation officers with the prescribed qualifications and status. There will be persons with or without judicial qualifications in the cadre of conciliators. Those who have judicial qualifications would be eligible for appointment as judicial members of the Commission after they acquire the necessary experience and expertise. Others could aspire for membership in the non-judicial wing. 23.63 (xii)
1.19 181. The functions relating to certification of unions will vest with a separate wing of the National/State IRC. 23.63 (xv) 182. The Commission may provide arbitrators from amongst its members/officers in case parties agree to avail of such services. The Commission may permit its members to serve as Chairman of Central/State Wage Boards/Committees, if chosen by the appropriate Government for such appointment. 23.63 (xiii and xiv) 183. After negotiations have failed and before notice of strike/lock-out is served, the parties may agree to voluntary arbitration and the Commission will help the parties in choosing a mutually acceptable arbitrator. Alternatively, either party may, during the period covered by the said notice, approach the Commission for naming a conciliator within the Commission to help them in arriving at a settlement. 23.64 (i and ii) 184. In essential industries/services, when collective bargaining fails and when the parties to the dispute do not agree to arbitration, either party shall notify the IRC with a copy to the appropriate Government, of the failure of negotiations whereupon the IRC shall adjudicate upon the dispute and its award shall be final and binding upon the parties. 23.64 (iii) *185. In the case of non-essential industries/services following the failure of negotiations and refusal by the parties to avail of voluntary arbitration, the IRC after the receipt of notice of direct action (but during the notice period) may offer to the parties its good offices for settlement. After the expiry of the notice period, if no settlement is reached, the parties will be free to resort to direct action. If direct action continues for 30 days, it will be incumbent on the IRC to intervene and arrange for settlement of the dispute. 23.64 (iv) *186. When a strike or lock-out commences, the appropriate Government may move the Commission to call for the termination of the strike/lock-out on the ground that its continuance may affect the security of the State, national economy or public order and if after hearing the Government and the parties concerned the Commission is so satisfied, it may, for reasons to be recorded, call on the parties to terminate the strike/lock-out and file their statements before it. Thereupon the Commission shall adjudicate on the dispute. 23.64 (v) 187. It should be possible to arrange transfer of cases from the National IRC to the State IRC and vice versa under certain conditions. 23.64 (vi, vii and viii) 188, (a) The Commission will have powers to decide to pay or withhold payments for the strike/lock-out period under certain circumstances. (b) If during the pendency of the strike or there after, the employer dismisses or discharges an employee because he has taken part in such strike, it would amount to unfair labour practice, and on proof of such practice, the employee will be entitled to reinstatement with back wages. 23.64 (ix, x, xi, xii, xiii and xiv)
189. All collective agreements should be registered with the IRC. 23.64 (xv) 190. An award made by the IRC in respect of a dispute raised by the recognised union should be binding on all workers in the establishment(s) and the employer(s). 23.64 (xvi) Labour Courts 191. (a) Standing Labour Courts should be constituted in each State. The strength and location of such courts will be decided by the appropriate Government, (b) Members of the Labour Court will be appointed by Government on the recommendations of the High Court. Generally, the Government should be able to choose from a panel given by the High Court in the order in which the names are recommended. 23.65 (i and ii) 192. (a) Labour Courts will deal with disputes relating to rights and obligations, interpretation and implementation of awards and claims arising out of rights and obligations under the relevant provisions of law or agreements as well as disputes in regard to unfair labour practices and the like. (b) Labour Courts will thus be the Courts where all disputes specified above will be tried and their decisions implemented. Proceedings instituted by parties asking for the enforcement of rights falling under the aforesaid categories will be entertained in that behalf. Appropriate powers enabling them to execute such claims should be conferred on them. 23.65 (iii and iv) 193. Appeals over the decisions of the Labour Court in certain clearly defined matters may lie with the High Court within whose jurisdiction/ area the Court is located. 23.65 (v)
1.20 Unfair Labour Practices 194. Unfair labour practices on the part of both employers and workers' unions should be detailed and suitable penalties prescribed in the industrial relations law for those found guilty of committing such practices. Labour Courts will be the appropriate authority to deal with complaints relating to unfair labour practices. 23.67 INDUSTRIAL RELATIONS—II Works/Joint Committees 195. (a) Works committees may be set up only in units which have a recognised union. The union should be given the right to nominate the worker members of the works committee. (b) A clear demarcation of the functions of the works committee and the recognised union, on the basis of mutual agreement between the employer and the recognised union, will make for a better working of the committee. 24.7 Joint Management Councils * 196. When the system of union recognition becomes an accepted practice, managements and unions will be willing to extend cooperation in matters they consider to be of mutual advantage and set up a Joint Management Council. In the meanwhile, wherever the management and the recognised trade union in a unit so desire, they can by agreement enhance the powers and scope of the works committee to ensure a greater degree of consultation/cooperation. The functions of the two in this latter situation can as well be amalgamated. 24.15 Code of Discipline 197. The Code worked in its initial stages with a certain measure of success and then fell into disuse. With the removal of the important provisions relating to recognition of unions, setting up of grievance machinery and unfair labour practices from the Code and incorporating them in the proposed legislation, the Code will have no useful function to perform. 24.20 to 24.22 Grievance Procedure
198. Grievance procedure should be simple and have a provision for at least one appeal. The procedure should ensure that it gives a sense of (i) satisfaction to the individual worker, (ii) reasonable exercise of authority to the manager, and (iii) participation to unions. A formal grievance procedure should be introduced in units employing 100 or more workers. 24.29 & 24.30 199. A grievance procedure should normally provide three steps: (i) submission of a grievance by the aggrieved worker to his immediate superior, (ii) appeal to the departmental head/manager, (iii) appeal to a bipartite grievance committee representing the management and the recognised union. In rare cases where unanimity eludes the committee in (iii), the matter may be referred to an arbitrator. 24.31 Dismissal/Discharge 200. The Industrial Disputes (Amendment) Bill, 1966 (Bill No. XVIII of 1966) as it stands should be enacted without delay. To minimise delays in adjudication proceedings and further delay in appeals, adoption of the procedure which obtains in the Small Causes Courts and abolition of appeals to higher courts may be provided. To make the procedure more effective, the following provision should be made: (i) In the domestic enquiry the aggrieved worker should have the right to be represented by an executive of the recognised union or a workman of his choice. (ii) Record of the domestic enquiry should be made in a language understood by the aggrieved employee or his union. (lit) The domestic enquiry should be completed within a prescribed period, which should be necessarily short. (iv) Appeal against employer's order of dismissal should be filed within a prescribed period. (v) The worker should be entitled to subsistence allowance during the period of suspension as per agreement in the tripartite. 24.40 LABOUR IN PUBLIC SECTOR 201. Suitability of the candidate and his availability for at least 5 years should be the criteria for selection for a senior position in a public undertaking. The chairman of the Union Public Service Commission and persons with known industrial experience should be associated with the selection committee which currently consists
1.21 of senior Secretaries to the Government of India. Persons on the verge of retirement should not be placed in charge of the public undertaking. 25.10 202. At the supervisory level, recruitment has to be on an all-India basis since the quality of personnel is a crucial factor. Where there is a choice between two persons who are equally qualified, the person who is a 'local' will, it is expected, get preference automatically. 25.13 203. Disparities in regard to items like working conditions, working hours and holidays as between workers/staff recruited at different times have become a cause of complaint in certain units. It should be possible for new units to avoid such difficulties in future by adopting procedures which have worked well in similar public sector establishments. 25.18 204. In order that the assessment of the profit ability of a public undertaking is not distorted, investment on townships should not be a charge on the public undertaking and should come out of a separate fund. 25.20 205. Strict enforcement of labour laws should be ensured by the person in charge of the under taking. Since the public sector is considered a model employer, breach of statutory provisions should not be countenanced in that sector. 25.17 & 25.30 206. Each fair-sized public undertaking should develop a good personnel department to enable proper understanding of the view-point of the unions on different matters. The levels of management at which decisions can be taken on different issues should be clearly laid down and made known to workers. 25.32 & 25.33 207. State Electricity Boards should come together periodically and exchange experiences with a view to drawing up a phased programme for decasualising labour engaged by them. 25.37 208. All casual workers employed by the State Electricity Boards who have put in a specific period of service, to be determined by the Boards in consultation with the State Labour Departments, should be allowed the benefits available to regular employees on an appropriate scale. 25.37 GOVERNMENT (INDUSTRIAL) EMPLOYEES 209. Our recommendations in regard to trade unions would be equally applicable to unions of Government (Industrial) employees. The position in the departmental undertakings is not so fundamentally different from that in other under takings, as to warrant a change in principle in regard to union recognition. 26.13 210. In case of Government industrial employees engaged in essential services, the prohibition of strike would be justified. Such prohibition of strike will, however, have to be accompanied by the provision of an effective alternative for settlement of unresolved disputes. This will ultimately lead to settlement of disputes by negotiations and agreements. All the same, there will be need for a statutory arbitration machinery. 26.28 211. There should be a wider scope for discussion in the Joint Consultative Machinery on all matters which can be brought constitutionally within its purview. The limited scope provided in a Joint Consultative Machinery for arbitration is a deficiency which should be removed if the industrial employees of Government are to be treated on the same footing as other industrial employees. The present arrangement in the JCM under which Government is the final authority to decide whether an issue can or cannot go for arbitration requires to be modified. 26.29
212. It is important that arrangements for Government (Industrial ) employees and others in similar non-governmental employment (essential services) should have as extensive a common ground as possible in matters concerning the settlement of disputes. 26.30 213. A Pay Commission to review the wages and other conditions of service of industrial employees of Government should be appointed without delay. The quantification of the need- based minimum wage in money terms or the task of deciding the question of Government's capacity to pay, which is a relevant consideration for determining the need-based minimum wage, is best left to the Pay Commission to be set up. No modification in the concepts of 'minimum wage', 'need-based minimum wage' and 'living wage' and other terms is required in their applicability to Government's industrial employees. 26.32 & 26.35
1.22 214. Pending consideration of the issue of D.A. by the proposed Pay Commission, no change in the recommendations of the Dearness Allowance Commission (May, 1967) is necessary except that at the lowest range of emoluments, the neutralisation percentage should not be less than 95. 26.36 EMPLOYMENT OF WOMEN AND CHILDREN 215. The right of a woman to employment should in no way be considered subordinate or secondary to that of a man. The necessary training facilities should be created/augmented. Vocational guidance programmes will serve a useful purpose in giving required information to women. It will be desirable to give preference to women for training in those trades and occupations for which they have special aptitude. 27.9 & 27.13 216. Implementation of the principle of equal pay for equal work should be more satisfactory than at present. 27.14 217. (a) Women will have to be absorbed more and more in skilled categories of work to make their employment more economic to the employer. (b) With proper skill generation and rational distribution of women labour force as a part of social and economic planning, it should be possible for an employer to follow a non-discriminatory policy in employing women. 27.19 & 27.27 218. (a) Employment of children has of late been on the decline in organised industries; but it is still common in the unorganised sectors of the economy, (b) The employment of children is more an economic problem than anything else. Even then, where it results in denial of education to them, employment hours of children should be so fixed as to enable them to attend to schooling, (c) Where the number of children is adequate, the employers with the assistance of the State Governments should make arrangements to combine work with education. 27.36 & 27.39 AGRICULTURAL LABOUR 219. There cannot be a unilinear approach for improving conditions of agricultural labour. Remedies lie in bringing about fundamental changes in the agrarian structure and social relationships in rural areas. 28.11 220. The highest priority should be given to developmental measures for raising agricultural productivity through labour-intensive scientific farming. The emphasis should be particularly on organisational and institutional reforms that would make scientific technology accessible to the small farmers and its benefits shared equitably between agricultural workers and the farmers. 28.16 221. (a) The Fourth Plan lays emphasis on labour-intensive schemes, e.g., road building, minor irrigation, soil conservation, area development, and rural electrification. This would en large non-farm rural employment and relieve agricultural under-employment, (b) The building up of the infra-structure through labour-intensive techniques should be undertaken through organisation of labour cooperatives to provide employment to the surplus rural labour force. The programme may be integrated with the progressive building up of the educational/social overheads to provide employment to educated youth. 28.21 & 28.23 222. There should be periodic revision of minimum wages in agriculture through tripartite consultative bodies consisting of the representatives of agricultural labour, employers and State Governments at the State and district levels. The Minimum Wages Act should be extended gradually beginning with low wage pocket areas to others. A way should be found to involve the village panchayats in the task of implementation of the Act. 28.33,28.66 &28.34
223. With the development of agriculture, spread of education and political consciousness, agricultural labour will become more organised in course of time. The State Governments, as a special measure, should provide such facilities as may be necessary to organisations of agricultural labour. 28.37 224. A departmental agency under officers with suitable experience and aptitude should be provided to execute and supervise employment programmes in backward areas where weaker sections preponderate. The work of this authority should be closely linked with that of the revenue authority. 28.37 225. Distribution of lands particularly where the statute recognises these gifts should be speeded up. Similarly the pace of "re-settlement' schemes should be accelerated. 28.43
1.23 226. A fair section of agricultural labour consists of small cultivators. Of late, eviction of small cultivators has been on the increase as a result of resumption of land for direct cultivation by land-owners. Such evictions should be stopped. 28.51 227. (a) Suitable arrangements should be made to direct the flow of a part of the cooperative or other institutional credit to the small cultivator- worker to enable him to benefit from the new agricultural developments, (b) For small cultivators who own petty holdings, the prices fixed for agricultural commodities play the same role as wage rates for workers outside agriculture. The wage content of agricultural costs has also to be given due weight in formulating agricultural price policies. 28.57 & 28.58 228. Delay in the enactment of tenurial reforms has acted as a damper to the new agricultural strategy because the land is not recorded in the name of the tiller. Tillers who belong to the category of small cultivators cannot invest their meagre savings under this new programme in the land for which they have no title. The tenurial reforms should be expedited so that small farmers are fully involved in reaching production targets. 28.58 229. Landless workers should be put in ownership of the house sites where their huts stand. Colonies of agricultural labour, away from the present unsanitary and unhygienic conditions, should be established, keeping in view the integrated character of the rural community and the need for promoting social equality. 28.59 230. Agricultural labour as the most vulnerable section of the rural community has suffered from the ravages of scarcities and famines in different parts of the country. As a long-term measure, there should be an intensive approach to development of the areas that are chronically susceptible to drought or famine. 28.60 & 28.61 231. Formation of labour corps, organisation of agricultural labour, and fixation, revision and enforcement of their wages have important policy and administrative implications. Coordination is needed at suitable levels of the vertical administration. There should be one coordinating agency at the Centre and another at the State level. The location of the agency should be left to the discretion of the Central and State Governments. 28.65 232. A major section of the agricultural labour comes from scheduled castes and scheduled tribes. The problem of giving them social status is deep- rooted and there is no short-term solution to it. It can and must be tackled only by the energetic and continued processes of strict enforcement of social legislation and sustained efforts at education. 28.67 & 28.69
Forest Labour 233. Forest labour is largely made up of labour from tribal communities which have deep ecological and economic links with the forests they live in. Forest labour in general, and tribal labour in particular, should be treated with understanding. There is greater scope for employment of the members of these communities as fire watchers, forest guards and rangers. 28.80 234. The welfare of forest labour cannot be divorced from that of other communities similarly placed. All operations connected with the exploitation of forest produce in which these communities are engaged, and trade in major and minor produce should be nationalised to ensure enduring benefits to forest labour and also to the State. 28.81 235. Forest labour cooperative societies through which workers are trained and equipped to organise themselves should be encouraged. They should be kept away from the pale of influence of contractors. There should be a coordinated support for them from different departments of Government. Such managerial assistance, training and marketing facilities, as they need, should be made available to them in the initial stages. 28.83 236. The procedures for grant of compensation on account of disability and injury to the worker during the course of employment should be set right to obviate rigidity in the matter of payment. 28.84 237. The Minimum Wages Act, 1948 should be extended to cover forest labour. Suitable procedures should be evolved for prompt payment of wages. The forest manual should be modified to deal with irregularities in the matter of payment. Rules should be framed under appropriate legislation to provide a wage card to each worker wherein advances given and adjustments against payment for work should be indicated. State Governments may consider involving local panchayats or action bodies of local communities in the task of enforcement of wage contracts on the employers of forest labour. 28.85
1.24 238. The forest department/contractors should make available such facilities as fair-price shops for distribution of foodgrains to forest labour particularly during the difficult months when these areas are cut off from the normal sources of supply. 28.86 UNORGANISED LABOUR Contract Labour 239. A stricter regulation of contract work than at present is called for. The general direction of policy should be towards abolition of contract labour in due course. The Central Bill providing for regulation and abolition of contract labour currently under consideration should be enacted soon. 29.14 & 29.15 Construction Workers 240. The possibility of introducing a decasualisation scheme should be explored to ensure greater security of employment for construction workers. 29.18 241. The cost on amenities to labour should be accepted as a permissible item in the tender. Where this item is admitted, it should be the responsibility of the agency which supervises work to see that the expenditure allowed is actually incurred and amenities provided. 29.19 242. Mobile dwellings should be provided for construction workers at work sites. 29.19 243. A periodic review of the. content of fair wage in the 'fair wage clause' and a strict enforcement of the clause should be the responsibility of the departmental agency entrusted with construction projects. A specific target of inspection should be laid down for all categories of inspecting officers to secure proper enforcement. 29.21 244. To guard against non-payment or delayed payment of compensation to the worker or to the next of kin, in case of fatal accidents, maintenance of attendance registers showing permanent and local addresses of labour employed by the principal contractor or sub-contractor should be enforced. 29.22 Casual Labour 245. (a) There should be a better regulation of conditions of casual labour. A beginning should be made in this direction in all undertakings, public and private, through periodic review and consultations among representatives of Government, employers and workers, (b) If employment is discontinued for a short period and the worker is re-employed, this short period should not be treated as a break in service. After a casual worker completes a stipulated period of service he should be allowed the same benefits which a regular worker enjoys. 29.28 & 29.29 Small-Scale Industries 246. Many unfair labour practices have developed in the wake of rapid expansion of small industries. Apart from efficient functioning of the labour inspectorate, a devoted leadership is necessary to remedy the situation. 29.32 Bidi Workers 247. Formation of cooperatives of bidi and cigar workers should be encouraged. All persons engaged in bidi making, irrespective of their place of work, should be treated as workers for the purpose of the Minimum Wages Act, 1948. 29.47 Workers in Shops and Commercial Establishments 248. (a) Working conditions in shops and commercial establishments are at present governed by State enactments, (b) The Central Government should enact a comprehensive legislation for
the purpose. It should be applicable to units which have a stipulated minimum number of employees or have an annual turnover above a stipulated limit, (c) The present legislation is implemented by local bodies. The implementation is unsatisfactory. It should be transferred to the office of the State Labour Commissioner. 29.48 & 29.50 Sweepers and Scavengers 249. State Governments should enact suitable legislation regulating service conditions of sweepers and scavengers and set up an adequate inspectorate for the purpose. 29.60 (i) 250. Recruitment should be strictly regulated and detailed records of seniority of substitute workers, registration of candidates and issue of call-letters and appointment orders should be maintained. Abolition of 'customary rights' should be sought through persuasions and with the assistance of social workers. An alternative programme for rehabilitation of families affected by this reform should be drawn up. 29.60 (ii) & 29.61
1.25 251. The Provident Funds Act, 1952 should be made applicable to the sweepers and scavengers employed by local bodies. The applicability of the Employees' State Insurance Act should be examined. 29.60 (iii) & (iv) 252. The practice of carrying night soil as head- loads should be abolished. 29.60 (v) Workers in Tanneries 253. The workers in tanneries and leather goods manufactories seem to be in the same plight as their counterparts who work for small employers in other industries. Malpractices such as short payments, unwarranted deductions and even extra deductions for absenteeism add to the other difficulties which these workers face. Unhealthy surroundings in which the workers engaged in tanning live and work should be improved by setting up separate industrial estates. 29.63, 29.64 and 29.65 256. There should be a comprehensive study of the working and living conditions of labour in the cooperative sector in order to understand the position vis-a-vis labour in corresponding units where the nature of entrepreneurship is different. 29.72 257. The recommendations in regard to labour in the small scale and unorganised sectors and agricultural labour will apply to labour engaged by small cooperatives and workers engaged by individual members of the cooperatives for agricultural operations respectively. 29.73 Unprotected Labour 258. Where employment of unprotected labour is of some magnitude, legislation on the lines of the Maharashtra Mathadi Hamal and other Manual Workers (Regulation of Employment and Welfare) Act, 1968 may be considered by other State Governments for enactment. 29.75 Tribal Labour 254. (a) There should be development of a consistent and integrated policy towards involving members of backward communities in the industrial processes at work around them. (b) Employment prospects of tribal labour have improved of late, but mere reservation of posts will no longer help if steps are not taken to make them fit for the jobs likely to be available, (c) Registration and placement procedures in the employment exchanges should be simplified, particularly in the case of illiterate tribal candidates, (d) Local tribal labour, especially displaced labour should get reasonable opportunities for recruitment to unskilled and semi-skilled jobs. (e) It should be the duly of the management to arrange for training and education of these workers for skilled positions when new employment opportunities are created or are available in industrial units in the area. 29.66 Labour in the Cooperative Sector 255. For labour in the large units in the cooperative sector, the recommendations made by us under different heads throughout our report will apply with equal force. A cooperative unit should not seek exemption from the operation of labour laws nor should the Government grant it.29.72 General Recommendations about Unorganised Labour 259. A better understanding of the problems of different categories of unorganised labour is essential to the formulation of suitable ameliorative measures. Detailed surveys about conditions of work in these employments should be undertaken. 29.76 (i) 260. The State will have to play an increasingly important role in providing legislative protection for unorganised/unprotected labour. The requirements of legislation and revision of existing measures should be under constant review.
29.76 (ii) 261. Legislative and administrative procedures applicable to small establishments should be simplified to facilitate their understanding and implementation. The machinery for the enforcement of law and welfare measures should be strengthened. 29.76 (iii) & (v) 262. The difficulties of small employers, who find it difficult to employ separate staff to look after various formalities and keep accounts are genuine. Government should take appropriate measures to mitigate them. 29.76 (v)
1.26 LABOUR ADMINISTRATION 263. Industrial relations in mines attached to factories and factories attached to mines should be brought under the purview of the same agency— Central or State. 30.11 264. The extension of jurisdiction of the Central Government to industrial relations in industries which cut across State boundaries or which are of importance to the economy, should be left to the discretion of Parliament. 30.12 & 30.15 265. Inter-State collaboration for handling matters of labour administration has taken place so far under the auspices of the Central Government. It should be possible for neighbouring States to come together more frequently for evolving a common line of approach on problems to mutual advantage. 30.22 266. The tenure of office for the State Labour Secretary/Commissioner should be longer. There should be an arrangement by which the Labour Department can have the benefit of at least two years experience of either the Labour Secretary or the Labour Commissioner at any point of time. An Officer, who in the early stages of his career worked as Labour Commissioner, should preferably be chosen as Labour Secretary. 30.24 267. The term of an officer from the administrative service, when appointed for running the employment service, should not be short. 30.25 268. Autonomous Boards/Corporations which have been set up to administer labour laws or voluntary arrangements should have a greater feeling of independence than at present in carrying out their functions. 30.26 269. Improving social consciousness should make the parties concerned avoid deliberate delays in the implementation of laws. Courts should show greater firmness in handling intransigence in these matters. 30.28 270. Greater vigilance on the part of Government is necessary for improving implementation of labour laws in small units. 30.29 271. When labour legislation is passed, common responsibility for its implementation by Central and State Governments is assumed. Arrangements for implementation should, therefore, be a matter of routine. 30.33 272. (a) Persons recruited to the junior-most technical posts in the inspectorate under any legislation should spend some time with an office of an industrial association and a well- organised office of a trade union. They should also acquire familiarity with the working of industrial establishments and visit the dwelling places of workers. All this will be a part of their
initial training, (b) A manual of office procedure should be prepared by each office of the Labour Ministry/Department for the benefit of new entrants. 30.34 & 30.35 273. (a) The senior officers should have arrangements to understand the broader perspective within which they have to establish their utility to the public, (b) New incumbents in senior positions should be enabled to attend collective bargaining sessions, trade union meetings and discussions organised by trade unions and professional organisations like management associations, the Indian Institute of Personnel Management/ the National Institute of Labour Relations, Local Productivity Councils and the like. 30.35 274. Refresher courses are necessary for officers who are permanently located in the office of the Ministry/Department. There should be 1 institutional arrangements for this purpose. The concerned institutions require to be strengthened with a view to making them more useful as training grounds for officers at different levels. 30.36 275. Supervision of construction work given on contract should be not only with regard to physical output, but also for seeing what the contract stipulates as to the needs and conditions of employment. This should form part of training to the new entrants in the engineering services of various Departments like the Railways, Public Works Department and Irrigation Department and of public corporations and autonomous bodies like State Electricity Boards and State Transport Undertakings. 30.37 276. Public Works Departments in the States and at the Centre, as also the Forest Department, should consult the respective Labour Commissioners before settling contractors' claims. 30.37 & 30.38
1.27 277. (a) Penalties for non-implementation of labour laws should be deterrent enough for habitual defaulters. A minimum penalty is not suggested, but it is expected that authorities awarding penalties will take a serious view of repeated breaches of law by the same defaulters, (b) Utmost restraint and discretion should be exercised by the appropriate authorities in the matter of withdrawal of prosecutions once launched. 30. 43 & 30.44 278. (a) The responsibility for the administration of Shops and Establishments Act should vest with the office of the Labour Commissioner. (b) Supervisory jurisdiction over all inspectorates which look after conditions of work should vest in the Labour Commissioner. 30.48 & 30.49 279. The field agency for the implementation of the Minimum Wages Act for agricultural labour should be the Zila Parishad and its functionaries at the village level. State Labour Departments should coordinate their implementational activities. The operative agency for this purpose will be the office of the Labour Commissioner. 30.49 280. The cadre of Central Government Labour Officers maintained by the Labour Ministry to look after the welfare of labour in Government industrial establishments should be transferred to the Chief Labour Commissioner's office. The Evaluation and Implementation functions of the Labour Ministry should also be transferred to the office of the Chief Labour Commissioner. 30.50 LABOUR STATISTICS, RESEARCH AND INTELLIGENCE 281. Timely publication of statistics should be an important aim of all agencies collecting data and information, 31.13 282. There is need for standardised concepts and definitions of the absenteeism statistics compiled at present by the Labour Bureau, State Governments and employers' associations. 31.14 283. (a) Statistics of industrial disputes should be collected statutorily under the Collection of Statistics Act, 1953. While publishing them under the new system, more details of the break-up of statistics according to causes should be provided, (b) Arrangements should be made for regular collection of statistics on work stoppages not connected with industrial disputes, such as, stoppages due to breakdown of machinery, shortage of raw-materials and lack of demand for products. If necessary, separate rules under the Collection of Statistics Act, 1953, should be framed for the purpose, (c) Statistics of disputes settled by collective agreements, conciliation machinery, industrial tribunals, or otherwise should be compiled on a regular basis. The Labour Bureau should examine and initiate arrangements for the collection and processing of these statistics in consultation with the authorities concerned. (d) Statistics about loss of working time, loss of production and other related details in the case of go-slow, work-to-rule and other forms of labour protests are difficult to compile. The Labour Bureau should explore, in consultation with the concerned authorities, how these difficulties could be overcome. 31.16 & 31.17 284. Deficiencies in labour statistics arise inter alia from: (i) inaccuracy and unreliability owing to (a) poor response, (b) failure of primary agencies to send accurate reports, (c) handling of data by untrained staff and (d) inadequacy of staff; (ii) variety of definitions of the same term in different statutes; (iii) varying response from agencies which supply data; and (iv) delayed publication. Steps should be taken to remove these deficiencies 31.19 & 31.20 285. (a) The load on employers and trade unions for submission of statistical returns can be substantially reduced through rationalisation of forms. An exercise in this regard was attempted by a committee appointed by the Maharashtra Government; similar steps should be taken by
other State Governments, (b) To secure uniformity in the work of such committees when set up, it would be useful to associate a technical officer of the Labour Bureau, (c) This matter should receive expeditious consideration from the Central and State Governments. 31.21 286. Statistics are collected by Central and State agencies purely to fulfill statutory or administrative requirements; some of the data as collected are not even compiled. To avoid such unplanned collection of data, a Standing Council consisting
1.28 of agencies of Government in charge of collection of statistics, representatives of employers' and workers' organisations and research institutions should be constituted to review periodically the requirements of statistics to be collected. 31.22 287. There is pressing need for bringing out important economic indicators like the index numbers of employment, wage rates and earnings at quarterly intervals. Expeditious action should be taken to organise these series on a statutory basis. 31.25 288. Gaps in labour statistics exist in regard to employees in the unorganised sectors, such as, in small shops, commercial establishments and small scale industries. The matter should be examined by the Central Government in consultation with State Governments with a view to evolving remedies. 31.25 289. The periodic surveys undertaken by Government to understand the rural situation should be continued and intensified. The need for action-oriented statistics for this section of labour is more than for any other. 31.25 290. Collection of social and sociological data on workers' life should find a place in the future programme for development of statistics. 31.26 291. The Labour Bureau has proposals for conducting fresh family living Surveys during 1969- 70 to bring out a new all-India Index on that basis. With the experience gained so far and with the improved facilities now available for tabulation, the switch-over from the 1960 series to the proposed 1969-70 series should be expedited. 31.35 292, (a) The authorities compiling consumer price index numbers should show readiness to supply the necessary technical information to the users on a regular basis, (b) A formal avenue of consultation should be provided at the time of planning the family budget inquiries or inquiries in all matters pertaining to industrial employment. (c) A chart of prices collected during the week area-wise should be displayed in the office of the Labour Commissioner. Users could raise doubts about the prices displayed with the authority in charge of compilation and the authority should get these doubts clarified through an appropriate check by an officer who is senior in rank to the one who collects the prices. The prices used in the final compilation should also be published, (d) The manner of introducing changes in (i) the commodities included in the index, (ii) the technical problems involved and (iii) the way they are proposed to be tackled should be explained to the users through the usual channels open to the authority compiling the index. 31.34 & 31.37 (i, ii and iv) 293. Before the indices are released, they should be checked for their correctness by a committee consisting of the Director, Labour Bureau, and a representative each of the Central Statistical Organisation and the office of the Economic Adviser (Ministry of Industrial Development and Company Affairs). This procedure should not, however, result in delays in releasing the indices. 31.37 (iii) 294. The family budget inquiries which form the basis of determining the 'weights' for an index should be undertaken once in ten years and the work on linking the old and new series should be completed before the old series is discontinued. The process should be ordinarily over within two years of the completion of the inquiry. 31.37 (v) 295. The Government of India has set up a Council of Social Science Research, an autonomous body which will coordinate researches in all social sciences and promote systematic research by providing financial assistance to universities and research institutes for approved schemes. This Council should recognise labour research as one of its important
branches and introduce the necessary coordination in labour research within the overall discipline of social science research. 31.39 296 (a) There should be wider collaboration among Government, universities and research institutions, and employers' and workers' organisations in the field of labour research, (b) The responsibility of providing necessary leadership and resources in the field of labour research should rest primarily with the Department of Labour and Employment, Government of India. It should re-examine the difficulties which cropped up in the way of proper functioning of the proposed Central Institute of Labour Research and activise the Institute. 31.42 & 31.43
1.29 INDIA AND THE ILO 297. (a) India's participation in the I.L.O. over the years has been meaningful, (b) To be better equipped for the country's participation in the annual conferences and also industrial Committees of the I.L.O., the choice of delegates (Government, employers and workers) should be made well ahead of time. (c) A preparatory meeting with the participation of all delegates and advisers to discuss agenda items should be convened by the Labour Minister. It should help participants to evolve the stand that our delegates should take, though employers' and workers' representatives will naturally work in the ILO in close collaboration with their international organisations, (d) A flexible approach should be followed in fixing the strength of the delegation taking into account the complexity of the subjects to be discussed in the conference. 32.10 298. Our country, while receiving technical assistance from other countries through the ILO, has also offered assistance to the international community. There is greater scope than at present for improving this two-way traffic. 32.15 299. (a) The Government should, over a period, seek to ratify the Conventions which may have been held up because of technical and administrative difficulties, (b) Some of the conventions dealing with fundamental human rights have not yet been ratified by our country. There should be a reassessment by the Government with a view to their formal ratification. 32.22 & 32.25 300. International obligations which devolve on India as a result of our long association with the ILO have to be discharged in several directions : (i) by adopting the aims and objects of the ILO for national action ; (ii) by cooperating at the international and regional levels in the programmes of the ILO ; and (iii) by progressive implementation of the standards set up by the ILO. Our country has made adequate progress in all these directions and this process should continue to gain momentum. 32.30
Chapter I: Introduction
Appointment and Terms of Reference
1We were appointed by the Government of India Resolution No. 36/14/66-I&E, dated the 24th December, 1966, issued by the Ministry of Labour, Employment and Rehabilitation (Department of Labour and Employment)1. Our terms of reference are: (1) To review the changes in conditions of labour since Independence and to report on existing conditions of labour; (2) To review the existing legislative and other provisions intended to protect the interests of labour, to assess their working and to advise how far these provisions serve to implement the Directive Principles of State Policy in the Constitution on labour matters and the national objectives of establishing a socialist society and achieving planned economic development; (3) To study and report in particular on— (i) the levels of workers' earnings, the provisions relating to wages, the need for fixation of minimum wages including a national minimum wage, the means of increasing productivity, including the provision of incentives to workers; (ii) the standard of living and the health, efficiency, safety, welfare, housing, training and education of workers and the existing arrangements for administration of labour welfare— both at the Centre and in the States; (iii) the existing arrangements for social security; (iv) the state of relations between employers and workers and the role of trade unions and employers' organisations in promoting healthy industrial relations and the interests of the nation; (v) the labour laws and voluntary arrangements like the Code of Discipline, Joint Management Councils, Voluntary Arbitration and Wage Boards and the machinery at the Centre and in the States for their enforcement; (vi) measures for improving conditions of rural labour and other categories of unorganised labour; and (vii) existing arrangements for labour intelligence and research; and (4) To make recommendations on the above matters. NOTE.—For the purposes of the Commission's work the term 'labour' and 'worker' will include, in addition to rural labour, all employees covered by the Industrial Disputes Act, 1947. The original composition of the Commission underwent the following changes: (i) Shri G. D. Khandelwal, the then Member (Staff), Railway Board, was elevated to the Chairmanship of the Railway Board, and his place was taken over by Shri B. C. Ganguli on February 17, 1967; (ii) two additional Members, Dr. Bharat Ram and Dr. Baljit Singh, were appointed on April 18, 1967; (iii) Shri D. C. Kothari was appointed in place of the late Shri N. K. Jalan on September 20, 1967; (iv) Shri S. A. Dange resigned on September 17, 1968; and (v) Dr. B. N. Ganguli resigned on March 3, 1969.
Completion of Preliminaries
1.2 We assembled for the first time in Bombay on January 18, 1967 and had the benefit of listening to the inaugural address by the then Minister for Labour, Employment and Rehabilitation, Shri Jagjivan Ram2, and the response to it, by the Chairman of the Commission3. Since these two speeches provide the main guidelines for our work, they have been appended to the Report.
Foot Note 1 Appendix I 2 Appendix II In the unavoidable absence of the Labour Minister, his inaugural speech was read out by Shri P. M. Nayak, Additional Secretary, Department of Labour and Employment. 3. Appendix III
21.3 Three eminent persons associated with the Royal Commission on Labour, 1929—1931 (referred to hereafter as the Whitley Commission), two of them as Members and one as Joint Secretary, still continue to be active in public life. They are Shri G. D. Birla, a noted industrialist, Diwan Chaman Lal, a senior trade union leader and Shri S. Lall, a distinguished civil servant (now retired). They met us on our invitation. Discussions with them about the manner in which the Whitley Commission set about its task and on the problems in the area to be covered by our inquiry were very useful. Informational Base Our starting point, according to the terms of reference, was to assess the situation as it developed since Independence. However, for understanding the situation prevailing in 1947 and for maintaining continuity with the work of the Whitley Commission, we considered it appropriate to refer to the period 1931—47 wherever necessary. One of our earlier tasks was, therefore, to assess the availability of information connected with our inquiry. As compared with the task of the Whitley Commission, ours was more extensive in terms of the number of workers involved, the aspects of conditions of work and the nature of employment. Inter-actions between labour and management and relations between Governments on the one hand and the two parties on the other have become more intricate be-cause of fundamental changes in the social framework of our country. In a sense, we consider ourselves more fortunate than the Whitley Commission in respect of availability of published material. Literature on labour and allied subjects in the last forty years, and more particularly in the period since Independence, has been voluminous. Apart from the Report of the Whitley Commission, 1931, and the extensive studies made by the Labour Investigation Committee, 1946 (thereafter referred to as the Rege Committee), there have been reports of committees appointed by different Provincial/State Governments which reflected the conditions prevailing at the time of their reporting. In the same category could be placed official surveys of labour conditions in several industries and areas, but undertaken in different years. To cite a few, we had the reports of the two enquiries on agricultural labour, reports on labour conditions in industries, reports on the family budget inquiries, and the wage censuses. Reports of minimum wages advisory committees, wage boards and special committees appointed to study changes in conditions of work in different sectors of employment including industries, small and large, transport of all types, trade and service organisations, financial institutions of different types, the two Pay Commissions, the Dearness Allowance Commissions, the Bonus Commission and Committees and Courts of Inquiry were other useful sources of material. The Annual Reports of Ministries of the Central Government and Departments of State Governments and the annual reports of employers' and workers' organisations which discussed the topical problems that affected the respective groups contained information, albeit subjective. The record of discussions in the Indian Labour Conference, the Standing Labour Committee, the Industrial Committees, Evaluation and Implementation Committees and similar bodies at the State level could also be put to some use. A fair measure of legislation was undertaken in the field of labour, particularly in the early years of Independence. Debates in Parliament and State Legislatures, leading to these enactments, formed equally valuable source material. On the interpretational side of the legislation, apart from the pronouncements of the Supreme Court and High Courts, we had for our analysis the awards of the industrial tribunals, industrial courts and labour courts. 1.6 The Research Programmes Committee set up by the Planning Commission in 1953 has been instrumental in sponsoring research on various aspects connected with economic development; labour research has been a part of this activity. Researches in cognate areas like city surveys, economics of small industries, assessment of land reforms, benefits of irrigation and the like have relevance to some aspects of our work. Labour in India has been a subject of study in recent years by a number of scholars within the country and abroad. Professional organisations in the field of labour have increased their activities; special institutions for labour research have been set up; some universities, and institutions enjoying similar status, have organised special cells to study labour with or without Governmental assistance. Their research activities as well as special seminars/meetings organised by them have helped in our understanding of local experiences. The library of the Department of Labour and Employment prepared bibliographies on selected topics for our use. Similar assistance was made available by the International Labour Office, Geneva, on international experience.
31.7 On the statistical side, the annual publication of the Labour Bureau 'Indian Labour Statistics' and similar publications by State Labour Departments came in handy for some aspects of our work. We have used the data published by Government, the Reserve Bank of India and the financial journals, to understand the general behaviour of the economy. For a major part of the work of interpreting changes in the conditions of manufacturing industries, the financial structure of different industries, the wage component, employment and the like, information culled out from the Census of Manufacturing Industries (1946—58) and the Annual Survey of Industries (since 1959) could be used with advantage. A statistical analysis of these data is published separately. The results of the surveys conducted by the Directorate of the National Sample Survey were analysed, wherever necessary, to understand the changes in Conditions of labour in relation to changes in the life of the community as a whole. Even with this fund of statistics, special efforts had to be made to comprehend changes which had taken place with regard to certain categories of labour, particularly in agriculture and small scale industries. In some other areas, where statistical support was not available, we had to rely on the assessment of experts. 1.8 To supplement these informational resources, we requested the Central and State Governments and central organisations of employers and workers to prepare material for our use under the following broad headings: (1) wages, earnings and productivity; (2) social security; (3) conditions of work; (4) industrial relations; (5) rural and other unorganised labour; (6) labour research and intelligence; (7) organisation and functions of the Department of Labour;1 (8) international obligations; (9) tripartite consultative machinery and its impact on labour policy; and (10) employment and training. (These heads Were broadly expected to cover the whole area of our inquiry). We also requested them to send to us such reports as they thought would be useful to the Commission. The response from the Central and State Governments to this request was satisfactory. The central organisations of employers and workers considered it appropriate to cover these topics in the exhaustive memoranda they sent. Questionnaire
1.9 Our next task was to frame a Questionnaire. We sought to emphasise in the circular issued with the questionnaire2 the need for re-examining, in particular, the principles on which the current labour policy was framed. In view of the exhaustive nature of the inquiry, the questionnaire had to be elaborate and yet leave persons/organisations free to add to the issues we posed, if they so desired. The questionnaire was widely circulated within the country. Some copies were also distributed in foreign countries among persons conversant with the Indian labour scene. Several institutions/persons responded to it'. The replies were processed in two ways. Manual tabulation was undertaken to bring out a qualitative assessment of the views of different categories of respondents. Services of a computer were availed of to bring out the quantitative dimension of category-wise responses to the various issues. The tables so prepared are being published separately. Liaison Arrangement
1.10 We were conscious that the task expected of us could not be completed satisfactorily unless adequate local arrangements were made to ensure a smooth flow of information. For this purpose, we found it convenient to request all employing Departments* of the Central Government and other Departments with which we were concerned, the State Labour Depart-ments5, major public sector undertakings and central organisations of employers and workers to nominate a person in the Department/undertaking/organisation as a liaison officer-6 for our work. In particular the liaison officers of the State Governments, mostly State Labour Commissioners, had to bear the main brunt of meeting the constant demands for information made by us. It was with the assistance of State Labour Secretaries/Labour Commissioners
Foot Note 1 This was not relevant to non-official organisations. 2 Appendix IV 3 Appendix V 4 Employing Departments are those which control Government employee who come within the definition of the term 'workman' under the Industrial Disputes Act, 1947. 5 Includes Labour Departments of Union Territories also. 6 Appendix VI.
4that appropriate arrangements could be made for our visits to State headquarters and places of industrial importance. To ensure that our requirements were uniformly appreciated by the liaison officers, we held two conferences in the early stages of our work, the first with Labour Secretaries and Labour Commissioners of State Governments, and the second with officers of Central Ministries and public sector undertakings associated with them. Recording of Evidence 1.11 For recording evidence at State headquarters, our sessions usually opened with a discussion with local union leaders in the State, followed by a round covering more or less the same range of topics with employers' organisations or groups of individual employers. We then met persons in public life who included vice- chancellors of universities, university teachers, research scholars and persons who have been associated in some capacity with workers, employers or their organisations. In several States, members of local legislatures gave us the benefit of their advice. The final session at each State headquarters was devoted to the Government Departments/State Corporations and State public sector undertakings, ending up with the State Labour Minister and other ministers and officials of the Labour Department. Such clarifications as were needed on the evidence were sent to us in writing by many persons/organisations who appeared before us. Where a deeper probe into certain points mentioned in the evidence was necessary, we deputed suitable officers from our Secretariat for making an on-the-spot inquiry and preparing a report for us. We undertook many observational visits, in addition, to acquaint ourselves with local situations. It was possible, through this process, to have a better appreciation of the issues raised during the course of our inquiry. 1.12 We followed these discussions by meetings with the central organisations of employers and workers. On many general issues or issues of all-India importance, the affiliates of these organisations in different States had expressed tentative views or explained local situations. Apart from what the central organisations had to tell us about the issues before us, the points arising out of the evidence of their State affiliates were brought up for clarifications in these meetings. A similar pro-cedure was followed in recording the views of employing Departments of the Central Government and the Central public sector undertakings. 1.13 Shri V. V. Giri, then the Vice President of India, gave us the benefit of his experience in a paper he sent to us and in the talks we had with him. Our Chairman and some members called on Acharya Vinoba Bhave mainly to discuss the problems of the rural and unorganised sections of the working class. 1.14 We thought that our series of consultations would be incomplete if we did not have the benefit of advice from the Members of Parliament1 belonging to different political parties. Among them there are many who take keen interest in problems connected with labour—urban and rural. Through the good offices of the Minister for Parliamentary Affairs and leaders of different parliamentary groups, we obtained a list of Members of Parliament who would help us. For these meetings our Secretariat put together the trend of evidence recorded on some important areas of our inquiry with a view to making our dialogue with the representatives of the people more fruitful. 1.15 Before we settled down for framing conclusions, we had meetings with the Secretaries to the Government of India and with the officials of the Ministry of Home Affairs and the Department of Labour and Employment. Our final round of discussions were with the Planning Commission and the Governor of the Reserve Bank of India. 1.16 The list of organisations/persons who tendered oral evidence before us is appended3. Committees, Study/Working Groups 1.17 We set up three Committees, thirty Study Groups and five Working Groups3 to investigate various issues connected with our terms of reference. Each group drew upon (a) the expertise of its members, (b) the relevant material on the whole area of the Commission's work in the concerned industry or subject, and (c) information which would help project its thinking on the problems in the area in the years to come. It was free to evolve its own procedure for work and for framing its report. --------------------------------------------------------------------------------------------------------------------- Foot Note 1Appendix VII 2 Appendix VIII 3 Appendix IX.
5Several committees/study groups reached unanimous conclusions. In some, there were differences in emphasis; and in others, the divergences were of a serious nature requiring dissenting minutes. The bearing which these conclusions have on our report is indicated in the Chairman's Foreword to the reports of these committees and groups, wherein he has stated that while the views expressed in the reports are the views of the Committees/Groups, in examining them for framing its final recommendations, the Commission will attach due importance to these views, coming as they do from knowledgeable persons. Indeed, as our Report will show, we have not accepted some of the suggestions made by these Committees/ Study Groups. Seminars and Conferences
1.18 Another recognised method to seek expert guidance was through participation by the Commission in seminars', organised by academic institutions interested in labour problems. In some cases, such seminars/conferences were sponsored by the Commission; in others, a measure of assistance was made available to institutions for the discussions arranged by them. In the case of conferences, the procedure followed was (1) to request a known expert to prepare a paper on the basis of his expertise and technical information, (2) to seek written comments from experts to be invited to it on this paper, and (3) to reach conclusions after detailed discussions on the basis of (1) and (2). We used this method for proper appreciation of various problems connected with (a) working conditions, (b) labour statistics, and (c) agricultural labour. International Cooperation
1.19 To understand the latest developments in the field of labour in , the international context, our Secretariat, at an early stage of its work, established liaison with the International Labour Office (ILO) through the Department of Labour and Employment, Government of India. The ILO was good enough to nominate one of its senior officers to help clearance in good time of our references to that office. Embassies and High Commissions of different countries located in Delhi assisted us with whatever information we, needed from their respective countries. The Australian Government provided facilities to our Member-Secretary and the Member-Secretary of our Study Group on Labour Legislation to visit Australia and have discussions with a cross-section of public opinion in that country and also with persons/organisations and governmental institutions which helped in maintaining industrial harmony. We had similar invitations from the ILO, the USA and the USSR, but these could not be availed of because of the time-table we had set for ourselves. Towards the close of our work but before reaching final conclusions, we deputed the Member-Secretary to Geneva for discussions at the ILO headquarters on international experience. Our special thanks are due to the ILO and to the foreign Governments who provided/offered to provide liberal facilities for studying international/national experience. Cooperation from the Press
1.20 Throughout our inquiry, the Press was extremely cooperative. It provided adequate coverage to the Commission's programmes before we visited any State and to the press conferences which usually followed the completion of our work in that State. The study group reports, proceedings of the conferences, seminars, special discussions, etc., received wide publicity and evoked editorial or other comments in important dailies and journals. Scheme of the Report
1.21 Our report first deals with the general background of changes which have taken place in the economy since Independence. We then indicate our approach in dealing with the task entrusted to us, followed by chapters on different subjects covered by our terms of reference. Our conclusions and recommendations are brought together in the final chapter. 1.22 Apart from the Committee/Study Group/Working Group reports and the statis-tical volumes which have been released to the public, we have authorised the publication of three other companion volumes, the first dealing with industry, in its wider connotation, the second on the changing profile of labour in different States, and the third which contains the results of mechanical tabulation of evidence. The status of these publications in relation to our conclusions/recommendations is explained in the Foreword to each of these volumes. ------------------------------------------------------------------------------------------------------------------------------------------------ Foot Note 1 Appendix X
Chapter II: Framework of Indian Society
6We consider it necessary to provide a synoptic view of the main features of the Indian society as they have emerged since Independence. Notwithstanding the significance of individual issues, referred to us, a comprehensive view of labour problems covering all wage labour engaged in primary, secondary and tertiary activities, whether organised or otherwise, protected or unprotected, we believe, should not be taken in isolation from the trends of developments in the system as a whole. 2.1 Our country is inhabited by over 514 million people with a population density varying from 1,792 persons per square kilometre in the Union Territory of Delhi, to 435 in Kerala, 59 in Rajasthan and 8 in the Andamans. Over the forty years 1901 to 1941 the population witnessed an increase of about 34 per cent; the increase since has been 13.3 per cent in 1941—51 and 21.5 per cent in 1951—61. It threatens to be more than 2.5 per cent per annum during the current decade. The rate of population growth in recent years has been influenced by a continued high birth-rate coupled with a declining death rate. The sex ratio of the population is in favour of males; in 1961 there were 941 females per thousand males. The age structure reveals characteristics typical of a population which has potentialities of a high rate of growth; 41 per cent of the population is accounted for by boys and girls below the age of 15. The rural/urban ratio as revealed in 1961 was 82:18. This represents a small change as between the years 1951 and 1961. Several languages and dialects are spoken in different parts of the country. Each language has developed, in varying degrees, its own literature and each dialect its folk-lore. The 1961 Census records that 24 per cent of the population was literate as against 16.6 per cent in 1951. The percentage of literacy in 1961 worked out at 34.4 per cent for males and 12.9 per cent for females. 2.3 We refer briefly to the land, water and mineral resources. The country has a geo-graphical area of 3.27 million square kilometres, with a land frontier of 15,168 kilometres and a coast-line of about 5,700 kilometres. It has a variety of soils ranging from the rich alluvium of the Indo-Gangetic plains in the north, noted for its response to irrigation and manuring, to black, red and laterite structures in the peninsular region, suited for a variety of crops. The soils have determined the cropping pattern and, to some extent, the structure of local industry. India has well distributed water resources consisting of rivers and streams, about a third of which has been harnessed. It is rich in mineral resources. Reserves of coal are estimated at over 120,000 million tonnes. Potential oil-bearing areas so far explored aggregate a million square kilometres and more, with oil reserves of over 100 million tonnes. Iron ore deposits of about 22,000 million tonnes account for a fourth of the total world reserves. Besides, there are sizeable quantities of gypsum, manganese, bauxite and mica. Small belts of copper, chromite and gold lying at different depths are being exploited. Developments Prior to Independence
2.4 India became independent on August 15, 1947. The struggle leading to Independence and the long history associated with it are by themselves significant in tracing the evolution of the Indian society in the last twenty years. The freedom movement, mainly directed at the overthrow of the foreign yoke, developed its own social and economic ethos, in consequence of the growing awareness that without social reform and economic development, political independence will not take the country far. While this was the trend of nationalist thought upto the thirties, an aspect which overshadowed all political discussions and public controversies thereafter was the need to bring about a workable integration between the two major communities comprising undivided India. These have influenced significantly the institutional framework which free India has given to herself for conducting the affairs of the nation. 2.5 India inherited from her erstwhile British rulers a unified system of administration, a rule of law, a measure of synthesis of eastern and western ideas, inadequately developed agriculture, an industrial setting though limited in its diversity, a system of transport and communications which for a developing country could be considered modern, a press which had in it the main elements of free and fearless comment on the events of the day, a foundation of liberal
7education and scientific and technological institutions, and an independent judiciary which could be trusted to interpret the wishes of the legislature faithfully. The strengthening of the better elements in this inheritance was at once a challenge and an opportunity brought to the country's leadership on the eve of Independence. It evoked responses from the people in the form of nationalism and political unity based on economic and cultural integration of the country. 2.6 Development of agriculture had not received its due priority, though the country was essentially agricultural. The needs of growing numbers were always more than what was produced. Successive changes in the geo- graphical boundaries over the years reduced India to the position of an importer of foodgrains. Agriculture stabilized at a low level of efficiency and low productivity per hectare of utilized land and per person employed in agriculture. Within the country, the small dose of industrialisation with newer forms of transportation made rural areas less insular and more dependent on products of large scale industries. And these also showed tardiness in their growth. Employment in organised industry on the eve of Independence was not more than a few millions in spite of the industrial growth spread over a century. Even to reach this stage, the major impetus had to come from the two World Wars and a measure of tariff protection which the industry could secure under an alien rule. The process of industrialisation remained inhibited due to the apathy of Government, lack of financial resources, lack of savings on the part of the community, inadequate development of the infra-structure and indeed the sluggish pace of growth of the economy as a whole. The total effect of the events prior to Independence was such that the economy in the post-Independence era displayed typical features of an under-developed economy. This is not to suggest that no developed pockets existed; but the few which were there served merely to arouse in others the aspirations which lay dormant in the pre-Independence phase. 2.7 The Indian National Congress (Congress), the dominant political organisation in the country, was not unaware of the needs of the time. Its annals reveal resolutions on what Government should and should not do to alleviate the miseries of the people. Its action programme acquired a radical character only when, with the philosophy of nationalism, it blended an economic content which appealed to the masses. This process could be noticed even before the resolution on economic programme was adopted at the Karachi Congress in 1931. A trend seen in the early years was against Government's policy of laissez faire which operated in favour of interests outside the country. The popular leadership favoured conscious governmental action to tackle the deep-rooted problems of under-development. The economic objectives became more definite when the struggle for Independence acquired a sharper edge in the thirties. Indeed, on the assumption of limited political power under the Government of India Act, 1935, the Congress initiated work at non-official level for preparing a blue- print for development on a comprehensive analysis of the economic problems in relation to the resources of the country. This was about ten years prior to Independence, and over a dozen years prior to inauguration of formal planning in the country in 1950. 2.8 The cessation of hostilities in 1945 and the steps taken by the new British Government for transfer of power to the people of India were developments to be noted after the militant postures struck by the war-time British Government. On the economic plane, the threat of a fall in the level of employment without abatement of pressure on prices and the inadequacy of wages resulted in a high degree of industrial unrest in the years 1946 and 1947. The transition from war-time to peace-time economy and dislocations and distortions resulting from the partition of the country, which had functioned till then on the basis of inter-dependence between the regions, added to these difficulties. It was only after their magnitude could be brought to a size the people could live with that Government could devote attention to nation-building activities which had been at a standstill for years. The Constitution
2.9 The plan for transfer of power by the British envisaged the early setting up of a Constituent Assembly. In the very first session of the Constituent Assembly set up in pursuance of this plan, the then Prime Minister of India, the late Shri Jawaharlal Nehru, moved on December 13, 1946, a resolution which envisaged the Indian Union as an 'Independent Sovereign Republic' consisting of autonomous units: "(5) WHEREIN shall be guaranteed and secured to all the people of India justice, social, economic and political:
8equality of status, of opportunity, and before the law; freedom of thought, expression, belief, faith, worship, vocation, association and action, subject to law and public morality; and (6) WHEREIN adequate safeguards shall be provided for minorities, backward and tribal areas, and depressed and other backward classes; ..."1 For the nation, according to Shri Nehru, the Resolution was "a declaration, a pledge and an undertaking before the world, a contract with millions of Indians and therefore in the nature of an oath which we must keep". The Assembly accepted the Resolution and from it flowed important guidelines for the work of the Constituent Assembly. Shri Nehru further underlined the sentiments behind the Resolution in his speech in the Assembly on the night which ushered in a Free India. 2.10 The Constitution was adopted and enacted on November 26, 1949 with the following Resolution:— "WE, THE PEOPLE OF INDIA, having solemnly resolved to constitute India into a SOVEREIGN DEMOCRATIC REPUBLIC and to secure to all its citizens: JUSTICE, social, economic and political; LIBERTY of thought, expression, belief, faith and worship; EQUALITY of status and of opportunity; and to promote among them all FRATERNITY assuring the dignity of the individual and the unity of the Nation; IN OUR CONSTITUENT ASSEMBLY this Twenty-sixth day of November 1949, do HEREBY ADOPT, ENACT AND GIVE TO OURSELVES THIS CONSTITUTION". The Resolution became the Preamble to the Constitution of our country. Some of its articles came into force at once; the Constitution as a whole started its course on January 26, 1950. 2.11 The Constitution provides for a single and uniform citizenship for the whole of India. It confers the right of vote on every person who is a citizen of India and who is not less than 21 years of age on a fixed date and is not otherwise disqualified under the Constitution or any law of the appropriate legislature on grounds of non- residence, unsoundness of mind, crime or corrupt or illegal practice. 2.12 Citizens have been given certain "Fundamental Rights" under the Constitution: Right to Equality, Right to Freedom, including the Right to form societies/unions. Right against Exploitation and the like. Fundamental Rights are justiciable and any citizen can approach the competent court for seeking re-dress against the infringement of these Rights2. The Constitution also contains the "Directive Principles of State Policy". These principles, though not justiciable, are nonetheless regarded as 'fundamental in the governance of the country'. They cast a duty on the State in fulfillment of which the performance of the Government in power can be judged. Since the Directive Principles have a special relevance to our enquiry, they have been discussed in some detail in a later chapter.3 The Constitution lays down inter alia the legislative and administrative relationship between the State and the Union. Three Legislative Schedules—the first exclusively for the Union, the second exclusively for the State, and the third for both the Union and States— have been drawn up and provision has been made to avoid difficulties likely to be created by concurrent jurisdiction. Residuary legislative functions rest with the Union. 'Labour' is an item included in the Concurrent List. Thus labour legislation in the States has to operate within the constraints laid down for legislation on the Concurrent List in the Constitution. State Legislatures cannot enact a law which is repugnant to an Act passed by the Parliament. In practice, however, the working of Constitutional provisions have not created any special difficulty in labour matters even at the time when Union-State relationship in other aspects of their respective functions had to undergo a severe strain. Political and Administrative Changes
2.14 Immediately prior to 1947, the Indian political scene was dominated mainly by two parties, the Indian National Congress which comprised all communities and the Muslim League which had a major following in the ----------------------------------------------------------------------------------------------------------------------------------------------------- ------ Foot Note 1 Jawaharlal Nehru's Speeches, Volume I (1946—49), p. 6. 2 It is only when the President proclaims Emergency that these rights can be suspended for the period of operation of the Proclamation. 3 Chapter 6—Our Approach
9second largest religious group in the population. Since Independence, the Congress has commanded a comfortable majority both in the Parliament and State legislatures. With notable exceptions in some States for varying periods, this situation continued till 1967. Within the party in power, however, there developed splinters of different sizes. In the early stages, major opposition in the Union Parliament/State Legislatures came from some politically well-knit groups. But over the years, barring exceptions, these also were affected by splits, groupings and re-groupings. The picture which has emerged after the last General Election seems to point to a pattern in which the Union and State Governments could belong to different political persuasions. The federal structure1 of the Constitution is, in a way. being put to test now. 2.15 The essential structure of Government administration was again inherited from the pre-Independence period. At the higher level of policy-making and administration the functions were discharged both in the States and at the Centre by members of selected services. A major expansion, however, came with Independence. The problems, which a popular Government had to face, imposed a strain on the administrative setup. The period between 1947—51, which saw considerable changes in the functions of Government, brought out a number of reviews on the working of the administrative system as also expansion in the administrative cadres all over. With the initiation of the planning process, the tasks of developmental administration were added on to the normal administrative but expanding functions, both at the Central and at the State levels. The system as a whole required a thorough examination, and this task is now under study by a separate Commission, the Administrative Reforms Commission, Progress Since Independence
2.16 Under the process of planning initiated in 1950-51, development and harnessing of the country's resources have gained momentum (Annexure). We see evidence of a transformation and refashioning of the traditional pattern of Indian economy, which had experienced only a marginal change since the beginning of the century in terms of per capita real income. Progress recorded so far has added fresh dimensions both to the nature and scale of developmental activities in the country. On this score one can be confident that the material and human resources of the country are capable of further development and more intensive and efficient utilisation. Both in terms of employment and contribution to the national product, agriculture and allied activities continue to predominate, but there is now a fairly developed and diversified industrial base and an organised net-work of transport and communications. The institutional framework and the system of socio-economic of the economy are on the way to being purposively reshaped. Under the first three plans, the country's net national income increased by about 69 per cent or at a compound rate of 3.8 per cent per year at constant prices. The per-capita income in real terms increased during the same period by 28 per cent or at an average annual rate of about 1.8 per cent. An interregnum commenced, even within this period, after 1964-65, due to adverse monsoons and the conflicts with our neighbours. Recovery started in 1967-68 when national income increased by 8.9 per cent over that of the previous year. 2.17 This rate of advance compares favourably with the growth rates achieved by some of the now developed countries in their early stages of economic growth, though in an age of technological reorientation a more rapid progress could have been expected. As against this expectation, one has to allow for the country's inability to be fully in tune with modern technology because of unfavourable demographic factors and problems of unemployment and under-employment attendant on it, apart from other difficulties already referred to. 2.18 With the growth of aggregate national production, its composition has not significantly changed. Agriculture, animal husbandry and allied activities continue to contribute about half the net national product, 1966-67 being an exception. The relative shares of 'mining, manufacturing and small enterprises', "commerce, transport and communications' and 'other services' have shown changes inter se as the following table would reveal: -------------------------------------------------------------------------------------------------------------------------------------------- Foot Note 1 We ought to make it clear that we are using the word 'federal' in a general sense. We are aware that several constitutional lawyers, including Dr. Ambedkar, who played an important role in the drafting of the Constitution, have said that the Indian Constitution is not federal in the strict sense. Having regard to the powers which are vested in the Parliament and the Union Government by the Constitution, particularly in relation to emergencies as prescribed in Parts XVIII the Constitution of India, in a technical sense, in federal-cum-unitary. However, it is not necessary for our purposes to enter into a discussion of this aspect of the matter.
10
TABLE 2.1: Percentage Distribution of Net National Output at 1948—49 Prices
1948- 49
(1) Provisional. Figures have been obtained from the Central Statistical Organisation. (2) Including forestry and fishery. (3) With better harvests in the two years following 1966-67, the relative share of agriculture has again come to near about a half. (4) Comprising professions and liberal arts, Government Service (Administration). Source: Economic Survey 1968—69. In recent years, the large fluctuations in the levels of agricultural production due to adverse climatic conditions, coupled with the slack in industrial production, have somewhat distorted the composition of the net domestic product; but there is little doubt that gradually the shares of the secondary and tertiary sectors have been moving up. 2.19 Agriculture has shown a significant expansion. Between 1950-51 and 1966-67 the gross acreage under cultivation is estimated to have gone up by 23 per cent. Over the same period, the volume of agricultural production registered an increase of about 46 per cent and the average yield per hectare improved by about 19 per cent. Operationally, however, Indian agriculture still continues along traditional lines, though use of fertilizers and mechanical aids, and cultivation of high-yielding varieties have been getting popular in more recent years. Tractors and pumping sets are not entirely unknown to rural areas as they were some years ago. 2.20 Electricity generated has increased from 6.6 billion Kwh in 1950-51 to 49.6 billion Kwh in 1968-69. Of the total sales of electric energy in 1968-69, industry bought about 73 per cent and commercial users another 5 per cent. Approximately 8 per cent of the sales were for domestic consumption and about 6 per cent for irrigation. The remaining 8 per cent of the sales represents other uses such as public lighting and public works and sewage pumping. In recent years, the pattern of electricity consumption has shown little change except for the fact that about 69,000 villages have been electrified by the end of March 1969 as against 3,677 in the beginning of the First Plan. Presumably, the use of electrical energy for agricultural operations has also been on the increase. 2.21 The industrial base of the economy could now be considered as fairly well-developed. Simultaneously, the industrial structure has been greatly diversified and strengthened. In addition to the traditional large-scale industries, viz., cotton and jute textile, sugar, tea, paper and paper board and cement, a number of new industries including heavy electricals, heavy chemicals, petro-chemicals, fertilizers, machine tools, automobiles and mechanical engineering industries have been established. The production of iron and steel has been substantially raised. Refineries have been set up. Aircraft manufacture has made progress. Railway rolling stock is being constantly augmented, almost all from indigenous sources, to meet the expanding requirements of rail transport. 2.22 External economic relations have also shown noteworthy developments. Before the
1950- 51
1955- 56
1960- 61
1966- 67
1967- 68 1 2 3 4 5 6 7 1. Agriculture, (2) ... animal husbandry and ancillary activities
49.1 49.0 47.9 46.4 38.40 41.6
2. Mining, manufacturing and small enterprises ...... 17.1 16.7 16.8 16.6 18.2 16.7 3. Commerce, transport and communications ...... 18.5 18.8 18.8 19.3 20.0 19.2 4. Other services (4).... 15.5 15.7 16.5 18.1 24.7 23.8 5. Net domestic product at factor cost . 100.2 100.2 100.0 100.4 101.3 101.3 6. Net factor income from abroad . —0.2 .0.2 0.0 —0.4 —1.3 -1.3 7. Net national product at factor cost 100.0 100.0 100.0 100.0 100.0 100.0
11out-break of the Second World War, India's foreign trade followed the pattern of a colonial country. The major portion of our trade was with the United Kingdom and other Commonwealth countries. The country used to export raw material and import finished products. The value of exports more or less balanced, or was made to balance, with the value of imports. Occasional and small surpluses in balance of payments were not unknown. The special conditions created by the Second World War and the post-war years converted Independent India into a substantial creditor country with comfortable foreign exchange reserves. The situation has now changed both in regard to the pattern of imports and exports and the countries with which we trade. In 1950-51, total imports amounted to about Rs. 651 crores against exports of about Rs. 601 crores. By 1955-56, the level of imports rose to nearly Rs. 774 crores, but the exports remained almost stationary at Rs. 609 crores. The adverse trade balance which amounted to only Rs. 50 crores in 1950-51 went on increasing to about Rs. 423 crores in 1968-69. Thus, the overall deficit in balance of payments has grown and, in the process, has highlighted the problems of financing external obligations. 2.23 In our transport system, the railways have a pride of place—India's railway system with a route kilometreage of 59,300 being the second largest single railway net-work in the world. It is also the biggest nationalised undertaking in the country. The thirty-seven railway systems which existed in India in 1949 have now been grouped into nine zones. Over the three plans, the passenger traffic increased by nearly 70 per cent and goods traffic by about 120 per cent. Since 1947, there has also been considerable progress in road construction. Compared with 0.2 million motor vehicles in March 1947, over a million were plying on our roads by the end of March 1965. 2.24 The country has now eight major ports. The traffic handled by these ports during 1967-68 was 55.0 million tonnes as compared to 16.9 million tonnes in 1947-48. Our coastline is also served by a large number of minor ports which together handle a coastal and overseas traffic of about 9.8 million tonnes. Civil air transport operates through a network of 85 aerodromes and carried 1.66 million passengers in 1966-67 as compared to merely 0.52 million in 1954-55; similarly cargo lifted by aircraft increased from 113 million kgs. in 1954-55 to 518 million kgs. in 1966-67. The overseas communication service is responsible for the management of India's external telecommunication service. Besides two sub-marine telephone cables, 29 direct wireless telephone links, 35 direct radio telephone links, 7 radio photo services and 6 direct international telex services are now operating. Most of this is a post-Independence development. 2.25 At the beginning of the First Plan, 4 out of every 10 children in the age group 6—11 years went to school. Today the ratio has almost been doubled. Facilities for higher education, especially technical education, have been enlarged. The following table shows the progress made so far:
TABLE 2.2 : Progress of Education (1950—1969) Unit 1950-
51
2.26 Substantial progress has been made in controlling diseases and in extending health facilities. This is reflected in a falling death rate and a rising life expectancy rate. The death rate per thousand of population declined sharply from 27 in 1951 to 18 in 1961. The average life expectancy at birth rose from 32 years in the forties to 41 years in the fifties. Indications are that it has continued to rise in the current decade also. From the point of
1965- 66
1968-69 (estimate) 1 2 3 4 5 1. School-going children as per cent of children in the respective groups : (i) Primary stage (6-11 years) .... Percent 42.6 74.9 77.9 (ii) Middle stage (11-14 years) . . . . „ „ 12.7 30.3 33.5 (iii) Secondary stage (14-17 years) . . . „ " 5.8 16.7 19.4
12view of the Commission's work, expectation of life at age 21 is more relevant. In this regard, whereas in the decade 1941—51 a male worker at 21 was expected to live for another 32 years, in the decade 1951—61 he was expected to live for another 36 years. 2.27 Social welfare schemes and schemes for welfare of backward classes, including Scheduled Castes and Scheduled Tribes, is another area where rapid strides have been made. With a modest beginning in August 1953, when the Central Social Welfare Board was set up, the expenditure on Social Welfare in the Third Five Year Plan aggregated to about Rs. 19 crores. Similarly, the plan programmes have made specific provisions for welfare of backward classes. As against an actual expenditure of about Rs. 26 crores in the First Plan and Rs. 91 crores in the Second Plan, the outlay in the Third Plan period was of the order of Rs. 101 crores. The emphasis in the programme has been to supplement the facilities in respect of the development of agriculture and cottage industries, education, medical and public health, so as to uplift the population falling in this category. In the field of education, in particular, almost all the State Governments and Union Territories have taken steps to exempt the Scheduled Castes and Scheduled Tribes students from payment of tuition fees at various stages of education. Concessions have also been allowed to them for admission to technical and educational institutions. Distributional Aspects
Thus, in the years since Independence, the Indian economy has entered an expansionary phase and its productive potential has been augmented. The average levels of money incomes have risen appreciably. The distributive aspects have, therefore, acquired significance both from the standpoint of the goals of social policy and management and regulation of money flows. The official series of national income accounts do not give a break-up of the total national product in terms of factor incomes. Estimates worked out from time to time by research workers indicate that the share of profits, rental and interest incomes in the total income has been growing somewhat faster than that of wages and salaries. This is borne out by data on the relative shares of 'wages and salaries' and 'profits before tax' (inclusive of interest and managing agent's remuneration) in the total net output, in so far as the organised industrial sector is concerned. In 1952-53, for example, the salaries and wages constituted 78 per cent and profits before tax 22 per cent of the net output of the industrial sector. As against this, the respective percentages were 65 and 35 in 1964-65'. This does not imply that per capita earnings of workers have gone down. The percentage of profits after tax to net worth has remained more or less constant over this period. New entrepreneurship has been developing as the old has been remodeling itself as a result of egalitarian pressures. 2.29 While these changes on the distributional side have been taking place in our towns and cities, villages too have not simply been silent spectators. The emergence of peasant communities in different parts of the country with a tradition of land ownership, personal cultivation or at least personal supervision over such operations, is another prominent feature of the current scene. These groups, Bhumihars and Rajputs, Kammas and Reddis, Lingayats and Vokkaligas, Kunbis, Nayars and Tilayans, Jats and Aheers, and Kallans and Nadars have acquired a new focus in rural society. They provide local leadership in most cases and control rural institutions which have been set up after Independence. A constant upward mobility of social groups and individuals right from the lower rungs of the ladder, and 'modernisation' and 'secularisation' of social life and culture have also been witnessed. 2.30 The foregoing account of India's development raises hopes and aspirations, as much as it creates fears and apprehensions. On the credit side is the fact that a long run annual growth rate of the order of 3.8 per cent has been achieved in spite of the difficulties of the last twenty years e.g., bad agricultural seasons, difficulties in setting up industrial units and the reconditioning of those already set up, shortages of industrial raw materials resulting in increased unutilised capacity, widening of the foreign exchange gap, distractions on account of international tensions which used up latterly a portion of resources that would have been normally spent on development, increased population pressure, despondence in the younger generation because of inadequate employment openings, shortages of scientific and technical skills, and difficulties introduced by rising prices. As one moves around in the country, one sees signs of increasing self-reliance, whether it is in agriculture ----------------------------------------------------------------------------------------------------------------------------------------------------- ------ Foot Note 4 Report on 'A Framework for Incomes and Prices Policy' Reserve Bank of India 1967, p. 73.
13or in small industry; in the more sophisticated areas of industrial development or in producing rolling stock for transportation; in complicated areas of ship-building or enlarging port facilities; or in building up institutions of higher learning and scientific or technological research. The achievements within the constraints of a developing economy have, however, been overshadowed by what the people had expected to happen or were made to believe would happen. There has been, since Independence, a growing consciousness and a rising level of aspirations for better life all round. The more the democratic institutions reach out to the newly awakened, the stronger will be their urge to build up the country's economy and share the fruits of development. Given the impetus which the developmental effort of the community has imparted and the sizeable gains achieved in the productive potentials of the economy, we feel that notwithstanding temporary set-backs and difficulties inherent in the very process of growth, the momentum and pace of growth in the country would show a marked improvement in the coming years over what has been the case so far. It will open larger opportunities to the people for their economic betterment and social amelioration. 2.31 We do not propose to discuss here the implications of these developments in the economy on the tasks assigned to us. We would rather they unfold themselves in the pages to follow.
Annexure
14
INDIA : Progress Under the Three Five Year and Annual Plans 1950—51 to 1968—69
Unit 1950-
51
1955- 56
1960- 61
1965- 66
1966- 67
1967- 68
1968-69 (Estimates)
1 2 3 4 5 6 7 8 9 General 1. Population Million 361 392 439 495 502 514 2. Per capita income Rupees prices). (1960-61
284 306 326 315 313 334
3. Index of national income Base 1950-51. 100 118.4 143.8 165.3 170.0 186.6 NA+ 4. Index of agricultural production. Do. 100 122.2146.1160* NA+ NA+ - 5. Index of industrial production. Do. 100 133.8 189.5 275* NA+ NA+ - 6. Investment as per cent of national income. 5.0 8.0 11.0 14.15
* NA NA - 7. Domestic savings as per cent of national income. 5.0 7.0 8.5 11.12
*
8.O+ + NA .. 8. Tax revenue as per cent of national income. 6.6 7.7 9.6 14* NA NA - Agriculture 1. Foodgrains Million tonnes. 54.9 69.2 82.0 72.0 75.0 95.0 98.0 2. Oilseeds Do. 5.1 5.6 7.0 6.3 6.4 6.4 8.5 3. Sugarcane (in terms of gur) . Do. 6.9 7.3 11.2 12.1 9.5 10.0 12.0 4. Cotton Million bales§ 2.9 4.0 5.3 4,8 5.0 5.6 6.0 5. Jute Do. 3.5 4.5 4.1 4.5 5.4 6.4 6.2 6. Tea ... Million Kgs. 277 299 321 365 369 380 418 7. Nitrogenous fertilizers consumed.
Thousand of N. tonnes
56 107 210 550 840 1150 1400
8. Phosphatic fertilizer consumed. Thousand of P2O3, tonnes
7 13 70 130 250 400 400
15
Unit 1950-51 1955-56 1960-61 1965-66 1966-67 1967-68 1968-69
(Estimates) 1 2 3 4 5 6 7 8 9 Irrigation and Power 1 Potential at outlets—gross Million 23 8H 6 5 11 7 17 3 18 9 20 9 23 1
acres 2. Potential utilised—gross Do 23 8H 3 1 8.3 13 6 15 2 17 5 19 3 3 Electricity generated Billion 6 6 10 8 20.1 36 8 35 0 49 6
Kwh. 4. Electricity capacity Million 2 3 3 4 5 6 10 2 11 4 13 1¦! 14 5
Kw Minerals 1 Iron ore Million 3 0 4 3 11 0 24 5 26 3 27 0 26 0
tonnes 2 Coal Do. 32 8 39 0 55 7 67 7 70 9 71 9 69 5 3. Petroleum refining capacity Do. 0 2 3 4 6 1 9 8 11 9 13 7 16 1 4. Crude oil Thousan
d 260 340 410 3020 4800 5800 5850 tonnes Industry 1 Cotton cloth Million 4215 6260 6738 7440 7304 7509 NA
metres. 2 Rayon yarn Thousan
d 2 1 13 5 43 8 75 6 80 6 92 2 108 0 tonnes. 3 Paper and paper board . Do 116 190 350 560 580 628 640 4. Sugar Thousan
d 1134 1890 3029 3500 2147 2248 2900 tonnes. 5. Nitrogenous fertilizers (in
terms of N). Do 9 80 101 232 308 367 550
6 Phosphatic fertilizers Do 9 12 53 123 145 195 220
of P2O3, 7 Sulphuric acid Thousan
d 101 167 368 662 702 846 1020 tonnes 8 Caustic soda Do. 12 36 101 218 233 275 314 9. Cement Million 2 73 4 67 8 0 10 8 11 1 11 5 12 5
tonnes. 10 Steel ingots Do. 1 5 1 7 3.5 6 5 6.6 6.3 6 5 11 Aluminium (virgin metal) Thousan
d 4 0 7 4 18 2 62 1 72 9 100 4 120 0 tonnes 12. Machine tools Rs. 3 8 70 294 354 283 250
million. 13 Cotton textile machinery Do NA 40 104 216 154 115 170 14 Sugar mill machinery Do 2 44 77 94 84 120
16
Unit 1950-51 1955-56 1960-61 1965-66 1966-67 1967-68 1968-69
(Estimates) 1 2 3 4 5 6 7 8 9 15. Mining machinery Rs. 0.6 55* NA NA NA
million 16. Diesel engines . Thousan
d 5 5 10 4 44.7 93 112.2 113.0 125.0 Nos. 17. Metallurgical equipment Thousan
d 11 14.3 18.0 2 0 tonnes. 18. Power driven pumps . Thousan
d 35 37 109 244 311 269 325 Nos. 19. Electric motors Thousan
d 99 272 728 1753 2095 2029 2000 hp. 20. Aluminium conductors Thousan
d 1.7 9.4 23 6 40 6 52.7 74.0 70 0 tonnes. 21. Bare copper conductors Do. 5.0 8 7 10 1 3.1 1.7 0.7 NA 22. Automobiles Thousan
d 16.5 25.3 55.0 70.7 75.2 67.9 95.0 Nos. 23. Railway wagons Do. 15 3 8 2 23 5 15 0 11 9 22.0 24. Locomotives : Steam Nos. 7 179 272 203* 180 153 130 Electrical Do. 64* 59 37 75 Diesel Do. 58* 55 126 170 25. Bicycles Thousan
d 99 513 1071 1574 1719 1673 1900 Nos. 26. Electric fans Do. 199 287 1059 1358 1364 1372 1500 27. Sewing machines Do. 33 111 303 430 400 367 400 28. Radio receivers . Do. 54 102 282 600 761 931 1300 Transport and Communications 1. Railways Freight carried Million 93 116 156 203 202 197 203
tonnes. 2. Commercial vehicles on road
Thousan d 116 166 225 333 351 NA 380 Nos. 3. Roads (surfaced) Thousan
d 157 196 236 287 295 NA 317 KM. 4. Shipping Million 0 4 0 5 0.9 1.5 1 8 1.9 2.1
CRT. 5. Post Offices Thousan
d 36 55 77 97 102 Nos. 6, Telephones Do. 168 280 465 881 1100
17Unit 1950-
51
* Estimated figures. + Not available on 1950-51 base. ++ As given in the Approach to the Fourth Five-Year Plan. §Bale=180Kgs. P Position before the commencement of the Plan. Subsequent figures represent progressive totals. ¦¦ After allowing for obsolete plants.1955- 56
1960- 61
1965- 66
1966- 67
1967- 68 1968-69
(Estimates) 1 2 3 4 5 6 7 8 9 Education 1. Students in schools . Million 23.5 31.3 44.7 64.8 71.7 75.2 75.2
Nos. 2. School-going children as per cent of children in the respective age-groups: (a) Primary stage : 6-11 42.6 52.9 62.4 74.9 79.9 79.2 77.9 years. (b) Middle stage : 11-14 years .. 12.7 16.5 22.5 30.3 33.9 34.2 33.5 (c) High/Higher Secondary 5.8 7.8 11.1 16.7 19.0 19.0 19.4 stage : 14-17 years. 3. Annual intake of engineering Thousan
d 10.0 16.4 39.6 72.7 79.0 73.6 73.6 institutions : of which Nos. degree level Do. 4.1 5.9 13.8 24.7 28.0 25.0 25.0 diploma level Do. 5,9 10.5 25.8 48.0 51.0 48.6 48.6 4. Admission to medical colleges Do. 2.5 3.5 5.8 10.5 •• •• 11.5 Health 1. Expectation of life at birth . Years 35.3 41.3 45.8 50.3* 51.9 51.9 NA 2. Hospital beds . Thousan
d 113 125 186 240 247 250 256 Nos. 3. Doctors (Practicing) . Do. 56 65 70 86 90 96 103 4. Nurses (Registered) Do. 15 18.5 27.0 45.0* 50.0 55.0 61.0 5. Family Planning Centers Nos. 147 1649 12138 19684 24523 28448 6. Primary Health Centers Nos. 730 2800 5223 5323 4928 4840 Villages covered by National Thousan
d 143 364 565* NA Extension Services Nos. Towns and villages electrified Do. 3.7 7.4 24.2 52.3 55.2 61.2 NA
Chapter III: Economic Trends Since Independence
18The overall growth of the economy since Independence has affected the working class in more ways than one. A larger per capita availability of goods and services might help raise living standards provided the wage can buy these goods and services. This will depend upon the cost at which they are produced and made available. Both would require an analysis of the general production and price movements, the behaviour of the consumer price index numbers, the state of monetary and fiscal discipline and balance of payments in the system. We propose to view these trends together to provide a better understanding of the changes in the Indian economic situation. Economic growth has also had its effect on employment. To the extent increase in employment has lowered the dependency ratio per earner, it may have raised living standards. Employment trends have a special significance to the working class even otherwise; these are discussed separately in the latter part of the chapter.
Production Trends
Table 3.1 below sets out the index numbers of agricultural production as well as production of foodgrains since Independence.
TABLE 3.1: Indices of Foodgrains/ Agricultural Production * Final estimates. Source: Economic Survey, 1968-69.
(1949-50 =100) July—June Year Production of
food-grains
Agricultural production Year Production of
food-grains
Agricultural production 1 2 3 1 2 3 1947-48 .... 98.1 99.2 1961-62 . . . . 140.3 144.8 1948-49 .... 95.3 93.6 1962-63 . . . . 133.6 139.6 1949-50 .... 100.0 100.0 1963-64 . . . . 136.5 143.1 1950-51 .... 90.5 95.6 1964-65 . . . . 150.2 158.5 1951-52 .... 91.1 97.5 1965-66 . . . . 120.9 132.7 1952-53 .... 101.1 102.0 1966-67 . . . . 123.8 132.0 1953-54 .... 119.1 114.3 1967-68 . . . . 159.9* 161.8* 1954-55 .... 115.0 117.0 1955-56 .... 115.3 116.8 1956-57 .... 120.8 124.3 1957-58 .... 109.2 115.9 1958-59 .... 130.6 133.5 1959-60 .... 127.9 130.3 1960-61 .... 137.1 142.2
19Agricultural production as well as the output of foodgrains has been subject to sharp annual fluctuations due to variations in weather conditions. In the years immediately after Independence, variations in annual agricultural output and output of foodgrains were moderate. This was also the period when the statistical tools available at the disposal of Government were less refined than in later years. The period of the First Plan (1951—56) turned out to be one of sustained improvement resulting in a measure of optimism about the country's goal of self- sufficiency in food. Since the beginning of the Second Plan, production trends have been erratic in spite of an increase in the area under irrigation and other steps to improve production. The years 1965—67 witnessed a sharp decline in the production of foodgrains and agricultural output in general. The difficulties created by shortage of foodgrains are too well known to be narrated. The high level of foodgrains output achieved in 1967- 68 and sustained in the year 1968-69 has improved the current outlook on the food front. It is hoped that given a concerted effort on the agricultural front, it would be possible to wipe out the country's food deficit in the years to come and to minimise the instabilities arising on this account. 3.2 To have a better idea of the change, we should look at the five yearly moving averages of foodgrains production presented in the table below:
TABLE 3.2: Trends in Foodgrains Production (Agricultural Tears)
(Five-Year Moving Averages)
* Against 1950-54 the (Figures in million tons)
average for the years Years Output Years Output Years Output
from 1949-50 to 1953-54 1 2 1 2 1 2
has been shown. 1950-54 * 56.4 1954-58 . 67.3 1960-64 . 80.4
3.3 It is obvious that 1951-55 59.0 1955-59 . 70.7 1961-65 . 82.9
foodgrains production in 1952-56 62.2 1956-60 . 72.7 1962-66 . 80.9
the country has 1953-57 66.4 1957-61 . 75.2 1963-67 . 79.4 1958-62 . 77.3 1964-68 . 82.4 1959-63 . 80.1
increased substantially from 56 million tons at the beginning of the fifties to 82 million tons in 1964—68. Still, this rising trend in the level of foodgrains production has not made the imports of foodgrains less important. We started with a food deficit on the eve of Independence and have not caught up since with the production required for our growing population. Whenever there has been a decline in foodgrains production, the pressures on marketable supplies have mounted both because of the desire in rural areas to meet their growing needs as also to secure better prices. The impact of these factors has varied according to the intensity of crop failures. Shortfalls in domestic supplies were by and large made good by imports in such a way that the overall availability of foodgrains was maintained, if not improved, over the entire period from 1947 to 1965. It was only in 1966 and 1967 that net availability of foodgrains per head of population was, despite record levels of food imports in these years, lower than the level reached in the preceding years.
20
Changes in the level of industrial production are shown in the table below TABLE 3.3 Indices of Industrial Production 1951-67* (1956=100) Year Index Year Index Year Index 1 2 1 2 1 2
* Indices for the years 1951 73 4 1957 104 1 1963 167 3(129. 6)
1947 to 1950 are 1952 75.6 1958 107 5 1964 177 8(140. 8)
available but with a 1953 77.7 1959 116 8 1965 187 7(153. 6)
different base year 1954 83.0 1960 130 2(100.0)++ 1966 192 6(152. 4)
+ Provisional. 1955 91.9 1961 141 0(109 1) 1967 195 3(151. 9)
++ Figures within 1956 100.0 1962 152 9(119. 7) 1968 + —(160 9)
brackets are in respect of the new series of the index of industrial production with 1960 as base This series is based on production of 324 items as against 201 items in the old series and has a wider coverage especially in respect of the products of new industries, the new series (1960=100) shows a better rate of industrial growth but does not affect the conclusions which follow. 3.5 Industrial production on the whole has been using from year to year This is indicative of a rising level of employment in the industrial sector. The rate of increase has not been consistent during the period If the level of industrial production in certain periods registered relatively small increases in the aggregate, the causes of it have been dislocation in supplies of imported raw materials and components, and/or shortages of agricultural raw materials and demand for industrial pro ducts. Taking the period as a whole the inhibiting influence of factors like power shortage, disturbances due to industrial conflicts, transport bottlenecks, insufficient market demand and lack of credit facilities has been relatively minor and confined only to particular industries or regions. 3.6 Trends in industrial and agricultural production reflect the rate of growth of nation al and per capita incomes In the main, the fluctuations in the levels of agricultural output have affected national income Notwithstanding these fluctuations, real national income has risen by about 73 per cent between 194748 and 1966-67 and per capita income by 195 per cent The tentative estimates of national income for 1967 68 indicate a rise of the order of 9 per cent in the real national income and of over 6 per cent in per capita income over 1966-67 as in the table below.—
TABLE 3.4: Indices of National Income and Per Capita Income
(1948-49=100) fiscal year
Year
•Provisional figures computed on the basis of revised series. N.B.—The indices of national and per capita income given above are based on the figures given in the conventional series of national income estimates As from 1960-61 onwards the revised series of national income estimates are available. Source : Economic Survey, 1968-69.
National income at 1948-49 prices
National income at 1948-49 prices
National income at 1948-49 prices
Per capita Year
income at 1948- 49 prices 1 2 3 1 2 3 1947-48 .. .. 1956-57 127.2 110 4 1948-49 100 0 100 0 1957-58 125 9 107 1 1949-50 102 0 100 4 1958-59 134 7 112 2 1950-51 102 3 99 2 1959-60 137.1 111 9 1951-52 .... 105 2 100 3 1960-61 147 2 117 5 1952-53 .... 109.4 102 4 1961-62 .... 151 0 117.9 1953-54 .... 116. 0 106.7 1962-63 .... 153 8 117.5 1954-55 .... 118 8 107 3 1963-64 161 5 120 6 1955-56 .... 121 2 107 3 1964-65 173.2 126 6 1965-66 .... 169 2 120 9 1966-67 .... 174 0 120 5 1967-68 .... 191 0* 128 0*
Price Trends
213.7 If the key role of agricultural output in determining the size and growth of the national product is considered in relation to the fact that the bulk of agricultural produce consists of foodgrains, the influence of fluctuations in domestic supplies of foodgrains on prices and the economic situation in general becomes deal. The experience of the last twenty years shows, that the level of foodgrains production determines also the general level of prices in the economy as reflected in the index of wholesale prices. The prices of foodgrains affect even more the cost of living indices, now termed as the consumer price indices (working class), because foodgrains form a substantial position of the workers' consumption basket. 3.8 Trends in the general price level and in the price level of food articles and in the consumer price index (working class) over the period 1947 to 1967 are shown in the tables below in terms of the available series of index numbers.
TABLE 3 5-A: Price Movements (1947—1952)
Year Index of wholesale prices (Base year ended
August 1939=100
Working class consumer price index (Base 1949=100) General Food articles 1 2 3 4 1947 ....... 297 292 87 1948 ....... 367 374 97 1949 ....... 381 389 100 1950 ....... 401 410 101 1951 ....... 439 410 105 1952 387 360 103
22
TABLE 3.5-B: Price Movements [1953—1967) Year Index of wholesale prices (Base 1952-53 =100)
General Food articles
P—Provisional 3.9 Price movements since the adoption of planned development in 1951 have had two distinct phases viz., (i) prior to 1956 and (ii) 1956 and after. In the first there was a decline in prices, whereas in the second, there has been a continuous rise. It would be seen from Table 3.5-A that during 1947—52 the index for food articles rose by 23 per cent, but the general index moved up even faster. To a considerable extent, the rise in this period was conditioned by the inventory boom for raw materials which was directly attributable to the Korean War. It did not materially affect the prices of consumer goods and the consumer price indices over the period 1948—1956 oscillated within narrow limits. After the abatement of the international tension, there was a decline in the prices of industrial law materials. Money supply in the First Plan period increased by just about Rs. 200 crores or by 10 per cent, compared to a rise of about 18.5 per cent in the real national income. External accounts were in a state of balance and the foreign exchange reserves were comfortable. 3.10 Since 1956 (Table 3.5-B), however, the general index of wholesale prices has moved up continuously from 103 in 1956 to 212 in 1967. The consumer price index rose by nearly 100 per cent over the same period. Leaving aside last year when the trend was somewhat arrested, this period can be divided into two phases: (i) 1956—61 and (ii) 1962—07. In the former, price increases were mild, the larger part of the price rise taking place over the latter years. The general index of wholesale prices moved from 126 in 1961 to 212 in 1967. This increase was principally the result of heavy and continued upward rise in prices of foodgrains and other food articles. Compared to a rise of 68 per cent in the general index of wholesale prices, the index for food articles rose by about 98 per cent during 1961 to 1967. The consumer price index rose by 66 per cent, from 126 in 1961 to 209 in 1967. Here again, the food items account for a greater part of the rise. 3.11 A closer analysis of the movement of the food component of the consumer price
Working class consumer price index (Base 1949= 100) 1 2 3 4 1953 ....... 106 109 106 1954 ....... 100 98 101 1955 ....... 92 85 96 1956 ....... 103 99 105 1957 ....... 109 107 111 1958 ....... 111 112 116 1959 ....... 116 118 121 1960 ....... 123 120 124 1961 ....... 126 120 126 1962 ....... 127 125 130 1963 ....... 133 133 134 1964 ....... 148 155 152 1965 ....... 161 166 166 1966 ....... 184 189 184 1967 ....... 212 238 209 1968 ....... 210 235 215 (P)
23 indices over the last six years has shown that apart from cereals which have a larger weight-age in the total food group, prices of other components, comparatively less important in terms of expenditure on them in the base year, have risen much more than those of cereals and have contributed in the aggregate to a rise in the index. Items like chillies, garlic, vegetables and fruits, could be cited as instances in point. However, 'consumer resistance' can operate in a significant manner in their case than in staple items like rice, wheat, jowar and pulses. 3.12 The disparate movement of prices of food articles and prices in general over the period since 1961 stands out in sharp contrast to the trends experienced in the earlier phases of price rise. Hitherto, price changes, though substantial during certain periods, had not materially altered the relative structure of prices in the system. The level of the price index for food articles had remained, by and large, below the level of the general price index. To the extent price variations in certain periods brought about shifts in price parities, these were largely, if not entirely, adjusted by subsequent trends. This has not been the case with the price movements since 1961. Data given in the following table bring out this aspect. They indicate that the extent and character of price rise in recent years signify a definite and distinct change in the relative structure of prices, and consequently, in the commodity terms of trade between agricultural and non-agricultural sectors.
TABLE 3.6: Relative Movements of Prices (7961-62 to 1967-68) (Index Numbers)
Year All commodities
(April- March)
Agricultural commodities (Nov.-May)
NOTE—The price indices for agricultural commodities and manufactures are for the time period Nov.-May each year so as to take into account the harvest season prices of agricultural products as per the procedure followed by the Agricultural Prices Commission in its Annual Report. Recent investigations have shown that because of the staying power acquired by producers of agricultural commodities, there is no special merit in watching price trends in particular months. But, even when the respective indices are examined over the whole year, the conclusions are not materially affected. NA Not available. 3.13 In broad terms, the relatively greater rise in prices of foodgrains, compared to manufactures as well as other agricultural commodities, is a symptom of imbalance as between available supplies of foodgrains and demand, for reasons already mentioned in the foregoing paragraphs. This imbalance has indeed been the main factor responsible for the price rise in recent years. There have also been other contributory factors such as increases in money supply in relation to production, adverse 'capital-output' ratios in the investments undertaken, stresses on account of increased defence expenditure, the shortages of agriculture-based industrial products and of manufactured goods dependent on imported supplies of raw materials and intermediate goods.
Foodgrains Manufactures
(Nov.-May) Ratio of 3 to 5
1 2 3 4 5 6 1961-62 ...... 125 100 100.4 100 100 1962-63 ...... 128 102 105.5 102 100 1963-64 ...... 135 113 116.1 104 108 1964-65 ...... 153 132 144.0 112 118 1965-66 ...... 165 148 150.5 122 121 1966-67 ...... 191 175 178.5 132 133 1967-68 ...... 213 177 222, 8 129 137 1963-69 ...... 210 NA 201.2 NA NA
Fiscal and Monetary Factors
243.14 The overall impact of monetary factors on the economic situation and on behaviour of prices could be gauged with reference to the growth of plan outlays and the pattern of financing them. The table below shows the realised levels of plan outlays for each of the plans and their broad pattern of financing.
TABLE 3.7: Pattern of Financing Plan Outlays (Rupees in crores)
First Plan 1951-56 (actuals)
* Includes Rs. 2709 crores additional resources mobilisation in Fourth Plan. The First Plan was characterised by conditions of all-round stability. Unlike the plans that followed, it had to be expanded in certain sectors when the price level was below what prevailed at the time the Plan was framed. The Indian economy started showing signs of 'stretching' and perhaps of uneven expansion in the period thereafter. The money supply with the public rose from a level of about Rs. 2, 217 crores at the end of 1955-56 to about Rs. 2, 869 crores at the end of 1960-61. The rate of growth of real national income in this period was, however, lower. With the exception of the year 1957-58 when the national income at 1948-49 prices declined slightly, the aggregate output in the economy was growing throughout the Second Plan period. The heavy withdrawals of the foreign exchange reserves during these years contributed further towards moderating internal inflationary pressures. Plan outlays were stepped up and over the entire five-year period, deficit financing of the order of Rs. 950 crores was resorted to. In spite of this, price increases were moderate due to the operation of the already noted counterbalancing forces. The Third Plan witnessed a deceleration in growth. Plan outlays exceeded projected levels; the growth of national income fell short of stipulated targets and the average annual compound growth rate came to only 2.9 per cent. Despite renewed efforts for further resource mobilisation, deficit financing to the tune of Rs. 1.133 crores became inevitable and this exercised its own upward pressure on the price level. There was in addition a substantial expansion of bank credit. Altogether, the money supply with the public rose by Rs. 1, 660 crores during 1961—66 i.e., by nearly 60 per cent or by about four times the rate at which real national output increased. This was hound to have an inflationary impact on prices.
3.16 Since the early years of the Second Plan, foreign exchange reserves have been at a low level. This, along with the type and scale of external assistance received from year to year, limited the scope for correcting domestic inflationary pressure through disinflationary balance of payments deficits. The financing of necessary developmental and 'maintenance' imports, coupled with increasing burdens of external debt servicing and repayment, has imposed further strains on foreign exchange resources. Import policies have, therefore, been continuously restrictive and have been tightened further from time to time. Still, the balance of payments difficulties gathered momentum and the rupee had to be devalued in June 1966 leading to a fresh rise in prices, particularly of imported goods and, in consequence, of import based industrial costs. The larger defence outlays have in a measure also contributed to the economic difficulties in recent years. The burden of financing defence outlays which became inescapable in the latter half of 1962-63 and thereafter has had the effect of restraining the scale of new productive
Second Plan 1956-61 (actuals)
Third Plan 1961-66 (actuals)
Annual Plan 1966-68 (estimated)
1968-69 (proposal )
Fourth Plan 1969-74 (proposal) 1 2 3 4 5 6 7 1. Total Plan Outlay 1960 4672 8577 4352 2337 14398 2. Financed through: (i) Domestic Budgetary Resources
1438 2669 5021 2157 1154 11034*
(ii) External Assistance 189 1049 2423 1779 876 2514 (iii) Deficit Financing 333 954 1133 416 307 850
25 investments and of the resultant output and supplies. In brief, therefore, the heavy pressure on prices in recent years has been the result both of monetary and real factors.
3.17 In the years 1965—67 the economy had plunged into industrial recession and its growth had come almost to a halt. The recession actually commenced in 1965-66 with very poor agricultural output and the harvest of the following year was no better. This affected adversely the levels of industrial production as well as the buoyancy of Government revenues and availability of resources in general. External assistance too tailed to come up to expectations. Financial stringency was aggravated under the circumstances in spite of postponement and even some lowering of developmental commitments, except those which were inescapable. In the face of these financial stresses, maintenance of monetary equilibrium was not easy and there was a further increase in money supply. This gave rise to almost a contradictory phenomenon viz., inflationary recession.
3.18 A measure of relief has, however, come with the bigger harvest of 1967-68. The output of foodgrains in 1968-69 is estimated to be equally promising. Besides, the production of non-food crops is also expected to be higher. With expectations of improved agricultural production and a more assured supply of agricultural raw materials, industrial production has started picking up as from the second quarter of 1967-68. These trends, coupled with hopes of further successes on the agricultural front, give ground for optimism in regard to the economic conditions in the ensuing period. Employment Trends
3.19 In analysing the post-war employment situation we note five distinct phases, broadly covering the periods 1945—51, 1951—56, 1956—61, 1961—66 and post-1966. 1945—51: The period of the Second World War was one of expanding employment opportunities. With the close of hostilities, arrangements had to be made for transfer of the defence personnel to civilian employment. These did not encounter serious difficulties since they meant no special hardship to persons in the labour force. The Rege Committee which apprehended the spectre of mass unemployment looming ahead was perhaps unduly alarmed. While no reliable data are available for the years after its report and for the early years after Independence, it is gathered that the employment situation during this period was in a way easy. This was due to the expansion of Governmental activities and its multiplier effect on employment. The general exuberance in the country following Independence was an additional factor, though on a psychological plane. Special arrangements to provide favoured treatment to displaced persons did not create resentment in the rest of the population, not only because of the proximity of tragedies which displaced persons had suffered, but also because unemployment as a problem did not have the edge which it developed in later years.
3.21 A Development Department was set up by the Central Government in the closing years of the Second World War, but it was actually wound up within one year. There were no special plans to generate fresh employment, though arrangements were made through the Directorate General of Resettlement and Employment to assist employment seekers and certain priorities were also laid down. The number of persons seeking employment through this agency is no direct index of the level of unemployment, but the Employment Exchanges showed about 300, 000 employment seekers on their registers at the end of this period. 3.22 1951—56: Even as the country entered the stage of planned development in 1951, generation of employment was assumed to follow from development. Overt unemployment was not considered to be so serious as to counter the development strategy itself. It was assumed that unemployment would taper off with growth of national income. The First Plan was conditioned by this approach, though it did attempt to estimate the employment effect of planned activities in certain sectors. By about the middle of 1953, however, unemployment became a matter of national concern. Indications of the relative worsening of the employment market were available through the data maintained by the National Employment Service. The size of the Plan had to be enlarged to accommodate schemes which were designed to generate additional employment.
3.23 With the attention drawn to problems of unemployment by developments subsequent to the formulation of the First Plan, a stage was set for a fuller discussion of issues connected with employment and unemployment on the eve of the Second Plan. Provision of adequate employment opportunities, it was felt, should become one of the main objectives of the Plan. On the national plane, a
26 systematic assessment of the unemployment situation was undertaken. Estimates of backlog of unemployment, additions to labour force and the impact of plan projects on total employment were recognised as some of the many exercises required for plan formulation.
3.24 1956—61: The employment policy of the Second Plan emphasised the choice of employment-oriented techniques. From this viewpoint it recognised that while in certain new sectors highly capital-intensive techniques were technologically given, in other sectors changes in established technology that displaced labour must be avoided. Further, in the traditional sector, labour-intensive techniques should generally be fostered to attain the employment targets of the Plan. What was sought to be achieved was to provide a remedy for absorbing the growing numbers in the labour force at suitable levels of income, but without necessarily jeopardising the building up of a wider base for gainful employment in future.1 As against a backlog of unemployment estimated at 5.3 millions and new entrants at nearly 10 millions, the employment potential of the total economic activity in the five years of the Second Plan was expected to cover an equivalent of the new entrants to the labour force. The aim was, therefore, a modest one viz., the prevention of a worsening of unemployment.
3.25 Developments in the Second Plan period presented an employment picture which was clear in certain aspects, but hazy in others. It was clear, for instance, that in every State shortages continued to exist on the technical side. It was also clear that development resulted in inter-State migration of unskilled labour due to
(i) shortages in some areas or
(ii) surpluses 'pushing out' workers from certain areas. The employment situation in different States, however, continued to be uncertain about the skills and numbers required for different plan activities.
3.26 Paradoxically, certain types of involuntary unemployment developed during the Second Plan period along with the generation of new employment. This happened in certain industries, particularly in engineering, as shortages of raw material came to the surface resulting in involuntary unemployment. For altogether different reasons, the cotton textile industry was also suffering. In the midst of drawing up plans for augmenting employment, therefore, schemes which would give relief to workers in cases where unemployment was forced on them had also to be considered.
3.27 To provide additional employment to agricultural labour during the slack season, the Planning Commission formulated a programme of rural works. A pilot scheme was drawn up in the final stages of the Second Plan as a supplement to schemes formally included in it. The State Governments were requested to select rural areas which were most in need of such unemployment relief.
3.28 1961—66: It is in this atmosphere that thinking on the Third Plan began. Work on better assessment of employment and unemployment and on understanding the mechanism of employment generation had, in the meanwhile, made progress. Unemployment estimates, though still unsatisfactory, were a shade better than those on which reliance was placed in framing the Second Plan. The National Sample Survey, after experimenting with different ways of measuring unemployment, standardised its methods for estimating the level of unemployment/under-employment. Adjustments needed for making the data from the National Employment Service more meaningful for understanding the changes in urban areas were also worked out. On this basis, the Third Plan estimated that the backlog of unemployment at the end of March, 1961 was about 9 millions.
3.29 The disturbing part of the appraisal of unemployment at the beginning of the Third Plan was the under- estimation of population increases during the period and the consequent lower estimates of additions to labour force during 1951—61. Added to it was the shortfall in physical terms in every area of development, particularly during 1956—61. The labour force was expected in the Third Plan period to increase by nearly 17 millions, and given the size and priorities of the Third Plan, it was not found feasible to generate adequate employment. Obviously, even the employment goal adopted in the Second Plan to prevent any addition to the back-log of unemployment could not be set for the Third Plan.
3.30 The implementation of the Third Plan was affected by the happenings on India's frontiers. The consequent increase in defence expenditure raised the prospects of employment. The new level of public spending made it possible for a time to divert the country's ----------------------------------------------------------------------------------------------------------------------------------------------------- -Foot Note Second Five Year Plan, P. 112-114.
27attention away from the problems of unemployment; and so did public preoccupation on other matters. But all along the employment situation continued to be difficult and assumed serious proportions towards the end of the Plan period.
3.31 Post 1966: The postponement of the Fourth Plan and the initiation of annual plans normally should not have affected the level of unemployment if in framing the annual plans, adequate concern for employment generation had been shown. However, planning in each of these three years was confined to allocating resources for different sectors of development on the basis of the levels of expenditure reached in the previous year, irrespective of prices. This in effect meant a curtailment of development in physical terms. Constructional employment which has been almost 20 to 25 per cent of the total non-agricultural employment generated in the Second and Third Plans has suffered a set-back. This lack of activity, coupled with the pressure of new entrants to the labour force, explains some of the difficulties which one finds in the employment market today. Recession during this period made it difficult for some industrial undertakings even to continue their normal working force, let alone generate fresh opportunities for employment. Earlier expansion of educational and training facilities has accelerated supplies of skilled manpower. Consequently, along with the rising incidence of general unemployment, the situation has worsened even for highly skilled persons including engineers and university graduates. 3.32 The conclusions in the foregoing paragraphs are supported by the following data taken from the Fourth Five Year Plan 1969— 74—Draft published recently.
TABLE 3.8: Industry-wise Employment during 1961-68
Employment as in March of the year (Million) Industry 1961* 1966* 1966+ 1967+ 1968+ 1 2 3 4 5 6
1. Plantations, livestock, forestry, fishing, etc. 0.85 1.10 1.13 1.10 1.10
2. Mining and quarrying 0.68 0.66 0.67 0.65 0.61
3. Manufacturing ...... 3.39 4.26 4.53 4.43 4.44
4. Construction ...... 0.84 0.99 1.02 0.99 0.90
5. Electricity, gas, water and sanitary services 0.26 0.35 0.34 0.38 0.39
6. Trade and commerce 0.25 0.39 0.49 0.51 0.53
7. Transport, storage and communications 1.81 2.21 2.21 2.24 2.24
8. Services 4.01 5.50 5.80 6.00 6.12
9. Total 12.09 15.46 16.19 16.32 16.33
* Covers all public sector establishments and non-agricultural establishments in the private sector employing 25 or more workers. + Covers all public sector establishments and non-agricultural establishments in the private sector employing 10 or more workers. 3.33 We now take a view of what happened since Independence in the inter-related areas of employment and real wages. From a relatively comfortable position upto 1953, the employment market started showing signs of strain with minor variations right upto somewhere around 1962.
For reasons explained, employment picked up between 1962 and 1965 for a short time. Though in relation to additions to labour force the opportunities were inadequate, the period of the Third Plan seemed to be somewhat tolerable. Real wages improved fairly fast in the years since Independence upto the end of the First Plan both as a
28 result of increase in money earnings and later in the period because the price situation was favourable. Since 1956, real wages have been showing a downward trend. The result has been that the major gains secured between 1952 and 1955 could not be retained in the following years. From the reports of the committees appointed for the purpose of fixing minimum wages for industries scheduled in the Minimum Wages Act, 1948, it would appear that considerations of the employment situation have not been taken as relevant except to the extent that the prevailing wage rates in the locality had a bearing on their recommendations. The committee's work could be considered to have been influenced by employment market considerations to the extent the prevailing wage rates have a relationship with the employment market. In the case of other industries, industrial tribunals do not appear to have considered the impact of their recommendations on employment. Actually, as a result of the regulation and fixation of wages through institutions and arrangements made since Independence, money wage trends do not reflect the trends in the employment market. While this has given a certain measure of protection to the employed workers, the employment market itself could not be cleared off. 3.
34 The economic changes described in the foregoing paragraphs have affected the community as a whole, although their impact on different sections of it has, indeed, varied. Changes in production, prices and wages as also those in the social setting described earlier have influenced the working class. A synoptic view of how the worker has adapted himself to the total change in his environments follows in the next chapter.
Comments