Second National Commission on Labour
CHAPTER-II
INTRODUCTORY REVIEW
AN OVERVIEW
As we have seen in the preceding chapter, by the time India became independent, a broad consensus had emerged on the goals of economic development as well as the strategies that were needed to achieve them. To say this is not to deny that there were differences – acute differences - on some issues, especially when they concerned the ultimate order one wanted to see set up in the country or the means that one considered desirable and likely to be used. Even so, there was general agreement that the country should have a democratic order; that sovereignty should vest in the people; that every citizen should enjoy Fundamental Rights that guaranteed freedom and equality; that the aim of the State should be to abolish poverty by assuring full employment and minimum wages; that a concerted attempt should be made to raise the standard of living of the masses through increased production, better technology and a system of distribution of the gains of economic progress that ensured adequate purchasing power; that essential goods and services should be available at fair prices commensurate with the income level of the masses;
that disparities should be reduced by maintaining a ratio between minimum and maximum incomes;
that workers and employers should regard each other as partners; that the land tenure system should be reformed to abolish absentee landlordism, and to enable the tiller to own land and earn fair returns;
that multipurpose co-operatives and industrial co-operatives should be set up to assist the workers, the peasant and the tiller; that foreign investment should be subject to national interest, and permitted only on conditions that ensured that the control of the economy remained in the hands of the state; that the state had to play a definite and important role in developing the economy and securing the economic goals of the country;
that industrial activity should be organised through undertakings with small-scale industries and cooperatives, and large industries in the private sector, and undertakings in the State or public sector. There was also general agreement on the role that planning can play in marshalling and directing the use of resources and achieving growth with social justice.
2.2 The Indian National Congress was the spearhead of the national struggle for Independence, and therefore, played a very important role in evolving the broad area of agreement that we have referred to in the previous paragraphs. Therefore, it is appropriate to refer to the Resolution that the Congress adopted on the economic policies of the new Government. The Resolution was adopted by the All India Congress Committee (AICC), the supreme policy making body of the Congress, on the 17th of November 1947, almost within three months of the accession to Independence. It said that
“political independence having been achieved, the Congress must address itself to the next great task, namely, the establishment of real democracy in the country and a society based on social justice and equality. This can only be realised when democracy extends from the political to the social and economic sphere…[this] necessitates planned central direction as well as decentralisation of political and economic power…”
“The smallest territorial unit should be able to exercise effective control over its corporate life by means of popularly elected Panchayats. In so far as it is possible, national and regional economic selfsufficiency in the essentials of life should be aimed at. In the case of industries which, in their nature, must be run on a large scale and on a centralised basis, they should be so organised that workers become not only co-sharers in the profits, but also associated with the management and administration of the industry. Land, with its resources and all other means of production as well as distribution and exchange, must belong to, and be regulated by the community in its own interests.”
“Our aim should be to evolve an economic structure which will yield maximum production without the operation of private monopolies and the concentration of wealth, and which will create a proper balance between urban and rural economies. Such a social system can provide an alternative to the acquisitive economy of private capitalism and the regimentation of a totalitarian State.”
2.3 The Congress also decided to appoint a Committee to draw up an economic programme that flowed from these principles. Pandit Jawaharlal Nehru was the Chairman of the Committee, and the other Members included leaders from most areas of the spectrum, with persons like Maulana Abdul Kalam Azad, Shri Jai Prakash Narayan, Professor N.G. Ranga, Shri Gulzari Lal Nanda, Shri J.C. Kumarappa (well-known Gandhian economist), Shri Achyut Patwardhan, Shri Shankar Rao Deo and Dr. John Matthai (who later became Finance Minister). The Committee appointed subCommittees. All the sub-Committees submitted unanimous reports. The integrated Report too was unanimous, as Pandit Jawaharlal Nehru pointed out in his letter of submission.
2.4 The Committee formulated five objectives:
“(i) A quick and progressive rise in the standard of living of the people which should be the primary consideration governing all economic activities and relevant administrative measures. The achievement of a national minimum standard in respect of all the essentials of physical and social well-being within a reasonable period must be pursued as the practical goal of all schemes of economic development,
(ii) A parallel aim of the nation’s economic activities should be to afford opportunities for full employment,
(iii) For the earliest realisation of this two fold aim, an adequate or expanding volume of production is an indispensable pre requisite. All schemes and measures should be so designed as to obtain the maximum utilisation of the material and manpower resources of the nation,
(iv) “To achieve these objectives, it is necessary to bring about equitable distribution of the existing income and wealth, and prevent the growth of disparities with the progress of industrialisation of the country.” The Report recommended the fixing of a ceiling for incomes, and stipulated that the maximum should not exceed 40 times the minimum. It further recommended that the maximum should be brought down to 20 times the minimum,
(v) The Report recommended that “to secure the widest diffusion of opportunities for gainful occupation… to reduce to the minimum opportunities for exploitation, the economic organisation of the country should function on a decentralised basis.” “Towards the same end, the requirement of national and regional self-sufficiency… [and] balance between rural and urban economy should be kept in view.
2.5 On industry, the Report said that
(i) industries providing articles of food and clothing and other consumer goods should constitute the decentralised sector of the Indian economy, and should, as far as possible, be developed on a co-operative basis.
(ii) the respective spheres of large scale, small scale and cottage industries should be demarcated as clearly as possible to avoid economic insecurity and destructive competition.
(iii) where a cottage industry is allowed to operate in the same field as large scale mechanised industry, its output should be protected from the competition of the latter by subsidies or some methods of price equalisation. The Report also had a section defining village industries and the ways in which the State should promote and protect them.
(iv) “Regional self-sufficiency should be the aim with regard to all types of industries. Development on these lines should help to provide full and varied employment of manpower and raw materials in each unit, and to reduce the pressure on the transport system. Location of industry should be planned so as to make a district of average size… as nearly self-sufficient as possible in respect of consumer goods which supply the needs of the people.”
2.6 On foreign trade, the Committee said, “The complexion of the country’s foreign trade should be carefully scrutinised to enable the country to build up its economic structure on a sound basis so as to make it possible for the nation to provide its primary needs and thus buttress its independent position.”
2.7 On foreign capital, the Committee said, “In the development of the country the place of foreign capital should be carefully examined so as to ensure that the economic control remains with the nationals of the country.”
2.8 The primary objectives that emerged as the economic content of Swaraj was
(i) industries providing articles of food and clothing and other consumer goods should constitute the decentralised sector of the Indian economy, and should, as far as possible, be developed on a co-operative basis.
(ii) the respective spheres of large scale, small scale and cottage industries should be demarcated as clearly as possible to avoid economic insecurity and destructive competition.
(iii) where a cottage industry is allowed to operate in the same field as large scale mechanised industry, its output should be protected from the competition of the latter by subsidies or some methods of price equalisation. The Report also had a section defining village industries and the ways in which the State should promote and protect them.
(iv) “Regional self-sufficiency should be the aim with regard to all types of industries. Development on these lines should help to provide full and varied employment of manpower and raw materials in each unit, and to reduce the pressure on the transport system. Location of industry should be planned so as to make a district of average size… as nearly self-sufficient as possible in respect of consumer goods which supply the needs of the people.”
2.6 On foreign trade, the Committee said, “The complexion of the country’s foreign trade should be carefully scrutinised to enable the country to build up its economic structure on a sound basis so as to make it possible for the nation to provide its primary needs and thus buttress its independent position.”
2.7 On foreign capital, the Committee said, “In the development of the country the place of foreign capital should be carefully examined so as to ensure that the economic control remains with the nationals of the country.”
2.8 The primary objectives that emerged as the economic content of Swaraj was
(i) assuring a fair standard of living to all,
(ii) full employment,
(iii) decentralisation to assure full employment and the full utilisation of resources,
(iv) self-reliance or selfsufficiency in food and primary consumer goods,
(v) subjecting foreign trade to national interest, and
(vi) strict vigilance over the induction of foreign investment to ensure that “control remained in the hands of nationals.”
(vii) reduction of disparities in income and wealth.
2.9 The Planning Commission itself was appointed in 1950 in accordance with, and to give effect to, the views set forth in this Report. It may, therefore, be useful to quote from the Government Resolution appointing the first Planning Commission, “The Constitution of India has guaranteed certain Fundamental Rights to the citizens of India and enunciated certain Directive Principles of State Policy, in particular, that the State shall strive to promote the welfare of the people by securing and protecting as effectively as it may, a social order in which justice, social economic and political, shall inform all the institutions of national life and shall direct its policy towards securing, among other things:
(a) that the citizens, men and women equally, have the right to an adequate means of livelihood;
(b) that the ownership and control of the material resources of the community are so distributed as best to subserve the common good; and
(c) that the operation of the economic system does not result in the concentration of wealth and means of production to the common detriment.” The Government Resolution further says that the Commission should formulate its plans“ having regard to these rights and in furtherance of these principles as well as of the desired objective of the Government to promote a rapid rise in the standard of living of the people by efficient exploitation of the resources of the country, increasing production, and offering opportunities to all for employment in the service of the community.”
2.10 We have quoted extensively from these documents only to focus attention on:
i) the context in which the Government came to the conclusion that “planning” was the most effective way of achieving rapid economic growth and social justice.
ii) the Government’s belief that the responsibilities cast on the State by the Fundamental Rights and Directive Principles enshrined in the Constitution, could not be fulfilled without planned economic development.
iii) the premises on which the Government came to the view that the State had an important role to play in formulating and implementing plans, in building up industries and services or utilities that fell in a defined category, and in promoting the growth of industry and agriculture in areas in which the State did not have to accept special responsibility.
2.11 There is no doubt that there was general agreement on the policies that the Government adopted at that time and the steps that it took to implement that policy.
2.12 We have already pointed out in the last Chapter that the distinguished leaders of industries of the time had accepted the need for planning, and the role that the State had to play, especially in the early days of planning, in achieving the general goal of raising the standard of living, achieving full employment, increasing production and reducing disparities.
2.13 Since in the preceding Chapter, we have quoted extensively from the Plan that Industrialists had prepared in 1944, we will refer here only to statements in that document that relate to the role of the State. “It is inevitable that in executing a comprehensive Plan of economic development, especially in a country where the beginnings of such development have yet to be laid, the State should exercise, in the interests of the community, a considerable measure of intervention and control.... An enlargement of the positive as well as preventive functions of the State is essential to any large scale economic planning. ”(pages 23/24)” The following are illustrations of the form which control, may assume: fixation of prices, limitation of dividends, prescription of conditions of work and wages for labour, nomination of Government Directors on the Board of Management, licensing, and efficiency auditing …which will be the watchdog of public interest rather than of financial interests in the limited sense.” These statements show that the leaders of industry also accepted the need for state ‘intervention,’ measures of ‘control’ including ‘licensing’ and efficiency–auditing. (page 29)
2.14 Since 1950, the economic development of the country progressed on the accepted idea that there would be three sectors in the field of industrythe State sector or the public sector, the private large-scale sector, and the small-scale sector (including the cooperative sector). We have not been asked to describe the growth of these sectors and their achievements and failures, or the problems created by the negligence or intervention of the State.
2.15 But it must be pointed out that at least in the beginning, public undertakings grew up in areas like defence, transport and communications, power, mining and other activities and services related to the infrastructure, fulfilling most of the criteria laid down in the Plan proposed by distinguished industrialists in 1944. But, it can be observed that, in course of time, public sector undertakings were set up in areas that were not related to defence or the infrastructure, or the ‘commanding heights.’ It is doubtful whether in every case, the need to set up an undertaking in the public sector and the justification for doing so, were subjected to scrupulous and rigorous scrutiny before the decision was taken. It is not certain that the form of the undertaking - whether it should be a departmental undertaking – a company, or a corporation set up by a Charter or Resolution of the Parliament, etc. – was chosen after full consideration. Many causes have been adduced for the failure of many public sector undertakings to rise to the expectations with which they were set up: lack of genuine autonomy; lack of freedom to run the undertaking on business or commercial lines; the structure and powers of the Boards of Directors; bureaucratic control and bureaucratic methods; entrusting the organisations to Managers or Chief Executives who were from the Administration, and had no business acumen or experience of running business undertakings; the role of the Bureau of Public Enterprises and the control exercised by it, grossly diluting autonomy and responsibility; stultification in technology and poor research and development; overemployment; unwarranted political interference; poor work culture and industrial relations, in spite of the fact that the Plan documents and statements of objectives repeatedly declared that public sector undertakings had the responsibility to set an example to all industrial and commercial undertakings in the country, and so on.
2.16 In spite of all these, many undertakings did very well. It is a moot point to consider why private equity participation was not permitted in public sector undertakings, and why even in non-strategic sectors, private undertakings and public sector undertakings were not allowed to exist and compete with each other.
2.17 According to the draft 9th Five Year Plan, in March 1996, there were 243 Central Public Sector Undertakings (CPSUs) owned by the Government of India with a total investment of Rs. 1,78,628 crores. Out of these 239 were operational enterprises with an employed capital of Rs. 1,73,874 crores and employees’ strength of 23 lakhs. Of these, 134 were profit making and 101 were loss making.
2.18 Some undertakings became the arena of industrial strife, although in most such industries, wage determination and revision were undertaken on industry-wise basis, often with the Bureau of Public Enterprises pulling strings from behind the scene and having the ultimate say, thus making it difficult for the management to determine what the plants or industry could do to meet the demands of workers, thus making wage negotiations difficult.
2.19 The private sector had problems of its own. It had to secure licenses and permits and approvals from the letter of intent to the fixation of prices of products and schedule of sale (as in the sugar industry). It had to seek permission to commence. It had to seek permission to close. The net of permits and licenses and approvals grew wider and wider, and began to cover most industrial and commercial operations. This led to delays, uncertainties, whimsical and capricious decisions and widespread corruption, all lethal to ‘competitiveness’ and industrial and commercial activities where time and efficiency were of the essence.
2.20 It is difficult to say whether the decisions to increase the number of operations or stages at which permits, or periodic renewal of permits, were made obligatory, came as a result of deliberate discussions of policy and necessity at the ministerial level, or as a result of the tendency of the bureaucracy to increase its discretionary and executive powers and level of dominance.
2.21 This is not to say that private industry did not receive incentives, protection and support from the Government. They were helped to acquire land and raw materials at concessional rates, sometimes at incredibly low prices. They were offered development rebates, tax holidays, subsidies and so on. They were protected from competition from foreign industrial and commercial concerns by a ban or limitations on foreign equity, reservations, high tariff walls, quantitative and other restrictions on imports and so on. It cannot, therefore, be said that industry did not have many years and many forms of protection from the State.
2.22 There were some cases of entrepreneurs misusing these opportunities and facilities by raisingequity capital and loans from banks and financial institutions and closing down enterprises after running up huge unpaid bills for wages, the consumption of electricity and so on. Such cases were not many, but they created tension and hostility in the minds of workers who felt that neither the law nor the State was protecting their genuine interest, even the payment of wages that were legitimately due.
2.23 But on the whole, entrepreneurs availed of the facilities and assistance extended by the State and financial institutions to build up their industrial or commercial enterprises.
2.24 It cannot be forgotten that when India became Independent, it was heavily dependent on Britain and other European countries or countries like Japan even for articles of daily consumption; even pins, clips, pencils and biscuits were being imported. Since then, in the decades after the advent of Independence, we have diversified our production to an incredible extent. There is hardly anything that we do not, or cannot, manufacture today. We are able to use the most modern or sophisticated technologies, where it is available to us. There are Indian entrepreneurs and managers and concerns whose skills are comparable to those of entrepreneurs and managers anywhere in the world. Some of them have earned high respect from their peers in other parts of the world. We have produced engineers, technicians, physicists and scientists of the highest calibre, so much so that we stand third in the world for the number of trained scientific personnel. It is not the absence of men and women of calibre that has prevented the growth of our economy. It is true that we have lost many of these highly competent persons because of the ‘brain drain’ to countries in the West. We do not have to list the factors that have promoted this ‘brain drain’ and caused severe loss of our human resources to other countries. It is common knowledge that absence of facilities for advanced research and training as well as tempting opportunities that combine monetary benefits with job satisfaction and social recognition, have caused this ‘brain drain’ and kept it going. Our governments, business houses, and institutes of higher learning and research have not been able to counteract this phenomenon, to materially affect the speed of this drain.
2.25 In the decades after we became independent, the volume of production has gone up. The GNP has gone up from Rs. 8934 crores in 1950- 51 to Rs. 618969 crores in 1992-93 at current prices (with old series base 1980-81). A review of the increase (Table 2.5) shows that it has increased relatively faster in tertiary and secondary sectors.
2.26 Later in this Chapter, we propose to make a brief review of the state of some of our principal and traditional industries to see where we have gained ground, and where we have lost ground, or are losing ground.
2.27 At this point, we should make some reference to the small-scale industries, artisans and craftsmen. The special role that this sector has played in our economy, in achieving our once acclaimed prosperity, has been recognised and hailed from times even before Independence. The products and skills of our artisans and craftsmen once won universal praise for their excellence, quality and uniqueness. They attracted buyers and traders from all over the world. History records how our craftsmen and artisans were persecuted, and how our cottage industries were systematically destroyed to make us dependent on British industries even for essentials for which resources, technical skills and trained workers were available in our country. It is well known that the policy of imperialism and colonialism was to destroy local industry, cart away natural resources where this could be done, exploit immovable resources with profligacy, and convert countries into captive markets. During the struggle for Independence, and immediately thereafter, there was widespread hope that this process would stop and that small-scale and cottage industries and crafts and artisanry would revive and enter a period of renaissance. Economists as well as national leaders taught the country to look upon ’Swadeshi’ or the resurrection of indigenous industries as a symbol of Independence and self-reliance, without which there could be, no Independence. It was this conviction that made leaders like Mahatma Gandhi on the one hand, and Jamshedji Tata, Acharya P.C. Ray and others on the other, start movements for the revival of industry, and for building indigenously owned industry. The relation between national Independence and self-reliance and the question whether the goals of national economic policy and the interests of the people of a state can be pursued effectively without retaining the control of economic policy in the hands of those who are answerable to the people, will not lose relevance as long as the concept of the sovereignty of nation-states and their responsibility for the interests and welfare of the people of their territories, retain relevance.
2.28 We have already referred to the crucial role that small-scale industries play in our economy. Units or undertakings in this sector have grown from 20.82 lakhs in 1991-92 to approximately 31.21 lakhs in 1998-99. They now produce about 8000 items of goods ranging from food products to sophisticated electronic equipment. They account for 40% of the total industrial output and 35% of exports. They provide employment to 171.60 lakh persons (98-99), but they have not been able to perform to their potential or make the contribution that they feel they could have made to the generation of employment and the volume of production (GDP).
2.29 Many reasons have been cited for this performance below potential. Competition from big industry; unsatisfactory access to credit and markets; poor management skills and advertisement; vagaries in the policies of reservation and protection, often giving with one hand and taking away with the other; inadequate support from the Government; inadequate improvement of technology; subjection to the same laws that govern bigger industrial units and inability to bear the responsibilities that big industries could bear (like contribution to the Provident Fund, etc.); harassment by inspectors and officials and so on.
2.30 In some earlier paragraphs, we have referred to technology and research and development. We have also pointed out that the recommendations of the National Planning Committee and the Government that took over at Independence talked of self-reliance. In fact, as we have pointed out earlier, the Congress Resolution on policies and objectives adopted after the coming of Independence, prescribed ‘selfsufficiency’ in certain matters, and at certain levels. These created legitimate expectations that the Government would launch an all-out effort on a war footing, to set up the infrastructure necessary for economic growth, to upgrade indigenous technology and use the scientific talent in India to raise it to the level of technology that advanced countries possessed. It is very difficult to say that these expectations were fulfilled either for the technology necessary for industry, or for the technology necessary for defence and defence production. The amounts earmarked for R&D in these years, the record of utilisation of the grants, and awards for inventions that led to import substitution, and the number of improvements and inventions actually made in the different fields of technology to upgrade our industry and increase its competitiveness in the world market, make us wonder, why our efforts were so tardy and incommensurate with the goal of self-reliance and self-sufficiency.
2.31 However, the results of this failure were apparent in many fields. Since we did not create adequate indigenous technological competence on our own, we had to depend on a policy of acquiring technology from elsewhere. The policies that followed, give the impression, that in spite of talks of selfreliance, the Government had decided that India could achieve progress only by following the western model of industrialism, and that since there was little time to lose, India should depend on acquiring western technology. This raised the question of marshalling the resources necessary to acquire this technology through purchase or as part of package deals in collaboration agreements. We did not succeed in either. We did not have internal resources or foreign exchange resources from which we could pay for the purchase of technology. Foreign undertakings, with which we had collaboration agreements, dodged all requests and commitments and found ways to refrain from transferring technology, particularly technology that was crucial for self-reliance. The aid that was offered to us was often tied to products and areas. These did not always coincide with national perceptions of priorities in development. The foreign exchange reserves that we could build up depended on trade. The terms of trade and the variety of possible export items to other countries were affected by their ‘preferences,’ necessities and needs of their countries, their policies of substitution of primary commodities through synthetic products, quota systems, and so on. We then, had to seek aid or loans from international financial institutions. These had their own choices and conditionalities for granting aid or loans. These conditions often interfered with national policies. It can well be argued that a prospective creditor has the right to verify the creditworthiness of a prospective debtor, both to repay loans and to pay interest on an accepted schedule of instalments without defaulting. There was a fear that these conditions would lead debtor nations into a debt trap and the mortgaging of produce, and would even compromise sovereignty.
2.32 The financial institutions also thought that in the circumstances, it was in the interest of both the debtor and the creditor to propose ‘system reforms’ or ‘structural reforms’ that fitted their perceptions of what contributed to the growth of national economies and what the priorities of economic development should be. It is this succession of events and developments that led India, as well as many other developing countries, to accept or adopt the policy of globalisation. We are not called upon by our ‘Terms of Reference’ to make any observations on the decision to globalise. So, we refrain from doing so. But we have been asked to study the impact of globalisation, inter alia, on industry, on labour, the ‘future labour market,’ industrial relations, labour legislation, the security and welfare of workers and so on. We will, therefore, deal with this subject at greater length in a subsequent Chapter.
2.33 We must now refer to the policies that our Five Year Plans had advocated for the protection and welfare of labour and harmonious industrial relations. We have already referred to the objectives that were defined in the Resolution setting up the Planning Commission.
2.34 The First and Second Five Year Plans elaborated these objectives and made an effort to outline a procedure for the settlement of industrial disputes. The first Plan referred to the “growing consciousness of the importance of industrial labour in the national economy,” “the assurances that were given to labour in recognition of its rights which had long been neglected,” and made an attempt “to give concrete shape to these assurances and to give labour a fair deal, consistent with the requirements of other sectors of the economy” (page-571: Chapter-27 First Five Year Plan). It also emphasised the need for a strong trade union movement. The Second Five Year Plan reviewed the work of the conciliation machinery and the industrial committees set up by the Government. It pointed out that issues like bonus and profit sharing, still required a satisfactory solution. It also pointed out that the acceptance of a goal of the socialist pattern of society for the country demanded attendant alterations in labour policy. It said further that a socialist society could not be built up solely on monetary incentives, but the worker had to be made to feel that he was participating in the building up of a progressive State. “The creation of an industrial democracy, therefore, is a pre requisite for the establishment of a socialist society.” To achieve this objective, the Plan felt that it was necessary to build up a strong trade union movement, both to safeguard the interests of labour and to realise the targets of production. It suggested that the trade union movement should not be weakened by the multiplicity of trade unions, political rivalries, disunity and lack of resources. Inter alia, it discussed the role that ‘outsiders’ have played, and may play in the trade union movement. It raised the question of registration and recognition of trade unions and the criteria that should govern the choice of representatives of unions. It underlined the importance of “one union for an industry,” and emphasised the need to have effective machinery for the settlement of disputes so that direct industrial action should be the last resort for a trade union. It proposed a scheme of bilateral negotiations, conciliation, voluntary arbitration and adjudication. It felt that agreements should lead to workers’ co-operation in measures for higher productivity, for modernisation and expansion, and for the acceptance of schemes of ‘job evaluation.’ It wanted employers to recognise the desirability of measures “to associate employees in the management of industry” (page-574).
2.35 We do not propose, at this point, to describe the measures that the Plan advocated for harmonious industrial relations, ‘association’ of labour with management, and so on. The Plan document also made some proposals about strikes, lockouts, goslow, stay-in strikes and so on, and wanted provisions to be made for deterrent punishments for illegal strikes and lockouts. It advocated the formulation of a National Wage Policy and made some detailed suggestions on the fixation of minimum wages, the introduction of payment by results in some areas of industry, the provision of adequate safeguards to ensure a minimum fall back wage for workers, and so on. It said that “earnings beyond minimum wage should be necessarily related to results,” but, “workers should be consulted before a system of payment by results is introduced in an establishment.” It found that the major cause of industrial disputes was ‘wages and allied matters,’ ‘the settlement of bonus and profit sharing.’ The Plan also referred to the need for social security and the safeguards that contract labour needed. It wanted that minimum wages should be fixed for agricultural labour and that an effective machinery should be visualised to deal with the problem of enforcement of minimum wages in this field.
2.36 Subsequent Plans have repeated or paraphrased these ideas. Some of the Plans reiterated that the “progressive reduction of unemployment has been one of the principal objectives of economic planning in India.” It said that the solution to the problem of unemployment and the poverty that went with it, ultimately lay in a higher rate of overall economic growth. However, it admitted that there was “some leakage in the percolation effects of growth” and in any case, these percolation effects would not be sufficient to generate the required employment opportunities.” It, therefore, formulated a strategy for a supplemental programme for specific target groups, which, it believed, would lead to poverty alleviation, if not employment creation. The Sixth Plan, therefore, talked of the launching of programmes like the National Rural Employment Programme, the Rural Landless Employment Guarantee Programme, the Integrated Rural Development Programme, the Scheme for Training of Rural Youth for Self-Employment, Self-Employment to Educated Unemployed Youth and so on.
2.37 The Seventh Plan talked of the generation of employment in rural areas, the need to improve capacity utilisation, efficiency and productivity in urban industries, the rehabilitation of workers in sick units, improvement of industrial relations, increasing industrial safety, “an appropriate wage policy” with the basic objective of bringing about a rise in the levels of real income “with increase in productivity,” effective implementation of the Contract Labour (Regulation and Abolition) Act (1970) the Minimum Wages Act (1948) and the Inter-State Migrant Workmen Act. It] also talked of welfare measures for workers in the rural and unorganised sector including landless labourers, beedi workers, handloom workers, etc., and wanted that the scheme should be effectively implemented.
2.38 The Eighth Plan also mentioned the need to provide an adequate level of earning, good working conditions and minimum wages, social security for workers in the organised as well as unorganised sectors. It also talked of increasing productivity. The Plans, in the later years, made proposals for implementing measures to identify, liberate and rehabilitate bonded labour, increasing protection for migrant labour, and dealing with the problems of child labour. It wanted special attention to be given to the protection, welfare and equality legitimately due to women workers. From 1992, the two Plans that followed globalisation, have made mention of the needs that have arisen as a result of globalisation.
2.39 When one reviews the objectives and programmes formulated in the different Plans, one is struck by the fact that in spite of the reiteration of goals and the formulation of programmes, we are still very far from effectively implementing even the proposals that were put forward in the First and Second Plans, and ensuring that the machinery visualised and set up in the early years, was put in place and made effective through simultaneous periodical reappraisals, consultations and amendments or improvements. It appears that the periodic mid-term appraisals of the Plans were more related to financial provisions and physical targets rather than progress, stagnation and reversals in the pursuit of declared goals and directions. We do not have to go into the question of the responsibility for these shortcomings and the failure to take corrective steps in time.
2.40 At the completion of the first three Five Year Plans, the Government of India appointed the First National Commission on Labour under the distinguished Chairmanship of Justice Gajendragadkar. The Commission was appointed on the 24th December 1966. We are happy and proud to say that the Commission presented a highly commendable Report covering a very difficult and extensive area. It dealt in detail with all the items in the Terms of Reference with which it had been constituted. It made proposals on laws, industrial relations, the means and machinery for the settlement of disputes, safety in workplaces, determination of wages, bonus, schemes of social security and the kind of structures that were necessary to ensure the efficient extension and delivery of the services, promised by the policies on social security, the special conditions of rural and unorganised labour and women and so on. It made nearly 300 specific recommendations in the Report which it submitted in 1969.
2.41 Our Commission was appointed three decades after the Gajendragadkar Commission completed its work and submitted its Report. We have to record that almost in all the cities where we met representatives of trade unions and industrialists, labour lawyers and academicians, we were asked about the status of the recommendations of the Gajendragadkar Commission – how many of them had been accepted by the Government, how many of the recommendations accepted had been implemented, and why the other recommen-dations were rejected or not acted upon. We ourselves made efforts with the Ministry of Labour to gather information on these questions that were raised before us and that arose in our minds as well. But we did not receive any information that could help us, either to understand the position or to answer questions that were put to us by witnesses. There were some witnesses who wanted to know why we thought a new enquiry would help when the Report of the earlier enquiry was yet to receive full attention.
2.42 Our answer was that the circumstances that have come into being after globalisation and its visible impact on Indian industry, the working class and the economy, and the need that the Government itself was experiencing for immediate steps to deal with these new problems, would compel due and expeditious consideration of the recommendations that we may make in our Report.
2.43 We feel that we should now undertake a brief overview of the prevailing situation as far as the number and composition of the workforce, their employment and unemployment status, provisions of security and such other matters that are relevant to the subjects that are covered by our Terms of Reference, are concerned.
DEMOGRAPHIC TRENDS
2.44 One of the major concerns of developmental planning in the country has been the unabated population growth. The population of India has almost doubled from 548 million in 1971 to an estimated 1,027 million in the year 2001, the annual growth rate being about 2.2% through the seventies, and 2.1% during the eighties. The Ninth Plan estimated that the rate might have declined to 1.6% during the period 1996-2001. Provisional results from the 2001 Census place the population in March 2001 at 1,027 million, recording an annual average growth rate of about 2.0% during the decade 1991-2001. Thus, the decline in population growth has been painfully slow over successive decades, and has not also been uniform across the States.
2.45 Urban population accounted for 20% of the total in 1971, the proportion having increased steadily to 26% in 1991. It is now estimated to be about 29%. An undesirable feature of the demographic trends in the country has been the almost steady decline in the share of females in the population as recorded by the successive Censuses in the twentieth century. The sex ratio (number of females per 1000 males) has declined from 972 in 1901 to 927 in 1991. Provisional results for the Census of 2001 have indicated a welcome reversal of this trend, and recorded a higher sex ratio at 933. The age distribution too has been changing as a result of falling mortality rates and, in recent years, falling fertility rates, leading to a decline in the proportion of children below the 6.8% had 12 to 14 years of schooling.
Table 2.1
Age Structure of Population: 1971-2002
Percentage of population in the age-group
Age-Group 1971 1981 1991 1997 2002
0-14 42.02 39.55 37.75 37.22 33.59
15-59 52 53.91 55.59 55.79 59.41
60+ 5.98 6.49 6.66 6.99 7
Note
1 Population Census 1971, 1981, and 1991, and provisional results from Census 2001
2 Manpower profile, India Year Book 1999, Institute of Applied Manpower Reseach (Table 1.19)
2.46 LABOUR FORCE: The size of the labour force, which is a measure of the overall labour supply in the country, age of 15, and an increase in that of the elderly over the age of 60. It is easy to see that these trends have a bearing on the quantum of labour supply. Even though the literacy levels have been improving steadily from Census to Census (43.6% in 1981 to 52.2 in 1991 and 64 in 2001), the country is nowhere near the goal of universal literacy, except in some relatively small regions. The situation is even worse in the case of females where the rate was only 39.3 % in 1991, and has improved to 54.16 % by 20011 . It has been estimated that in 1991, 56.7 % of the population had less than 3 years of schooling (this figure includes those who have no schooling at all), 23.7 % had 3 to 6 years, 11.0 % had 7 to 11 years, and depends on the population in the working age groups and the rates of actual participation of the population in economic activities. Data from the population censuses show (Table 2.1) that there has been a steady increase in the proportion of population in the working age group of 15-59. This, coupled with the fact that the participation rates in this age group are generally very high, has resulted in a rapid growth in labour force over the years, even though the labour force participation rates themselves have not altered much over the years and, in fact, showed a decline in recent years, particularly for females. The participation rates for different years are given below:
2.47 Between 1993-94 and 1999-2000, the estimated total labour force grew from 382 million to 402 million or at an average annual rate of about 0.9%. While the growth rate in urban labour force was 2.4 % per annum (2.8% for males and 1.2% for females), in the rural areas it was only 0.4% (0.7% for males and (-) 0.2% for females), primarily due to the sharp decline in the participation rates in the latter. It has been estimated by the Planning Commission that the size of the labour force (aged 15+) in the country was 397 million in 1997 and would grow to 450 million by 2002 at an annual rate of 2.54%3 . In view of the decline in the labour force participation rates in almost all age groups between 1993-94 and 1999-2000, this growth in the labour force aged 15+ would also need downward revision.
{Note - 3 Ninth Five Year Plan 1997-2002, Planning Commission (Table 4.5)}
2.48 ECONOMIC GROWTH : The demand for labour depends on the pattern and pace of economic growth. Beginning with the Fifth Five Year Plan (1974—79), the gross domestic product of the Indian economy has generally increased at an average rate of 5% or more per year. This rate is much higher than in the first four Plans (3 to 4% per annum). Since the economic reforms were ushered in, the growth rate has picked up further and has been above 6% per year.
2.49 The Net National Product per capita (Per Capita Income) correspondingly increased at an average annual rate of 2.7% in the Fifth Plan, 3.1% in the Sixth Plan, 3.7% in the Seventh Plan, and 4.6% in the Eighth Plan. It has continued to grow at a rate of over 4% per annum so far in the Ninth Plan period as well.
2.50 SHIFTS IN THE STRUCTURE OF OUTPUT : Half a century of planned development has transformed the structure of the Indian economy. The share of agriculture and allied activities, mining and quarrying in the Gross Domestic Product gradually came down from 59% in 1950-51 to about 35% in 1990-91 and further down to 28% by 1999-2000. The share of manufacturing, construction, electricity, gas and water supply sectors improved from 13% to 24% in the four decades 1950-51 to 1990-91, and has remained more or less at that level in the subsequent years, with a declining trend in the latter half the nineties. The tertiary sector, comprising various services, accounted for an increasingly large share of the GDP over the entire period. In fact, during the last three decades (from 1980-81), gross domestic product from the tertiary sector has been growing at an average annual rate of 7.2% in comparison with 3.4% for the primary sector and 6.4% for the secondary sector. Within the tertiary sector, transport and communications grew at an annual rate of 6.7%, financial services, real estate and business services at 9.5% and public administration and other services at 6.4%.
2.51 The organised sector of the economy has been growing faster than the unorganised segment in terms of value added, the share of the former increasing from 30% in 1980-81 to 40% in 1995-96, while the share of the latter, declined from 70% to 60% over the same period.
2.52 Similarly, in the case of manufacturing, the share of the registered sector increased from 53.7% in 1980-81 to 62.1% in 1995- 96 while that of the unregistered sector declined from 46.3% to 37.9% over the same period.
2.53 In spite of the impressive gains in economic growth, particularly in recent years, widespread inequalities in income persist. Over a quarter of the population lives below the poverty line (measured in terms of a minimum level of consumption) in both urban and rural areas, but the poverty ratios (percentage of the poor to the total population) have been coming down. Though post-reform years have recorded a significant reduction in the poverty ratios, the improvement has not been uniform across the States. Some States like Uttar Pradesh and Bihar still remain at a high poverty level.
2.54 EMPLOYMENT LEVEL: According to the population Census of 1991, the total number of Workers (Main and Marginal) in India was 314.13 million out of a total population of 838.58 million. Their distribution by rural-urban areas and sex is given in Table 2.8.
Economic data from the successive Censuses are beset with problems of comparability (at least up to 1981) due to varying concepts adopted. The National Sample Survey Organisation (NSSO), on the other hand, provides a comparable series of data on employment for the last two decades (1977-78 to 1999-2000) using a practically uniform set of concepts and definitions. These data are given in Table 2.9.
2.55 The NSS data indicate that the Usual (Principal and Subsidiary) Status work participation rates have remained stable, and varied around 44 % in rural areas and 34 % in the urban areas over the two decades from 1972-73 to 1993-94. However, after 1993-94, there seems to be a decline in the work participation rate both in the rural and the urban areas, the decline being more marked in the rural areas. The decline has also been sharper in the case of females. The total estimated workforce using the NSS Usual Status work participation rates and the projected population for 1st Jan. 2000 is given in Table 2.10.
2.56 INDUSTRIAL STRUCTURE OF WORKFORCE: Table 2.8 indicates the changes that have been taking place in the industrial structure of the workforce since 1972 - 73 up to 1999 - 2000. Over the three decades since 1970, the proportion of the workforce in agriculture and allied activities declined from about 74% to 62% while that in manufacturing, construction, trade, transport and services improved significantly. During the period 1993-94 to 1999-2000 however, there are indications of a decline in the share of services in employment, perhaps because of stagnancy in public sector employment and decline in some sectors like banking. The changes in the structure of the workforce have not been as fast as in the contributions of different sectors to output, indicating continued concentration of labour in agricultural and other activities of low productivity and incomes.
2.57 EMPLOYMENT STATUS: The surveys of the NSSO identify the employment status of workers in terms of the self-employed, the regularly employed for salaries/wages and the casually employed. In the rural areas, 55.8% of the workers were selfemployed, 6.8% were in regular salary/ wage employment, and the remaining 37.4% were working as casual labour in 1999 - 2000. The corresponding percentage for the urban areas was 42.2, 40.0 and 17.8 respectively. The trends in the distribution of the employed (according to the Usual Status concept) by status are shown in Table 2.10. Important conclusions that emerge from these data are:
a) A steady decline in the proportion of the self-employed in the rural areas, both among men and women.
b) A corresponding increase in the proportion of casual labour in the rural areas, both among men and women.
c) A steady decline in the proportion of regular employment in the case of rural men and a fluctuating situation in the case of rural women.
d) A gradual decline in the share of regular employment for men and gradual improve-ment in the case of women in urban areas.
e) A marked shift from casual employment to regular employment in the case of women in urban areas during the post-reform period (1993-94 to 1999-2000).
2.58 UNEMPLOYMENT: In 1999- 2000, the Usual Principal Status unemployment rate (percentage of the unemployed persons among the labour force) was 1.9 (2.1 for males and 1.5 for females) in the rural areas, and 5.2 (4.8 for males and 7.1 for females) in the urban areas. If, however, the work done in subsidiary capacity is taken into account, these rates drop to 1.5 in rural areas and 4.7 in the urban areas. On the basis of Current Weekly Status, categories the rates are higher at 3.8 (3.9 for males and 3.7 for females) in rural areas and 5.9 (5.6 for males and 7.3 for females) in the urban areas. If the Current Day Status is taken into account, the rates go up further to 7.1 (7.2 for males and 7.0 for females) in rural areas, and 7.7 (7.3 for males and 9.4 for females) in urban areas. Table 2.11 gives the trends in the unemployment rates based on Usual Principal Status criterion for various 2.59 Between 1993-94 and 1999- 2000, which roughly coincides with the post-reform years, unemployment rates increased in rural areas according to all the criteria and for both the sexes, while the rates declined for females in the urban areas. In the case of urban males, only the UPS unemployment rate declined.
2.60 The National Commission on Labour that was appointed in 1966 under the Chairmanship of Justice Gajendragadkar was, inter alia, asked “to review the changes in conditions of labour since Independence and to report on existing conditions of labour… To study and report in particular on the levels of workers’ earnings… The standard of living and the health efficiency… Of workers – both at the centre and the states.” The report of the Commission, therefore, included sections on the conditions of labour, levels of earnings, standard of living and other questions relating to these subjects. Nearly three decades have elapsed since the Gajendragadkar Commission submitted its report. In these years many changes have taken place in the conditions of workers, their standard of living, their rights, social status and so on, and it would have been appropriate and beneficial to undertake a review of these changes as a prelude to a study and review of the existing labour legislation, the need for an umbrella legislation in the unorganised sector, and the measures needed for the protection and welfare of workers in both the sectors. However, our Commission has not been asked to undertake such a review (Nor have we been given adequate time and resources to undertake such a detailed review). Even so, we found that a brief review of the changes that have taken place in the conditions in the main sectors of employment has to be the starting point for the study and examination of some of the questions that have been entrusted to us, This is also necessary to have a clearer understanding of the situation in the main industries and economic activities in which our workforce is employed today. We propose therefore to devote a few paragraphs to a quick and brief review of the situation in the Plantations and Forestry, Mining and Quarrying, Construction, Textiles, Chemicals, Agriculture, Engineering and other industries before we proceed to a review of legislation, protection, and welfare. We should say once again that the review that we present is by no means comprehensive or exhaustive, for reasons that we have already indicated.
INDUSTRY PROFILES
2.61 HANDLOOMS: The art of hand weaving is a part of India’s rich heritage. From the dawn of recorded history, Indian handlooms have enjoyed a high reputation throughout the world.
2.62 Till the mid-nineteenth century, the textile industry in India meant only the handloom industry. By the time of the Second World War, however, the scale had tilted in favour of the mill sector. The Great Depression of the 1930s dealt a severe blow to the industry. Competition posed by imported cloth (buttressed by favourable tariffs), mass production by power-looms, import duty on yarn etc., contributed to the precarious conditions to which weavers were reduced. All these contributory factors had the underpinning of colonial exploitative policies.
2.63 The abject condition of the weavers finally prodded the Government of India to waive a part of the import duty on yarn in 1935. It did not, however, lead to any significant relief. A Fact Finding Committee was set up in 1941 to investigate the situation and suggest measures for reorganising the industry. An All India Handloom Board was set up in 1945. It was reconstituted in 1952. This heralded an upturn in the fortunes of the industry. Initially, the Board was the designated agency for formulating State Plans in the handloom sector in consultation with State Governments. After 1958, however, the Planning Commission changed the procedure and the new arrangement led to a diminished role for the Board. It was reconstituted in 1978, but in 1982, it was merged with the Handicrafts Board. An All India Society was set up in 1953 to give fillip to marketing and exports. Later, it was assisted by the Handloom Exports Promotion Council.
2.64 The Planning Era : The handloom industry was accorded importance during the First Five-Year Plan itself. It was put on par with small-scale industries in matters pertaining to competition from the large-scale sector, and benefited from the scheme of product reservation. A cess was also imposed on mill cloth through an Act passed in 1953 [Khadi and other Handloom Industries (Additional Excise Duty on Mill Cloth) Act, 1953]. The proceeds were to be pooled in a fund that was known as the Cess Fund. It was used for promoting marketing, production and quality control. It was, however, abolished in 1960. To minimise the competition for Handlooms, controls were imposed on mill production. A rebate scheme, initially intended for clearing accumulated stocks, was introduced in 1953. This too was aimed at making handlooms more competitive in the prices of their products. However, the functioning of the Rebate Scheme was prone to misuse and corruption, with the result, that in many situations the benefit often did not reach either the consumer or the producer. All these promotional efforts, however, did not address the problem facing the industry adequately, particularly that of competition from the mill and powerloom sectors. A Textile Enquiry Committee was appointed in 1952 under the Chairmanship of Shri N Kanungo. In 1954, the Committee recommended a phased programme of conversion of handlooms to powerlooms, particularly in the rural cooperative sector, to overcome the price handicap that was as high as 24%. The First Plan saw the production more than double from 742 million yards in 1950-51 to 1554 million yards in 1954-55.
2.65 The Industrial Policy Resolution of 1956 became the bedrock for policy formulation from the Second Plan onwards. It recognised the spin-offs of small-scale and cottage industries like large-scale employment, equitable income distribution and capital and human resources compatibility, and accepted the desirability of supporting such industries. Research and Technological Development in the handloom sector got a fillip during this time. The production increased to 1900 million yards in 1960-61. The looms in the co-operative sector almost doubled from less than 7 lakhs in 1953 to over 13 lakhs by middle of 1960. The Third Plan focussed on higher production through fuller employment and improved technology. It saw a liberal credit regime, supply of improved appliances and other support services. However, the production and cooperativisation did not register significant increase. These policies continued during the Annual plans (1966-69) and the Fourth Plan period (1969-74). The stagnant situation led to the appointment of the high powered Sivaraman Committee in 1973. The Committee made many important recommendations in their report. Among others, it recognised the need to promote the weavers outside the co-operative fold through Handloom Development Corporations. The Fifth Plan saw the introduction of special schemes for the handloom industry including integrated handloom development projects (for about 10,000 looms each); export production projects (about 1,000 looms each) and janta cloth production which started in 1976. Production went up significantly from, 2,100 million metres to 2,900 million metres, and so did employment from 5.2 to 6.2 million. The total number of looms increased to about 3 million of which about 1.3 million were in the co-operative sector. Out of these looms in the co-operative sector only 0.94 million were effective production looms. This represented effective coverage of 31% of the total number of looms against the targeted 60%.
2.66 The Sixth Plan witnessed an approach based on vertical and horizontal integration of programmes in the light of the Industrial Policy Statement of 1980. It saw, inter alia, emphasis on augmented supply of hank yarn to weavers, the modernisation of looms, and the establishment of the National Handloom Development Corporation to enhance co-operativisation. During this plan period, production increased from 2900 million to 3600 million metres, and employment, from 6.2 million to 7.5 million workers. However, the effective extent of co-operativisation remained around 32% through the years, it saw an addition of about 1.7 million weavers to this Sector (Cooperatives).
2.67 The Seventh Plan (1985-90) period was guided by the Textile Policy of 1985. The thrust was on co-operativisation, development of Central/State Government Corporations, loom modernisation, raw material linkage and technological upgradation.
2.68 Post Liberalisation period: The picture in the handloom sector has, however, changed from one of moderate to slow growth to decline in the 1990s. From the data collected during the Handloom Censuses of 1987-88 and 1995-96, it is seen that monthly production has come down from about 298 million metres to 260 million metres. In annualised terms, it shows a decline from about 3600 million metres to about 3100 million metres, or roughly 13%. The number of looms shows a decline of about 8% from 3.78 million to 3.49 million: the number of production units also shows a slightly sharper fall of about 15% from 3 million to 2.54 million, though the number of weavers/workers is virtually stagnant, at 6.55 million (increase of 0.01 million). These figures indicate a higher concentration of both workers and looms in the units in 1995-96 as compared to 1987-88, from 2.18 workers to 2.58 workers and from 1.26 looms per unit to 1.37 looms per unit. Of the 24 states surveyed, only two viz., Manipur and Himachal Pradesh registered increase in the number of units. The major decline in units was in Assam (-10%), West Bengal (-23%) and Tamil Nadu (- 24%). The number of workers fell in absolute terms in U.P., Tamil Nadu and West Bengal (-35%, -14% and –7% respectively).
2.69 The census data also revealed that during the period between the two rounds, the production per loom and per worker declined at the all India level though most states registered increases. This was mainly due to decline in productivity in the States that accounted for the bulk of fabric production (57%), in U.P., West Bengal and Tamil Nadu (overall productivity decline of about 29% in the three states). The average monthly earning of weaver households was merely Rs. 1,459/- in 1995-96. Excluding the North Eastern States which generally (except Tripura) showed a higher level of earning from agricultural and nonagricultural sources vis-Ã -vis weaving; the average earning of a weaver household declined from Rs. 1,458/- per month to Rs. 1,236/- per month. These broad data reveal the increased vulnerability of the weaving population to the forces that have been generated by the accentuated economic changes that have been witnessed in recent years.
2.70 The extreme distress in which the families of weavers find themselves in many states is reflected in the waves of suicides that have been reported from states like Andhra Pradesh and Tamil Nadu. No society, and no Government can be impervious to the degree of distress that drives citizens to commit suicide either because of the measures to temper or taper off protection (including from low priced imports) or the failure to create adequate social security systems that can mitigate the suffering and starvation of those who lose employment. 2.71 The portents seem more ominous with the removal of almost all quantitative restrictions on imports from 1st April 2001, and the full opening up of the textiles sector from 2005.
2.72 TEXTILE INDUSTRY: The textile industry is one of the oldest industries in India, which has made a significant contribution to the country’s economy over the centuries. We have already seen that the handloom sector of the industry flourished for a long time before the mill sector achieved a significant presence. The first textile mill in India was set up in 1854 at Bombay by C. N. Daver. Subse-quently, other mills were set up in Ahmedabad, Kanpur, Calcutta and Coimbatore. At the time of the Second World War, there were 389 cotton mills in India with about 10.06 million spindles and 2.02 million looms. After the War, there was a steep demand for cotton textiles. During Partition, a large portion of the cotton growing areas in Sind went to Pakistan, and as a result, the growth of the textile industry slowed down for sometime. After Independence, India embarked on planned development, and during the successive Five-Year Plans, the textile industry expanded and extended to States like Andhra Pradesh, Kerala, Bihar, Orissa and so on. The textile industry is today the largest industry in India with a share of 20% in national industrial production. It is the second largest employer, employing over 20 million, and coming only after agriculture. It contributes 4% of the GDP, and has over 30% share of the total export earnings. In addition, a number of other industries like textile engineering, manufacture of dyes, etc., depend upon the textile industry.
2.73 The Indian textile industry has been classified into four product categories i.e. yarn, fabrics, made-ups and garments. Yarn is manufactured by the organised sector as well as the small-scale sector. Fabric manufacturing is further classified into handloom, power-loom, mill-made and knitting. The other two products (made-ups and garments) are manufactured both by small and big undertakings. There are three major sectors in the industry: spinning, weaving and processing. In each of these three major sectors, there are organised and decentralised segments. In the organised segment, there are large spinning and composite mills with spinning, weaving and processing activities, while in the decentralised sector, there are small spinning mills, power-looms, handlooms and weaving and small hand processing units. Out of the hundreds of small spinning mills in the country, a majority is in Tamil Nadu, followed by Karnataka and Gujarat. There are at present (March 1999) 1,824 mills in the organised sector (1,543 spinning and 281 composite mills), and about 800 Spinning mills in the small-scale sector and 16 lakh power-looms in the country. Table 2.14 shows the progress of the textile industry over the past five decades.
2.74 As is evident from the table that follows (Table 2.15), the growth of the textile industry, which slowed down during the seventies, picked up again and, spear-headed by the spinning and man-made fibre in the organised sector, made impressive gains in almost all respects during the subsequent period, particularly in the post-liberalisation years. A conspicuous exception is the case of production of cloth in the mill sector, which has suffered substantially. It has consistently recorded fall in production since the sixties. The fall has become steeper in the postreform period.
2.75 There is a view that one of the reasons for this was the emphasis that was laid on the role of the handloom industry since Independence, both because of its employment potential, and because of the place that it occupied as part of the national movement. Therefore, while the spinning industry was allowed to expand, the expansion of looms in the mill sector was severely restricted. Between 1980 and 1997, the weaving capacity in the mill sector declined by 84,000 looms. On the other hand, the rate of growth of production of cloth in the decentralised power-loom and hosiery sectors has been impressive throughout the half century. The large gap in the excise levy between the mill and the exempted category of power-looms acted as a direct incentive to the rapid growth of power-looms. Moreover, although the reservation of the fields of production was made to encourage the handloom sector, it equally benefited the power-looms, since they were not prohibited from making the reserved varieties.
2.76 The Textile industry in the mill sector has been plagued by sickness and industrial unrest. One of the major events that showed the extent of unrest among workers was the strike of textile workers in Bombay, which commenced in January 1982 and continued for more than a year. The strike affected 60 textile units including 12 National Textile Corporation units and caused considerable loss of employment and other kinds of suffering to workers and their families. During the period of the strike, many of the composite mills were forced to close down. However, power-looms prospered. One of the fallouts of the strike was The Textile Workers’ Rehabilitation Fund Scheme that the Government introduced in 1986 to provide temporary relief to workers rendered jobless by the permanent closure of textile mills in the private sector. Under this scheme, the workers, whose wages were upto Rs. 2,500/- per month or less, were given relief on a graded scale for three years immediately after their retrenchment from employment. Till 31st March 1999, Rs. 111.59 crores were given to 54,631 workers involving 35 textile mills. With the structural transformation in the mill sector, and the competition faced from powerlooms, the textile industry in the mill sector began to face increasing sickness. The other reasons for sickness were comparatively low productivity, lack of modernisation, increase in cost of inputs, etc. As a consequence of all these factors, the number of mills that has closed down has gone up. The growing incidence of sickness is reflected by the increase in the number of closures which increased from 123 in the year 1992-93 to 349 in 1999-2000. As of September 1999, there were 421 cases of textile mills registered with the Board for Industrial and Financial Reconstruction (BIFR). The incidence of sickness is more in Maharashtra and Gujarat. Besides these closures, a large number of mills is not working to its full capacity due to the spreading sickness in the industry. Globalisation has also had adverse effects on the already sick textile industry as imports have increased and textile products from other countries are available in abundance at cheaper rates. The number of workers employed in the organised sector has decreased from 11,79,000 in 1980-81 to 10,43,000 in 1999-2000.
2.77 The condition of workers in the decentralised sector is very pathetic. The wage levels in this sector are also on the low side. The jobs cuts and retrenchment of labour that is taking place on a large scale have further added to apprehensions of imminent loss of employment and erosion of incomes and standards of living. It is estimated that more than 2.50 lakh textile workers have been affected adversely due to closure and curtailment of activities. Power-looms were considered to be viable propositions due to cost advantages. But due to the vast expansion of capacity, they are also becoming uneconomical.
2.78 IRON & STEEL INDUSTRY : The Iron & Steel industry is a key industry of national importance. The develo-pment of industrial activity in a country is often linked with the development of the steel sector. The level of per capita consumption of steel is often treated as one of the important indicators of economic development and the living standards of the people in any country.
2.79 The first iron and steel plant in Indian was established in 1907 at Jamshedpur by J N Tata. The setting up of the Tata Iron and Steel Company (TISCO) has been hailed as a monument to the daring entrepreneurship of India. In 1948 the production of ingot steel in the country was of the order of 1.25 million tonnes, and that of finished steel, 0.86 million tonnes.
2.80 There were many reasons for the failure of early attempts to introduce European methods of manufacturing iron in India. The then Central Government and the various provincial Governments were hostile to the industrialisation of India and the establishment of modern industries under indigenous entrepreneurship. 2.81 In its early years, even TISCO derived little benefit from the abundance of inexpensive labour in India. Prior to 1923 TISCO’s labour costs per ton of output were substantially higher than the labour costs of comparable steel plants in Europe and the United States. By 1933, there was no appreciable difference between TISCO’s direct labour costs and labour costs elsewhere, despite the fact that Indians had by then replaced much of the company’s foreign personnel.
2.82 In 1948 the Government of India issued its First Industrial Policy Resolution specifying the industries in which the state would assume a sole or primary responsibility for new investment, and those that would be subject only to normal government controls. The iron and steel industry was included in the second category. The 1948 resolution was superseded in 1958. The list of industries which were to become public sector monopolies, and in which the Government was to have sole or primary responsibility for new undertakings, was enlarged.
2.83 In many instances controlled prices have been kept relatively low, with the result that prices frequently did not cover all costs of production. Controls have not necessarily discouraged expansion of the industries in which the Government assumed primary or sole responsibility for new investment. However, in industries in which private sector participation has been permitted, unduly low prices have acted as a disincentive to new investment and this was one reason for some of India’s frequent commodity shortages.
2.84 In 1964, the Government of India (basing itself on the recommendations of the K. N. Raj Committee) placed the onus of formulating guidelines for production and distribution of steel materials on the Joint Plant Committee (JPC). The Committee was constituted with representatives from Hindustan Steel Ltd (Rourkela, Bhilai and Durgapur), Tata Iron & Steel Co. Ltd., and Indian Iron & Steel Co. Ltd., and the Railways as members. The functions identified for the JPC were:
a) Co-ordination of work of the main producers with a view to evolving common procedure and action in regard to planning, dispatch and pricing of products and drawing up of rolling programmes;
b) Assisting the Steel Priority Committee on the dispatch and allocation of Iron & Steel;
c) Reviewing the general market situation and fluctuation of free market prices, trends of production, movement and availability of Iron & Steel. 2.85 At present the JPC has its Headquarters at Kolkata and six regional offices at Kolkata, New Delhi, Mumbai, Chennai, Kanpur and Hyderabad.
2.86 The office of the Development Commissioner for Iron & Steel (DCI&S) has continued to perform its advisory, developmental and regulatory functions, through its regional offices.
2.87 The new economic policies being pursued by the Government have opened up new opportunities for the expansion of the steel industry. With a view to accelerating the growth of the steel sector, the Government has initiated a number of policy measures since 1991.
2.88 The Indian Steel Industry recorded a production of 26.71 million tonnes of finished steel in 1999-2000, which was more than that of the previous year. India continued to be the 10th largest steel producing country in the world during 1999-2000. The country is considered a leading producer of carbon steel in the world. This sector represents around Rs. 90,000 crores of capital, and directly provides employment to over 5 lakh people. The Indian steel sector was the first core sector to be completely freed from the licensing regime and pricing and distribution controls. This became possible primarily because of the inherent strength and capabilities demonstrated by the Indian iron and steel industry. During 1996-97, finished steel production shot up to a record 22.72 million tonnes with a growth rate of 6.2%. However, increases in the production of finished steel in 1997-98 and 1998-99 were only 2.8% and 1.9% respectively as compared to 20% in 1995-96 and 6.2% in 1996-97. The growth rate has improved in 1999 - 2000, and stands at 12.1%. But subsequently, a trend of decrease is visible in the growth rate of steel production. This has been brought about by several factors which inter alia include, general slowdown in the industrial construction activities in the country coupled with lack of growth in major steel consuming sectors, etc.
2.89 India exported 3.34 million tonnes of iron and steel valued at over Rs. 3500 crores during 1999-2000. It produced 5.18 million tonnes of sponge iron during the year 1999-2000, and continues to be the second largest producer of sponge iron in the world. The Steel Authority of India Ltd. (SAIL), a public sector enterprise recorded a turnover of Rs. 16250 crores during 1999-2000. In its four integrated steel plants, SAIL achieved a production of 10.94 million tonnes of Hot Metal, 9.79 million tonnes of crude steel and 9.53 million tonnes of saleable steel during 1999-2000. SAIL exported 0.89 million tonnes (compared to 0.49 million tonnes in the previous year) of steel and pig iron, recording a growth of 81% in exports.
The company earned foreign exchange of Rs. 886 crores during the year through exports and other activities. India exported 32.55 million tonnes of iron ore during 1999-2000 as against 31.02 million tonnes in 1998- 99. Another major steel private sector corporate, Tata Iron and Steel Company Ltd., achieved a production of 3.29 million tonnes of saleable steel and 3.43 million tonnes of crude steel, surpassing all previous records.
2.90 The new industrial policy announced in July 1991, has completely opened the iron and steel industry for private investment. Since then, 19 new field steel projects, financed by the financial institutions, involving a total capacity of approximately 13 million tonnes (saleable steel) have been commenced. The aggregate investment in them is over Rs. 30,000 crores. Of the 19 projects, so far 8 units have been fully commissioned, and 4 more have partly commenced manufacturing facilities. Thus, capacity to the tune of approximately 7 million tonnes has been added during the period. Some of the important new players are Essar Steel Ltd., Lloyds Steel & Industries Ltd., Jindal Steel & Power Ltd., Jindal Vijayanagar Steel Ltd., Ispat Industries Ltd., Southern Iron and Steel Company Ltd., Hospet Steel etc.
2.91 Global Impact on Iron & Steel Industry : The world steel industry has witnessed major ups and downs in the last few decades, especially over the past five years. The pattern of trade has been upset by two important developments.
2.92 The Asian Crisis and the collapse of the USSR have transformed importers of steel into exporters. Till the recent financial crisis, the Asian countries were large importers of steel. During recent years Indian exports have been subjected to anti-dumping/ CVD investigations in the European Union, USA and Canada. This has eroded our export base to some extent.
2.93 It is in this global context that the Indian steel industry will have to identify its future role.
2.94 Indian steel is currently exported to China, Japan, USA, Korea, Taiwan, Indonesia, Thailand, Malaysia, Italy, U. K. Germany, Canada, Spain, Australia and other countries. 2.95 After the liberalisation of India’s trade policy and the commencement of the general policy and procedures for export-import of iron and steel, ferro scrap etc. are decided by the Ministry of Commerce in consultation with Ministry of Steel. 2.96 Under the general policy and procedures for export-import that have been decided upon for 5 years (from 1.4.1997 to 31.3.2002), the policy for import and export of iron and steel materials has also undergone sweeping changes. Import of all items of iron and steel is freely allowed. India has been annually importing about 10 to 15 lakh tonnes of steel.
2.97 Efforts are being made by the Ministry of Steel/Development Commissioner for Iron & Steel to ensure adequate supplies of domestic raw materials to meet the requirements of engineering exporters.
2.98 With the coming of liberalisation, the steel industry, especially the public sector, has now to face up, not only to domestic competition but also to global competition in terms of product range, quality and price. The growth of the steel sector is intricately linked with the growth of the Indian economy and especially the growth of the steel consuming sectors. India has been self-sufficient in iron and steel materials in the last 3-4 years. Exports are rising and imports are falling. Production and production capacities are increasing. This position needs to be further consolidated, and issues affecting production and consumption need to be resolved on a continuous basis. India is already recognised as a global player in the steel industry, and this sector is poised to play a key role in the international steel scenario in the coming years.
2.99 Productivity in Iron and Steel Industry : The factors affecting production and productivity are labour, material, technology and capital. Productivity can be improved through various means like the introduction of new and better technologies, use of appropriate tools, equipment and methods, but the most important factor for the improvement of productivity is the workforce. High productivity is necessary for the survival of the industry. In this sector, PSUs and TISCO establishments have been attempting to ensure the improvement of productivity by motivating its workforce in various ways. In an attempt to improve the skills, the workforce is regularly trained in standard operating practices, told about task and target systems and above all made aware of the advantages of productivity. The establishments in the public sector and the private sector lay stress on productivity, and focus on cost consciousness and cost control, efficient use of raw materials, improvement in yields, systems and procedures, improvement in customer service and delivery, elimination of unproductive practices, elimination of waste, on safe and healthy environment etc. These methods have helped the industrial units to achieve lower costs and better quality of goods and services. This has also led to overall improvement in the quality of life of the employees. In addition, the units have set up quality circles: Total Quality Systems and the like. In TISCO, labour productivity has almost doubled in the last five years. TISCO is emerging as the World’s lowest cost producer of hot rolled coils (HRC). 2.100 Salary/Wage in Steel Industry : Prior to 1965, the pay scales of Board Level executives and below-Board Level executives in Public Sector Enterprises were fixed on an ad hoc basis by the Government, keeping these generally at par with the comparable pay scales of equivalent posts in the Government departments. But in 1990, guidelines were issued in respect of officers of Board level and below Board level positions, and uniformity was introduced rationalising the scales in Public Sector Enterprises. Again, in the salary revision effective from 1.1.92, the Department of Public Enterprises issued guidelines which included 14 scales of pay below board level, but provided for flexibility to allow the Public Sector Enterprises to adopt these pay scales depending upon their requirements.
2.101 Wage Revision: In the steel industry, there is a bipartite forum known as the National Joint Committee for the Steel Industry (NJCS) which discusses and finalises the wage agreements and other benefits for workers. Till now, the Committee has signed six agreements. This committee is functioning since 1969. NJCS is composed of representatives of employees as well as employers. On the employees’ side, there are three members each from the Central Trade Union organisations namely Indian National Trade Union Congress (INTUC), All India Trade Union Congress (AITUC), Centre of Indian Trade Unions (CITU), Hind Mazdoor Sabha (HMS) and one each from the recognised trade unions of SAIL Steel Plants, Indian Iron & Steel Company (IISCO) and TISCO (private sector). The Employers’ side is being represented by the Chief Executive of SAIL Steel Plants, IISCO and VicePresident (Human Resource Management), TISCO. From SAIL Corporate Office, Director (Finance) is the member and the Executive Director (Personnel and Administration), is the convener member of this Committee.
2.102 Better Industrial Relation through Participative Management and Welfare: The Industrial Policy Resolution of 1956 had laid stress on industrial peace as one of the prime requirements for industrial progress. Over the years, the industry has developed a participatory culture.
2.103 The voluntarily adopted system of workers’ participation in decisionmaking operates through quality circles, suggestions, schemes, shop improvement groups and by direct contribution of employees to production and productivity at the shop floor. The results and benefits of workers’ participation in decision making, in the management of steel plants, are clearly visible from the increasing production and productivity figures, the adoption of production practices leading to lower energy consumption and reduced waste etc.
2.104 The Committee has progressively widened the scope of its working from a forum negotiating and settling wages for workers across the Steel Industry, to a forum addressing issues relating to production, productivity, quality, cost control, establishing productive work practices and issues relating to safety, health and environment. All matters placed before the National Joint Committee for Steel Industry (NJCS) (the national level tripartite forum in the Steel Industry), are dealt with through consensus, resulting in improvement in the overall performance of the industry and in enhancing the quality of life of steel workers.
2.105 PLANTATION INDUSTRY : According to the Royal Commission on Labour (1929-31)
“Plantation represents the development of agricultural resources of tropical countries in accordance with methods of Western Industrialism. It is a largescale enterprise in agri-culture. The work is essentially agricultural, and is not concen-trated in large buildings.”
2.106 Convention No. 110 of the ILO defines a plantation as:
“An agricultural undertaking regularly employing hired workers which is situated in the tropical or sub-tropical region and which is mainly concerned with the cultivation or production for commercial purposes of coffee, tea, sugarcane, rubber, bananas, cocoa, coconuts, groundnuts, cotton, tobacco, fibres (sisal, jute and hemp), citrus, palm oil, cinchona, or pineapple. It does not include family or small scale holdings producing for local consumption and not regularly employing hired workers.”
2.107 According to the Indian Plantation Labour Act, 1951 a Plantation means any land used or intended to be used for growing tea, coffee, rubber, cinchona, cocoa, oil palm and cardamom which admeasure 5 hectares or more, and on which 15 or more persons are employed or were employed on any day during the preceding 12 months. However, the main plantations we have are tea, coffee, rubber, cardamom and pepper. Tea is grown in Assam, West Bengal, Tripura, Himachal Pradesh, Karnataka, Kerala and Tamil Nadu. Coffee, rubber and cardamom are grown only in the three southern states namely Karnataka, Kerala and Tamil Nadu (Tripura also has a certain number of rubber plantations). Since tea, coffee, rubber and spices plantations are the main ones that employ large groups of workers, we will confine our attention to them in these brief paragraphs.
2.108 Tea: The number of tea plantations with 5 hectares or more, covered under the Act was 902 in 1967 (with a total area of 25,685.61 hectares). However, the total number of plantations, including those not covered under the Act, is 54,000, and they have a total area of 4,36,100 hectares (1999-2000 figures). In 1999- 2000 the total volume of tea produced in India was 7,98,925 tonnes with a total value of Rs. 5,820 crores. Of these 1,90,200 tonnes tea, worth Rs. 1,850 crores, was exported. The total number of workers employed by all tea plantations (including those not covered under the Act) was 7.31 lakhs in the year 1967. It has since risen to 11.38 lakhs in 1999-2000.
2.109 COFFEE: In the year 1967, the number of plantations covered under the Act was 833. The total number of plantations (including those not covered under the Act) stood at 1,40,300 with a covered area of 3,40,300 hectares and total production of 3 lakh tonnes, valued at 1,910 crores. Out of this, 2.35 lakhs tonnes of coffee valued at Rs. 1,840 crores was exported in the year 1999-2000. The number of workers employed in coffee plantations in the year 1967 was 2.60 lakhs. It has since risen to 5.35 lakhs in the year 1999-2000.
2.110 RUBBER: In the year 1967 the number of rubber plantations covered under the Act was 170. It has since risen to 9,71,000 in 1999-2000 (including those not covered under the Act). They have a total area of 5.63 lakhs hectares. The total production of rubber was 6.22 lakhs tonnes, which was entirely consumed within the country. The number of workers employed by rubber plantations in the year 1967 was 1.22 lakh (including plantations not covered under the Act). In the year 1999-2000 the total employment in rubber plantations nearly trebled, and stood at 3.48 lakhs.
2.111 CARDAMOM: Small Cardamom, known as the Queen of Spices, has the second place in importance. India was the largest producer of small cardamom till 1979-80, but Guatemala has now become the world’s leading supplier of cardamom. India still meets about 30 to 35% of the world’s demand, and exports to about 50 countries. In the year 1999-2000 there were 30000 plantations with an area of 72,500 hectares. These plantations were employing 30,000 workers.
2.112 PEPPER: Black Pepper is the most popular of spices. Native to the west coast of India (Kerala), its cultivation has now spread to many parts of the world. It is grown on an estimated area of 1.75 lakh hectares (1999-2000) in India. As in the case of Cardamom, pepper is also mostly grown in Kerala and some parts of Karnataka and Tamil Nadu. Efforts are being made to commence its plantation in Pondichery and Maharashtra. Other countries producing pepper are Sri Lanka, Indonesia, Malaysia, Israel and Thailand. According to the figures for 2000, the world production was estimated as 1.85 lakh tones, out of which India accounted for about 32 to 35%.
2.113 Health, safety and working conditions: Plantation operations are carried out in open fields. Employment depends upon the intensity of operations and crop availability, which further depend on seasonal weather conditions. In a sense, therefore, the industry can be described as seasonal. Though a regular workforce is employed for normal operations such as pruning, weeding, manuring construction and maintenance roads and drainage, irrigation etc., for harvesting the crops i.e. plucking tea leaves and collecting coffee beans etc, a large number of temporary workers are employed, most of whom are migrant workers. Because of the humid conditions in the areas where workers reside and operations take place during the rains, workers are often exposed to malaria. Every plantation is required to provide medical facilities such as dispensaries for the workers and their families, as prescribed under the rules framed by the different State Governments. Bigger plantations employing above a certain number of workers, and in the case of small plantations, a group of smaller plantations are required to establish and maintain hospitals with facilities for out-patients, indoor patients not requiring elaborate diagnosis and treatment, infectious diseases, midwifery, simple pre and post natal care, care of infants and children, and periodical medical examination of workers. The Commission had opportunities to see the medical facilities and dispensaries main-tained by some plantations. We realise that there has been some improvement in the past decades. But we are of opinion that much more attention has to be devoted to make the facilities adequate and satisfactory.
2.114 Wages and working conditions: Being essentially an agricultural operation, the Plantation Industry attracts Part II of the Schedule of the Minimum Wages Act 1948, and the minimum wages fixed for agricultural workers apply to plantation workers as well. In practice, the workers are mostly paid the minimum wages fixed by the State Government for agricultural workers. However, in Kerala, wages are fixed through negotiated settlements or under conciliation settlements. This has its impact on the neighbouring states of Tamil Nadu and Karnataka as well. Workers in these States too have now demanded that wages should be settled through negotiations.
2.115 Welfare of workers: The Plantation Labour Act, 1951 stipulates that the State Governments may provide for medical care, housing, recreation, education for children etc. by framing rules under the Act. The Rules of most of the State Governments lay down that the employer will provide housing accommodation to the workers and their families, in the plantation area. We have already referred to the provisions or rules that require plantations, either singly or in groups to provide medical facilities. All plantations where the number of children of plantation workers between the age group of six and twelve years exceed 25, have to provide educational facilities of the prescribed standard. The responsibility to provide housing (except the new law for construction workers) and educational facilities are unique to this law, as no other law provides for the provision of housing and education to workers.
2.116 Employers have made representations to this Commission against the provisions of the present law and rules that make it obligatory for the Plantation to provide housing and education etc. on the ground that in the last few decades, village habitations have grown, and schools and hospitals run by the State Governments are available in the proximity of the plantations. Moreover, these days, workers do not necessarily reside within the plantations. Employers also feel that, in the present circumstances, the provision of healthcare should be the responsibility of the State Governments and not of the employers. 2.117 Every plantation employing 150 or more workers is required to maintain one or more canteens. Under this law any plantation employing 300 or more workers is required to employ a Welfare Officer. The hours of work, the provision for earned leave, rest intervals or weekly rest days under the Act are almost similar to those provided under the Factories Act. All other labour laws that are applicable to manufacturing industries like the Industrial Relations laws, Wage laws, and Social Security laws (excluding Employees State Insurance Act (ESI) but including Workmen’s Compensation Act) equally apply to plantations.
2.118 Impact of globalisation on the plantation industry : The plantation industry is at present facing a severe crisis. The evidence tendered before the Commission by planters, as well as workers in plantations, shows that liberalisation, globalisation and the WTO regime have combined to subject the plantation industry to unprecedented strains. The prices of coffee have come down almost by 50%.
2.119 The average price of rubber has come down from Rs. 47.50 per kg in 1995-96 to Rs. 27/- per kg in 1998-99. In 2000 the price stood at Rs. 28.50 per kg, which is below the benchmark price of Rs. 34.05 per kg fixed by the Government of India, and about Rs. 14.35 per kg below the cost of production.
2.120 Russia was one of the biggest consumers of Indian tea. But exports to that country have come down drastically, since Russia has started buying from other countries. Sri Lanka has been accorded most favoured nation status, and the import duty on Sri Lankan tea under the Indo-Sri Lanka trade agreement has been brought down to 7.5%. As a result the prices of indigenous tea, particularly from the Nilgiris have also come down. Producers are losing about Rs. 17/- per kg.
2.121 The total losses of the southern tea industry stood at about Rs. 350/- crores (1999-2000). In conformity with commitments to the WTO, the Government is soon to introduce open auctions for 75% of the tea produced in the country. It is apprehended that this will further reduce the prices of tea.
2.122 In view of these severe strains, the Plantation Industry has demanded that they should be helped to acquire the strength necessary to compete in the global market. They have suggested that the tax burden including the agricultural tax of 60% to 65% imposed by the State Governments of Tamil Nadu and Kerala should be reduced, and other burdens that arise from the level of wages and the obligation to provide statutory benefits to workers should also be reduced. The plantation industry has also contended that unless it resorts to mechanisation, it would not be able to compete in the world market. But mechanisation is bound to affect the workforce employed in the industry. A good number of workers will become surplus. The representatives of employers, therefore, pleaded that they be permitted to reduce the number of workers by 5% per annum.
2.123 The workforce engaged in the industry is also deeply concerned about the impact of globalisation and mechanisation on the industry. They are concerned about the possibility of loss of employment and the means available for migration to other avenues of employment.
2.124 The Plantation Industry is facing the problem of over supply because many countries have entered into the market. These countries have high output and low cost of production (in comparison to India). This is particularly so of Kenya, Malawi, Sri Lanka and some of the other countries. There is, therefore, need to shift the focus from production revolution to market revolution. For this, marketing infrastructure has to be created. Not only the Government but also the associations of industry should focus their attention to this. We have also to adopt new strategies like brand building such as ‘Indian Tea’ or ‘Indian Coffee’ or ‘Indian Spices’ and so on, and also to achieve value addition by innovative packing and presentation etc. Not only the growers but also the industry associations and trade unions need to be provided with more information about production estimates, the international demand for the commodities, the position of competitors, the need to increase productivity and to reduce cost of production, market trends, quality, etc. While we strongly feel that planters should be helped to increase competitiveness and reduce costs of production and expenditure on counts that can now be borne by others, we do not see any scope for wage reduction. Competitiveness and low costs of production have to be achieved through increased productivity, improved quality, uniqueness, and so on. The workers/ unions will also have to accept the crucial role that productivity and productivity norms play in ensuring the competitiveness necessary for the survival of the industry.
2.125 As has been pointed out in earlier paragraphs, one of the most potent threats to the viability of the industry has come from competition from other countries including countries like Vietnam and others, which are new in the ranks of exporters. The cost of production in some of these countries is considerably below what obtains in India. We are being compelled to seek markets at prices that are below the cost of production. It does not need many arguments to prove that no industrial operation can be economically viable if the sale price of its products continues to be below its cost of production. The Government will, therefore, have to urgently examine measures that can be taken to ensure the viability of the industry without adversely affecting the interests of the workforce employed in the industry. There is therefore, a strong case for reducing the tax burden on the industry.
2.126 CHEMICAL INDUSTRY: The Chemical industry is one of the oldest industries in India. It plays a crucial role in meeting the daily needs of the common man and contributes significantly to economic growth and industriali-sation. It is fast growing at 12% per annum and is exportoriented. The production of chemicals in South Asia started in a modest way during the inter-war in early forties, with the efforts of a few enterprising individuals. After the war, and when India became free, two petroleum refineries, the Sindri Fertiliser Factory, units of a few pharmaceutical and dyestuff industries as well as soda ash were among the first under-takings to be established in this sector. By 1956, the growth of the chemical industry gained momentum, and great strides were made in the field of synthetic drugs, antibiotics, DDT, insecticides, sulpha-drugs, etc. In the latter period, the chemical industry grew faster with the entry of a large number of new companies and undertakings in the public sector. Fertilisers, petrochemicals, pharmaceuticals, plastics, synthetic fibres, etc. received priority in the initial stage, but later, many types of chemical production have started in various centres in the country
2.127 The main branches of the chemical industry are drugs and pharmaceuticals, petrochemicals, plastics and polymers, pesticides and insecticides, dyestuffs and dyeintermediates, inorganic and organic chemicals, etc. These chemical industries offer employment opportunities to millions of workers and are regarded as industries with a high employment potential. As a large part of chemical production is from employment oriented small-scale units, the overall existing employment in the industry is rated around 4.5 million. The industry generates additional indirect employment to nearly 12 million workers in transport, distribution, sales, packaging, exports, etc. It is expected that despite the ongoing restructuring and job cuts in certain sections and units, the chemical industry will continue to offer high job opportunities.
2.128 The industry is currently in a phase of transition adjusting itself to structural changes necessitated by liberalisation and reforms. The protection levels enjoyed in the form of high import duties have been drastically reduced. This transition from a protected environment to the environment of international competition has resulted in a slowdown in growth. The adverse situation is attributed to:
i) inadequate infrastructure,
ii) high capital cost,
iii) fragmented plant size,
iv) expensive raw material, and
v) lack of research and development.
2.129 As part of the process of liberalisation, the requirement of obtaining licences has been withdrawn except in the case of a few hazardous chemicals. Entrepreneurs and foreign investors are now free to set up chemical industries. In the new environment of market driven global economy, the country’s export competitiveness is likely to be affected adversely since exports from SouthEast Asian countries are cheaper. There is also a threat of dumping, and increase in input costs due to the depreciation of the Indian Rupee. Most of the inputs in many segments of the industry are imported from developed countries.
2.130 India’s main competitive strength lies in speciality chemicals. It appears that in the future one of the main competitors of India would be China, which is becoming a major force in the global petrochemicals and polymer business. There are large investments being made by foreign companies in China in the field of chemicals. In the dyestuffs and dyeintermediates industry, China is already strong in the international market. It is also concentrating on speciality chemicals, surfactants, and agrochemicals, and emerging as the largest producer of synthetic fibre in the world. In pharmaceuticals too China is emerging as a strong competitor for India.
2.131 Chemical industries in the small-scale sector: The Small-Scale Sector constitutes an important segment of the chemical industry and accounts for 35% of the production of chemicals and allied products. It undertakes the processing of chemicals and other raw materials available from large units. The majority of production activities relates to chemicals based on downstream products/by-products and other chemicals like soaps, detergents, paints, pesticides, drugs, plastics, dyestuffs, cosmetics, rubber products, adhesives etc.
2.132 The production of synthetic detergents has grown to 10 lakh metric tonnes. Out of this, 60% is produced in the Small-Scale Sector. The SmallScale industries account for more than 50% of the total dyestuffs production. In drugs and pharmaceuticals, the small-scale units account for 40% of the total production with more than 11,000 manufacturing units. Around 70% of the total products of pharmaceutical formulations are from the small-scale sector. The Small-Scale Industries in the drugs and pharmaceutical industry provide employment to more than 1,70,000 workers directly. In the plastic processing industry there are around 18,000 units in the Small-Scale Sector, providing employment to 1,65,000 persons directly. In the export of plastic products the Small-Scale Sector contributes 40%. In the rubber goods industry, there are 5,200 Small-Scale and tiny units providing employment to about three lakhs persons directly. The share of the small scale industries in the production of rubber products is 30%. In the surface coatings industry, i.e. paints, varnishes, etc. there are 20,000 small-scale units producing around 50% of the total production. The toiletries, cosmetics and agarbatti industry include toothpaste, powder, mouthwash, fragrant products, cologne, hair oil, etc., and most of these are manufactured in small-scale units. There are more than 15,000 units for the manufacture of these products in the small-scale sector. About 40% of the production of these units in the small-scale sector is exported.
2.133 The Small Scale Industry (SSI) Chemical Units have some inherent limitations and problems that relate to the procurement of raw materials, technical know-how, financial resources, lower scales of operation, etc. However, the industrial climate is turning conducive for the speedy growth and development of these units.
2.134 EXPORTS : The data on various chemicals and petro-chemicals upto 1996, according to the Economic Survey 1998-99, give a glimpse of the progressive role that the chemical industry has played in our economy
2.135 The data on exports of various chemicals, quoted in the United Nations International Statistics Year Book, indicates India’s position in the World Market.
2.136 There are many Public Sector Undertakings in the production of chemicals, petrochemicals, fertilisers, agrochemicals and pesticides. Some of them are sick, and require remedial measures. The Indian Drugs and Pharmaceutical Ltd., Hindustan Antibiotics Ltd., Bengal Chemical and Pharmaceutical Ltd., Smith Stainstreet Pharmaceutical Ltd., U.P. Drugs and Pharmaceutical Ltd., Karnataka Antibiotic Pharmaceutical Ltd., etc. are sick public sector units and certain disinvestment proposals seem to be under consideration. However, there are many other under-takings which are making profits. It is also reported that the Government is working for the revival of some sick companies.
2.137 In the field of research, the main Government institutions are the National Institute of Pharma-ceutical Education and Research (NIPER), Mohali, Central Institute of Plastic Engineering and Technology (CIPET) (located at 10 different centres) and the Institute of Pesticide Formulation Technology (IPFT).
2.138 The industry carries out many hazardous processes and operations. Workers in chemical factories are often exposed to dangerous chemicals, fumes, and gases. Many chemicals are hazardous in nature and accidents, injuries and health hazards in this industry need special attention. High standards of safety, and a clean and safe environment have to be ensured. There is an imperative need for periodical medical check-ups for early identification of occupational health hazards as well as technological upgradation of safety norms.
2.139 There are provisions in the Factories Act 1948 to deal with, and to minimise safety risks, dangerous operations, and hazardous processes. After the Bhopal Gas Tragedy in the Union Carbide plant in the year 1984, when thousands of innocent people died, and a very large number suffered serious injuries and lingering ailments, these provisions have been modified, made more specific, and more stringent. In the Factories Act, Chapter IV-A relating to hazardous processes (Section 41-A to 41-H) was added. These sections deal with the location of such factories, responsibilities of the occupier, setting up of special inquiries, fixing standards and assuring the right of workers for information and participation etc. These modifications and amendments were made in 1987 to ensure the safety of workers in the chemical industries.
2.140 All labour laws relating to industrial relations, wage payment, social security, etc. are applicable to the workers engaged in the chemical industry in the same way as they apply in other manufacturing industries. However, many of these laws relating to social security and wages require modification to extend the coverage and to ensure that no worker is deprived of the benefits and security that these laws provide for. 2.141 Considering that the industry has accounted for export earning of over Rs. 14,000 crores, almost 14% of the exports from the manufacturing sector and 7% of total export of the country during 2000-01, the industry seems poised to grow at a faster rate. This will only increase the need to ensure better safety norms, pollution control and consistent Human Resource Development policies.
2.142 MINING INDUSTRY: Minerals constitute the backbone of the economy and provide a base for building up the infrastructure for many industries. There is hardly any industry or productive activity which does not depend on minerals or mineral products, be it for plants and machinery, construction, transport or agriculture. We may have a brief look at the state of the mining industry in the coal and non-coal sectors. 2.143 Coal mining: At the time of independence in 1947, a total number of 3,21,537 people were employed in the coal mining industry in about 900 coalmines. Coal production was around 26.89 million tonnes. In the year 1966, the total coal produced was 70.38 million tonnes. The total number of employees employed was 4,25,488. The coal industry was nationalised between 1971 and 1973. In June 1973, the Coal Mines Authority was set up to take over, own and manage all noncoking coalmines. The coking coalmines were left to Bharat Coking Coal Ltd. A Department of Coal was created under the Ministry of Energy. It has since been separated and is now an independent Ministry. In 1975, Coal India Ltd. was set up with five subsidiaries namely, The Eastern Coal Field Ltd., Bharat Coking Coal Ltd., Central Coalfields Ltd., Western Coalfields Ltd., and Central Mine Planning & Design Institute Ltd. In 1986 two more subsidiaries were carved out of the existing subsidiaries, namely Northern Coalfields Ltd., and South Eastern Coalfields Ltd. In the year 1992, Mahanadi Coalfields was created by setting up a new subsidiary. In the year 1999-2000 the Coal Industry employed about 5,50,000 workers. The total output was about 300 million tonnes.
2.144 The States of Jharkhand, Madhya Pradesh, West Bengal, Orissa, Assam, Maharashtra, Andhra Pradesh, Bihar and Uttar Pradesh are the main coal producing states. After the nationalisation of coalmines, there has been considerable improve-ment in the welfare measures taken for the workers.
2.145 The nationalisation of the industry brought about considerable change in the lives of the workers engaged in coal mining. They now get the wages settled through negotiations, whereas before nationalisation their wages were very low. The number of houses constructed by the industry before the nationalisation stood at 1,18,366. It has now risen to 4,06,812. The housing satisfaction in percentage terms has increased from 21.71% to 75.05%. There is considerable increase in the number of hospitals, and there is a quantum jump in the number of hospital beds (from 1,482 to 5,965). The number of schools and colleges too has increased from 287 to 1,254.
2.146 Globalisation has had an adverse impact on the coal industry in India. Indian coal is of poor quality due to its drift origin. Low ash coking coal required for making steel is not available in the country to the extent that is required, and so the steel industry has had to import coking coal. The coal produced in the country is basically used by the thermal power plants and metal industries. Because of the high cost of transportation, distant states, particularly the western coastal states like Gujarat, Maharashtra Karnataka and Kerala that do not produce coal, or where surface transportation cost to consumption centres is high, find imported coal much cheaper, especially after import duties were reduced in conformity with the WTO commitments. The cost of production of coal in India is very high. It is pointed out that the labour cost of Indian coal is as high as 50% of the total cost of production, whereas it is only 20% in some of the other coal producing countries in the world.
2.147 NON-COAL MINES: The major non-coal mines include metalliferous and other mineral mines. Notable among these are iron ore, manganese ore, chromite ore, copper ore, zinc ore, lead ore, mica, limestone, clay, stone and some other minerals such as apatite, barites, bauxite, gypsum, magnisite, gold etc. In the year 1947, non-coal mines employed 85,726 persons in about 1,074 non-coal mines. In the year 1966, the total number of persons employed in non-coal mines rose to 2,73,765, and the value of output to around Rs. 114.28 crores. According to 1998 figures, the non-coal mine industry including oil employed about 1,95,000 persons. (The figures pertain to mines whose returns were received by Director General, Mines Safety). The value of minerals produced during 1998-99 including nonmetallic minerals and crude oil was Rs. 81,293.46 crores.
2.148 There is practically no demand for mica now because of the substitutes that are available. Mica mining has, therefore, been almost stopped. The mining of gold in the Kolar mines has become uneconomic, as the cost of production of gold in India is very high due to low contents in the ore. The production of copper has also been adversely affected after globalisation, as imported copper is cheaper than indigenously produced copper. The production of ore is sliding from 4.5 million tonnes in 1997-98 to 3.1 million tonnes in 1999-2000. The Hindustan Copper Ltd., which owns most of the mines, is incurring heavy losses. However, some of the sectors of non-coal mining industry are fairly strong and are able to withstand competition. These are iron ore, zinc ore, and bauxite out of which aluminium is produced. This is mainly due to the intrinsic quality of our minerals. Some of these minerals particularly iron ore and other metallic ores are exported. Out of the total of 73.5 million tonnes of iron ore produced 30.6 million tonnes were exported. The known resources of chromite ore and manganese ore are limited, and there is a ceiling on the mining of these minerals. Out of the total 1,418 tonnes of chrome ore produced, 385 tonnes were exported. Similarly, out of 1,538 tonnes of manganese ore produced, 202 tonnes were exported in the year 1998-99. The total value of ores and minerals exported during the year 1998-99 was Rs. 24,622 crores.
2.149 SAFETY AND HEALTH: The Mining Industry in India came to be regulated first by the Indian Mines Act 1901. The Act of 1901 was repealed when the present Act i.e. the Mines Act of 1952 was enacted. The working conditions in mines whether underground or above ground, are very harsh – in fact one of the harshest in any industry. While the workers working in underground mines often face situations like flooding of the mines, falling of roof or caving in of side, fire, lack of oxygen, emission of lethal gasses, etc. the workers working above ground, particularly those working in open cast mines have to work under open skies, in scorching heat and in rain. They are also exposed to the risks of being injured by collapse of sides, falling of flying objects, moving dumpers etc. There is a very high incidence of accidents resulting in deaths and grievous injuries to the workers in mines. (Comparative table appears in Chapter XI)
2.150 Under the Mines Act 1952 different rules and regulations have been framed such as Coal Mines Regulations 1957, Metalliferous Mines Regulations 1961, Oil Mines Regulations 1984, Mines Rules 1955, Mines Vocational Training Rules, 1956, Mines Rescue Rules 1985, Mines Crèche Rules 1966, Coal Mines Pithead Bath Rules 1959. Apart from the Mines Act and the Rules framed thereunder, the provisions of certain other enactments are also attracted in the working of Mines e.g. the Indian Electricity Act, Factories Act, Mines and Mineral (Regulation and Development) Act and the Environmental Protection Act. Since mines and safety in mines are in the Union List in the Seventh Schedule of the Constitution of India the enforcement of Mines Act and the Rules and Regulations made thereunder is within the responsibility of the Central Government (except where the provisions of the Indian Electricity Act and the Factories Act are attracted). For the purpose of enforcing safety standards, the Directorate General of Mines Safety has been set up with Headquarters at Dhanbad. There are Zonal and Regional Headquarters at various places. Initially, the organisation was known as the Bureau of Mines Inspection when it was set up in 1902 with its headquarters at Calcutta. The name of the organisation was changed to the Department Of Mines in 1904, and its headquarters was shifted to Dhanbad in the year 1908. In 1960, the organisation was renamed as the Office of the Chief Inspector of Mines. Since 1967, the organisation has been re-designated as Directorate General of Mines & safety. Specialist staff officers in mining, electrical and mechanical engineering, occupational health, law, survey, statistics, and administration areas assist the Director General, who is the head of the Organisation.
2.151 Accidents in mines have to receive immediate attention from the Ministry in charge. No degree of vigilance, precaution and pre-emptive steps can be considered too high. There must be constant vigilance and commitment to use the most modern measures to detect and remove flaws that lead to accidents. The frequency of accidents in mines in India in terms of fatal and serious accidents calculated on the basis of per 1000 persons employed is not worse than that in many other countries, but it is perhaps the highest in terms of million tonnes of minerals produced. For example, India’s death rate per million tonnes of coal raised was 0.77 as compared to 0.32 in Japan, 0.26 in Yugoslavia, 0.12 in France and 0.05 in U.S.A. in the year 1995, for which comparable data is available. While rope haulage (19.81%), fall of objects (22.46%), fall of roof (10.75%), other machinery (10.45), dumpers (6.08), fall of sides (6.86%), were responsible for most fatal and serious accidents in coal mines, the fall of persons (18.38%) fall of objects (22.90%), other machinery (16.13%), dumpers (6.13%), and explosives (1.61%) were responsible for most of the accidents in non-coal mines. The corresponding figures for 1966 of trends in death rate per million tonnes of coal raised were as follows: India – 3.4%, Japan – 6.77%, France – 2.02%, U.S.A. – 0.47%. During that year most serious accidents were caused by haulage – 27.20%, fall of roof and sides – 18.36%, Machinery – 4.55%, explosives – 2.02%, miscellaneous – 48.04% in coal mines and haulage – 9.59%, fall of roof and sides – 5.06%, machinery – 6.04% explosives – 1.95%, miscellaneous 77.09% in non-coal mines.
2.152 Wages and conditions of service: The wages and other conditions of service of employees in the coal mining industry are decided directly between the employers and the All India Federations affiliated to Central Organisation of Workers, through a joint negotiating forum called the Joint Bipartite Committee of Coal Industry (JBCCI). So far there, have been six such bipartite settlements starting from 1975, the sixth, having been signed in December 2000. As per the last wage agreement, the revised minimum wage of an unskilled worker working on surface is Rs. 3,689.23. The wages in captive iron-ore mines of SAIL and TISCO are decided along with the wages for steel workers through the National Joint Committee of Steel (NJCS) (The last joint agreement has been signed in July 2001). The wages in iron ore mines of the Kudremukh Iron-ore Project and those under NMDC are also decided by bipartite settlements. As regards other non-coal mines, the wages in major metalliferous minerals such as copper ore, manganese ore, chromite ore, gold ore and bauxite are also largely decided by bipartite settlements wherever these mines are owned by large public sector companies or are worked as captive mines of large plants. But in other metalliferous and non-metalliferous mines, by and large, there is no system of settling wages and other conditions of service by bipartite negotiations, and wages are paid mostly as fixed by the Central Government under the Minimum Wages Act.
2.153 Welfare of workers in mines : The Coal Mines Welfare Fund established under the Coal Mines Workers Welfare Cess and Welfare Fund Laws has since been disbanded by repealing the respective laws and the welfare of workers in coal mines is now looked after by the employers. However, the coal industry workers continue to be governed by the Coal Mines Provident Fund and Bonus Act, 1948. Welfare funds have been established for the welfare of workers in mica, iron ore, manganese ore, chrome ore, lime stone and dolomite mines under respective welfare cess and welfare fund laws. The cess is collected on the basis of minerals consumed/ purchased by different industries using these minerals. The cess collected is deposited in the Consolidated Fund of India, and by re-appropriation, it is allocated to different funds established under the laws for the welfare of workers. The Welfare Division of the Ministry of Labour manages the funds. The workers are provided grants and loans for construction of houses, and scholarships for education of children. Workers and their families are provided medical care, and the women workers are paid maternity benefit out of these funds.
2.154 Though several labour laws apply to workers in mines e.g. the Industrial disputes Act 1947, the Payment of Wages Act 1936, the Payment of Gratuity Act 1974, the Payment of Bonus Act 1965, the Maternity Benefits Act 1961, the Minimum Wages Act 1948, the Workmen’s Compensation Act 1923, the Trade Unions Act 1926, the Industrial Employment (Standing Orders) Act, 1946, the Contract Labour (Regulation and Abolition) Act 1970, the Equal Remuneration Act 1976, the Inter State Migrant Workmen (Regulation of Employment and Conditions of Service) Act, 1979 and the Employees Provident Fund and Miscellaneous Provisions Act 1952, the workers in smaller unorganised mines do not normally get the benefits of these laws because of the absence of trade unions in inaccessible areas, the illiteracy of workers etc. It has been pointed out that people with political clout or money power or muscle power control most of such mines. 2.155 Construction industry in India : Construction has been variously defined as a product, considering the nature of the construction process and features, or as a series of related but discrete activities and outputs.
2.156 According to the ILO, “Building and civil engineering may be divided into four main parts: work above ground, work in open excavation, underground work and under water work,” involving the following operations:
(a) construction, alteration, repairs, maintenance or demolition of a building, flooring, mosaic flooring, sawing, jally work, concrete work, carpentry, painting, centring welding smithy work, electric work, plumbing and fittings, hut making or any such work which goes into the making of aforesaid construction or the preparation for, and the laying of the foundation of an intended building including boundary walls, or construction of wells, and includes the construction of furnace, chimney, well or any ancillary structure;
(b) construction of any railway line or siding other than upon an existing railway, the construction, structural alteration or repair, maintenance and laying of foundation or demolition of any dock, harbour, canal, dams, embankments including river-valley projects, tanks and water course, inland navigation, road, tunnel, bridge, viaduct, water works, reservoir, pipelines, aqueduct, sewer, sewerage works, river works, air fields, sea defence works, gas works and any steel or reinforced concrete structure other than a building, or any other civil or constructional engineering work of a nature similar to any of the foregoing works or construction operations connected with the installation of machinery in any of the aforesaid construction activities.”
2.157 It can, thus, be seen that ‘construction’ covers a wide field of activities and therefore, provides employment for workers of various levels of skills. It is also clear that much of the work in this field goes on in inhospitable areas without the facilities available in townships, villages or other residential sites, and under conditions that are often very strenuous and hazardous.
2.158 The construction industry has registered enormous growth throughout the world during the last few decades. The growth has been diverse in nature. The industrialised countries invest more on civil works, projects associated with energy, space research, armaments industry, new building materials and machinery and on retrofitting, upgrading and maintenance of existing structures. The developing countries are engaged more in the construction of civic, social and developmental infra-structure projects, roads, projects like dams, housing and other structures required for economic growth and improving the quality of life. The size of the world construction market is around 1.5 trillion US Dollars. Over 100 million workers are engaged in construction trades around the globe. Construction workers constitute 6 to 7% of the world labour force: in some countries the figure is as high as 20%.
2.159 Role in economy: Constru-ction industry is the second largest economic activity in India, and plays an important role in the nation’s economy. It is a vanguard activity of several other key sectors of economy whose performance is dependent on the satisfactory performance of this industry. A change in the level of construction activity affects the GDP and manufacturing, and the general employment and incomes of people. Construction has accounted for about 40% of the investment in the country during the last 45 years. Around 16% of the nation’s working population depends on it for their livelihood. During the 8th Five Year Plan (1992-97), the annual capital outlay on construction was approximately Rs. 3,30,000 million at 1991-92 prices. An estimated 14.6 million persons were directly employed in construction work in 1995-96. It contributes 5% to GDP annually, and accounts for 78% of the gross capital formation.
2.160 Roads, dams, irrigation works, schools, houses, hospitals, factories and other construction works provide the essential infrastructure for development, and contribute to better living standards. The products of the industry with the exception of repair and maintenance, are financed out of savings in the economy, and have linkages with the rest of the economy in terms of output and employment.
2.161 The Government, along with institutions sponsored or supported by it, is one of the biggest clients of the industry. It initiates most of the infrastructure development projects, civic and social services either by itself or through Built Operate Transfer (BOT) and other mechanisms. Capital outlay provided for construction of such works in budgets and development plans is an important determinant of the volume of construction activity. Government often uses investments in construction to regulate the economy as well as to introduce desired changes in it, e.g. projects for the construction of roads, relief works and so on. Construction activity is perhaps the first activity to be affected during recession. Buoyancy in construction can make the economy healthy. Thus, government as client, as regulator of the industry, and as initiator of economic changes through construction plays a significant role in this industry. Any increase or decrease in construction activity, caused by factors other than government policies, can also affect the economy as a whole because of the characteristics of this industry. Fluctuations in construction demand affect the demand for labour and materials as well as the time taken to supply the industry’s output. Backward linkages can have widespread impact because much of the raw, semi-processed and processed materials can be provided by relatively unsophisti-cated labour - intensive domestic sources and by basic industries such as cement and steel manufacturing. Forward linkages affect practically all other sectors of the economy. In fact, construction has been ranked among the top four out of the twenty economic sectors in terms of inter-sectoral linkages. These linkages, combined with a high value added-to-output ratio, indicate that construction provides a substantive growth stimulus for, and in the economy. Its importance as an agent of development is enhanced by its ability to provide gainful employment to a large number of workers. Much of the demand for labour is often met by taking unskilled workers from rural areas, who can subsequently be trained for more demanding jobs. Construction is often the only significant alternative to farm labour, particularly as it can adjust to the fluctuating needs of harvesting seasons to a larger degree than manufacturing.
2.162 Size of employment: According to an estimate of the National Building Organisation, every one million rupees spent on construction generates 3000 man days of skilled and semi-skilled employment, and 1300 man-days of managerial/technical employment. A recent study of the NICMAR gives estimates and projections on employment in the industry for the period 1995-96 to 2004-05 according to which total employment in the industry is expected to increase to 32.6 million in 2004-05 from 14.6 million in 1995- 96. While in 1995-96, unskilled workers comprised 73.08% of the workforce; in 2004-05 it is likely to be 55.08%. Comparatively, the percentage of skilled workers is likely to increase from 15.35 to 27.62.
2.163 The bulk of the demand for employment is expected to come from the housing sector. It is expected to rise from 8.58 million in 1995-96 to 20.5 million in 2004-05. For the existing workforce of 14.6 million, and against an annual increase of 1.2 million employees in construction, the average rate of formal training is around 10,000 persons per year since 1989 in 15 construction trades and 8 manufacturing skills through the national network of building centres, and vocational training schemes.
2.164 Construction technology: Construction is an age-old activity that has largely used traditional methods, techniques and materials. However, today’s construction activity is not altogether traditional. High rise buildings, complex design, heavy reliance on concrete and new materials, vertical transportations, pressure to complete building projects quickly etc., demand innovative work methods, new construction techniques, mechanisation of transportation and material handling systems and better quality workmanship. At the same time, there are constraints on the modernisation of construction activity. Some of these constraints are inherent in the technology itself, and others exist due to the social linkages of technology. First, the current state of the building industry does not lend itself to mass production techniques. Limitations arise due to variations in the site conditions and owners’ desire to make their buildings unique. Each facility has to be designed and produced to meet the requirements of a given site as well as of the owner. There is difficulty in standardising constructed products. Further, the site operation must conform to local regulatory requirements of design and building plans which may vary from one place to another. Use of local materials may not always lend itself to standardisation. Secondly, building work is subject to the conditions that the seasons create. Most of the work is done on sites exposed to inclement weather, rains etc. The intermittent and seasonal nature of building activity leads to uneconomic and under utilisation of construction resources and, therefore, increased construction costs and low levels of capital investment by contractors. Thirdly, due to the scope for easy entry, small firms with scant resources and limited technical capabilities proliferate. Subcontracting and low wages justify the continued use of archaic methods of construction. Low wages produce poverty on the one hand, and low productivity on the other. Thus, conditions of economic destitution and social backwardness are perpetuated, along with lack of skills, poor workmanship and low productivity.
2.165 Workers are exploited because they are illiterate, socially backward, unskilled, unorganised, uninformed and poor. The industry functions at low productivity because the technology it employs is among the ‘most backward in the world.’
2.166 Technological upgradation of the construction process, improvements in the social standing of the workforce and economic size of the firm must move hand in hand if efficiency and productivity are to be improved. A contractor will have to hire highly skilled labour and pay better wages if he desires to mechanise construction operations. And as mechanisation calls for the use of equipment, the contractor needs to have financial resources to buy such equipment and the technical personnel in the firm to handle it.
2.167 Labour based technologies can be best used in construction operations such as excavation, earthmoving, onsite handling and moving of construction material and mixing and pouring of concrete. Labour based construction methods may be adopted because they save capital and generate employ-ment. However, they should be encouraged wherever they are competitive with capital-intensive construction. Labour based construction enhances technolo-gical flexibility since labour can be redeployed more easily than capital equipment e.g. skilled craftsmen are required on low cost housing programmes, sites and services and on schemes to upgrade slums and squatter settlements. But the on-site requirements for skilled labour might be reduced by off-site activities to manufacture, assemble and pre-finish larger building components and systems. 2.168 Structure of industry: In spite of its large size, this industry is in the informal sector of the economy primarily because of its structure. Broadly categorised, the industry comprises over 200 firms which may be called the corporate sector of the industry. These firms are large by Indian standards. Besides, about 90,000 firms are classified as class ‘A’ contractors registered with various government construction client bodies. These firms may be of medium or large size in terms of the volume of business turnover. Then there are about 0.6 million small firms of contractors/sub-contractors who compete for small jobs or work as subcontractors of prime or other contractors.
2.169 Construction firms are heterogeneous, and small firms predominate. The preponderance of small firms is often consi-dered undesirable in developed countries.
2.170 Nature of industry:
(a) High Cost: The products of the construction industry are very expensive. A power project, a dam, an industrial structure, buildings for a university or a hospital, demands huge capital outlays. A house is perhaps the costliest item a person may buy in his life.
(b) Nature of Work: Construction is relatively labour intensive. However, the physical nature of the work and the conditions at the workplace make construction unattractive to the bulk of the workforce. Constr-uction work takes place in the open. Extreme weather conditions have been found to have severe adverse effects on construction productivity. The industry has also a high burden because of claims for compensation arising from occupational hazards and accidents.
2.171 Construction labour : Construction labour comprises three segments, namely, the Naka/Mandi segment, the Institutional segment and the intermediaries segment. The former two segments are relatively small in size.
2.172 The Naka/Mandi segment refers to the market that caters to the mass of individual householders and petty contractors who need casual labour for odd jobs. Naka/Mandis can be found at mid points between various neighbour-hoods of major cities. They function from about 8 a.m. to 10 a.m. on all days of the week. Workers, who are in search of work, present themselves at one of the locations in the morning. They come there and wait for customers, needing small jobs to be done in their houses like masonry, plumbing, carpentry, painting, plastering, tiling, water proofing etc. The clients visit Naka/Mandis, hire the required persons after negotiating wage rates and take them to their respective workplaces.
2.173 Large construction companies and government departments constitute the second segment of construction labour. Large contractors function like other business corporations. They maintain regular complements of technical manpower, both regular as well as project based. They invest on manpower training and development, and generally retain the core group of workforce required by them at all times. Several medium size firms retain a basic complement of workers and technical personnel on their regular payroll and hire additional hands when sites become active. Consequently, they also make some contri-bution to skill formation.
2.174 They accounted for approximately 73% of total construction workforce in 1995-96. Most of the unskilled workers (10.7 millions out of 12.9 millions in (1995-96) belong to this segment. This segment is controlled by mistris and jamadars who also constitute the bridge between unskilled labour seeking work and contractors who can offer work. After securing a job, a typical contractor breaks it into several units i.e. earthwork, piling, masonry, R.C.C. work, plastering, plumbing, electrical work, carpentry etc. and sub-contracts each unit to speciality job contractors or mistris. The latter bring their own helpers to the site, perform the job using materials and equipments supplied by the contractor and get paid by results. The mistri is the doer, a first line supervisor, trainer, instructor and quality controller – all rolled into one.
2.175 With rapid industrialisation requiring the use of more advanced technology and skilled personnel, industrial workers engaged in the formal sectors of the economy are often looked upon as a privileged category. They unionise themselves and demand for, and compel the concession of major wage-welfare benefits. They are able to eliminate the institution of ‘jobbers,’ and restructure their employment relations. Such is not the case with the construction workers. The construction sector is an aggregate of numerous discrete elements. This facilitates contracting. Fluctuations in demand for construction services contribute to instability in the workforce and encourage the paradigm of owner-contractor-subcontractor – worker relationship. The worker wants improvement in his economic and social situation in the construction labour market. This he can secure by functioning through unions as well as by acquiring skills, upgrading existing skills etc. There is enough evidence to show that skilled workers can influence their terms and work schedules. As elsewhere, skills and organisations are what can strengthen workers in the construction industry.
2.176 Profile of construction labour:
Some studies have found that construction labour is dominated by young, married, illiterate and unskilled males, mostly belonging to the scheduled caste and scheduled tribe, backward classes and the Muslim community, with a high family dependency load. Workers in the construction industry are often rural migrants who were mostly landless labour and on the brink of starvation in villages. They move to cities in search of work, or are helped to do so by jamadars and mistris. About half of the total workers start as unskilled labour. Many remain unskilled. 90 % of the workers says they entered jobs in the construction sector due to the compulsion of circumstances. 2.177 Labour laws for contract labour in the construction industry are, by and large, at par with those for other categories of labour employed in various industry groups. However, mention must be made of some laws which are of direct relevance to construction labour, namely
(i) Contract Labour (Regulation and Abolition) Act, 1970;
(ii) Inter-State Migrant Labour (Regulation of Employment and Conditions of Service) Act, 1979;
(iii) Building and Construction Workers (Regulation of Employment and Conditions of Service) Act, 1996;
(iv) Building and other Construction Workers Welfare Cess Act, 1996.
Many witnesses told us that the problem is not that the laws are inadequate, but that laws are not implemented in the construction industry. Inspection too is inadequate, both to verify facts on the sites and to see whether laws are being adhered to. Construction labour does not get the benefits of the ESI Act, but is covered by the Workmen Compensation Act, 1923. While the Employees Provident Fund Act, 1952 applies to the construction industry both the employer and employees normally prefer to avoid implementing the Act for their own reasons. Similarly, while the Maternity Benefit Act of 1961 applies to the construction industry, the number of beneficiaries is likely to be limited due to the intermittent nature of employment. It must be mentioned, however, that the industry does employ a sizeable number of women workers, although largely as unskilled labour. It is estimated that the percentage of women in the construction industry is 30-40. The actual number could be
higher because, at times, payment is made to the male head of the family, and only he is shown on records. 2.178 Trade Unionism in the construction industry started in the Government Sector with the formation of the CPWD Workers Union in 1934. In the private sector companies, it started with the formation of the Hindustan Construction Workers Union in 1946. For the general constr-uction workers, it started in 1950 with the registration of the All India Building Workers Union at New Delhi. 2.179 The extent of unionisation in the construction industry has been very low. 2.180 Important leaders of Trade Unions often attribute the low level of unionisation in the construction industry to the migratory and seasonal nature of the work, the scattered location of work sites, and the fear of victimisation by jamadars and contractors. 2.181 Living and working conditions: Wages in the industry are by and large at the minimum or sub-minimum level. As has been pointed out, the nature of the industry proves to be a deterrent for wage negotiations. It has already been stated that the industry functions in the open. Workers are thus exposed to scorching heat, rain, cold, dust, hazardous molten materials etc. They, and their family, live in huts or under canvas, exposed to hazardous conditions. When working on site, they live in temporary shelters which lack toilet facilities. There is no access to clean drinking water. The water they drink is normally drawn from the same source that is used for construction. It is a paradox that those who build the most imposing modern structures themselves have to live under the sky, or in hovels, and in sub-human conditions.
TRADE UNION MOVEMENT
2.182 The beginnings of the industrial working class in India can be traced back to the last decade of the 19th century. Britain had completed its conquest of India. The Crown had taken over the responsibility for the Adminis-tration of India after the revolt in 1857. Britain had become aware of the tremendous potential that India held both as a supplier of raw materials and cheap labour, and as a vast market for goods manufactured in Britain. Indian industry based on craftsmanship and cottage units of production, had been considerably battered and was in the process of being destroyed. Repeated droughts and famines had ravaged the villages in many areas, and reduced people to poverty and dearth of avenues of gainful employment. There was pressure on the soil. All these resulted in the migration of population from their traditional homes in many areas. Uprooted people were looking for land and work in the areas to which they moved. Around this time, British entrepre-neurs started establishing units of production in India, and discovered the promise that large-scale plantations held. Vast areas, particularly in the North-East of India, were converted into plantations for growing tea. Simultaneously, or even earlier, British planters had initiated the plantation of indigo in North Bihar and compelled thousands of cultivators to cultivate indigo in their lands. The British indigo planters reduced the people of the areas to conditions of bondage and fleeced them with extractions and impositions of many kinds. The peasants of North Bihar were ground down by many forms of economic exploitation and lived on the margin of slavery and deprivation.
2.183 British planters who were eager to develop plantations in the Northeast, had to find cheap labour to work in the plantations. They, therefore, looked to the impoverished villages to recruit workers from among those who had no employment and no agricultural income to fall back upon and were ready to move from their own homes and districts, to distant places in search of work and employment. It is not possible for us, in these paragraphs, to describe the areas from which recruitment took place and the methods that were employed by British companies and recruiting agents to visit such areas and recruit workers. The conditions, in which this section of the workforce, which was often described as ‘coolie labour,’ had to work, were indeed unbearable. They had been uprooted from their homes. There was hardly any residential accommodation. Wages were nominal. They had to work for long hours. Their access to amenities was almost marginal. They were often subjected to violent and inhuman treatment. The report of these conditions caused considerable embarrassment to the British Government. A Commission had to be appointed to enquire into the conditions of plantation labour.
2.184 The condition of workers, who were recruited to work in the factories, was hardly better. There were no restrictions on the employment of child labour in factories. There were no rest days or holidays, there were no holidays, and there were no limitations of the hours of work for which a worker –including women and children – could be forced to work. The condition of these workers again compelled the British Parliament to legislate. A number of commissions were appointed to enquire into the conditions of workers in mines and factories. The Report of the Indigo Commission of 1860 had led to the enactment of a Transport of Native Labourers Act in 1863. This was further amended in 1870 and 1872. The first Factory Act was passed in 1881 (this was succeeded by the Indian’s Mines Act 1901). The Inland Migration Act of 1882 and the Assam Migration Act of 1901 had followed suit.
2.185 The first Factory Act of 1881 was amended in 1891. The first Act had only been applicable to factories employing more than 100 workers. The Act of 1891 extended coverage to factories employing more than 50 persons. It introduced a compulsory rest period of half-an-hour during the day, provided for a weekly holiday, prohibited the employment of children under nine, fixed a maximum of 11 hours work for the day and prohibited night work for women between 8 p.m. and 5 a.m. Since, it is not our intention to deal elaborately with the different laws that were enacted during this period or later, we refrain from going into the limitations and inadequacies of the provisions of these laws of the period.
2.186 In the meanwhile, many more factories had come into existence, particularly in the field of cotton textiles and jute. The development of Railways led to the employment of large numbers in the railway system. The Public Works Departments of the Government also started recruiting large masses of workers for work on roads, embankments, canals, and so on.
2.187 As Shri K.T. Shah pointed out in his introduction to the Report of the labour sub-Committee of the National Planning Committee, there were no efforts at labour legislation between 1891 and 1911. No trade unions had come into being. But, the conditions of workers employed in the factories and plantations, and the railways, were resulting in misery and rising indignation. The introduction of electricity and the outbreak of Bubonic plague also had their effect on the industrial scene. It became possible for factories to work round the clock. But, the fear of plague, which was the worst in the towns, led to an exodus from the towns to the villages. There was a dearth of workers in factories. They had to be coaxed to continue to work in factories with ploys like the plague allowance. According to Mr. Shah, there were auctions of workers at street corners in places like Bombay.
2.188 The outbreak of the First World War in 1914 brought about a big change in the circumstances that were prevailing before the war. Many ablebodied men were recruited to the Army. The risk of attack affected shipping on the high seas. This in turn restricted imports of goods and commodities from the U.K. Efforts had to be made to increase manufacturing in India. This led to the growth of more units and varieties of production in the country in India. But, shortages also led to increase in the prices of essential commodities. This led to an increase in the cost of living of the workers. However, though entrepreneurs were making high profits, wages were pegged to previous levels. This led to steady erosion of the real incomes of the workers. Ground down by erosion of wages and the compulsion to work on terms dictated by the entrepreneurial class and the interests of the British Government, the working class began to look for ways of organising itself to secure justice and to fight for their rights. There were some sporadic cases of industrial action, but no union had yet been formed for “continuous association and continued action.”
2.189 The number of factories in India had grown from 656 in 1892 to 2403 in 1911. The average daily attendance of workers in these factories increased from 3,16,816 to 7,99,944. Two Commissions that were appointed in 1906-07 endorsed complaints that employers were consistently evading factory legislation. Unanimously, they recommended amendments ‘essential in public interest.’ A new Factory Act had been enacted in 1911. An Industrial Commission was appointed during the World War itself (1914-1918) to investigate the condition of industry.
2.190 The end of the First World War saw the impact of many ideas and movements on the Indian working class and those who were engaged in organising and leading them. We must refer to two specific streams of thought and action that influenced the working class and those who were committed to the struggle for social justice. One was the influence of the Trade Union Movement and the leaders of the Labour party in the U.K. and the thoughts of Marx and Lenin. The other was the thought and the struggles of Mahatma Gandhi.
2.191 The victory of the communist movement and the establishment of the Soviet system in Russia raised new hopes in the working class, and placed patterns of organisation and action before those who visualised struggles for a new socialist society. To some extent, it can be said that this pattern of struggle was based on the theories of class conflict and the role of the working class and its organisation in putting an end to bourgeois capitalism and the bourgeoisie, and establishing the dictatorship of the proletariat and socialism. The tactics of struggle that were visualised, were, therefore, based on the concept of class struggle, and the elimination of the bourgeoisie. It was believed that the bourgeoisie and the proletariat could not co-exist; that the apparatus of the bourgeois state and bourgeoisie economic order had to be smashed to usher in the era in which the State would wither away. It is not necessary for us, in these paragraphs, to refer to unforeseen developments that followed the introduction of adult franchise and the foundation of Trade Unions, the acquisition of effective access to political and economic power, and the effects of the industrial power that trade unions could generate, which led to doubts about some of the corollaries of pristine theory, or led to modifications in orthodox theory to explain departures from the lines or from denouements that had been foreseen, or to justify modifications that had to be made. Nor is it necessary for us to examine the merits or demerits of perceptions about the revolutionary role of the working class and the ‘distortions’ or deviations caused by the ‘bourgeoisification’ of the proletariat or what was described as ‘economism.’
2.192 But perhaps, it will be beneficial to reflect on the running debate that the Marxist-Leninist, SocialDemocratic and communist traditions have witnessed on the ‘dual tasks of the proletariat,’ and their implications on the organisations of the working class and the party, and the choice of, and emphasis on programmes and tactics. The debate has been reflected in the different, if not conflicting, views of ‘Legal Marxists,’ Economists and, later, the Mensheviks on the one hand, and the orthodox Marxist–Leninist Bolsheviks on the other. Perhaps, it is right to say that both believed in the necessity of a bourgeois revolution as well as a proletarian revolution which would overthrow bourgeois capitalism and establish socialism. Both believed that the working class had to provide the steam for both revolutions, through the Party as well as other organisations of the working class. But, ‘the distinctive tenet of the ‘Economists’,’ as E.H. Carr points out, “was the sharp separation of economics from politics; the former was the affair of the workers; the latter of the intellectual leaders of the party. According to this thesis the workers were interested not in political, but only in economic ends, the class struggle for them reduced itself to a form of trade unionism – a struggle of men against masters for better conditions of work and social improvements within the framework of the existing order.” The ‘Economists’ preferred the economic concept of class to the political concept of party, that the only concrete aim that could be offered to the workers at the present stage was the improvement of their economic lot. Lenin rebutted Economism, inter alia, in his ‘What is to be Done,’ and said “A trade union policy of the working class is simply a bourgeoisie policy for the working class.” His contention was that political as well as economic struggles were needed to arouse the classconsciousness of the masses; that the two could not be separated, “Since every class struggle was essentially political.” (Carr) The Economists “held that the development of economic action among the masses (trade unionism, strikes etc.) would make them ‘sponta-neously’ ripe for revolution. Lenin argued not only that the workers should be encouraged to put forward political as well as economic demands, but that they should be imbued with a conscious revolutionary purpose and conduct a consciously planned revolutionary campaign.” Though a study of the implic-ations and corollaries of the different positions can be extremely fascinating, it is not necessary for us to pursue the subject here. The effect of the considerations that different schools of Marxists have urged are perhaps still perceptible in the thinking of many Marxists active in the Trade Unions. The Trade Union movement in Great Britain - or at least the overwhelming majority in the Trade Union movement in Great Britain – has become the base of a Political Party – the Labour Party- and has adopted goals and methods of action that conform to the framework of a Parliamentary Democracy based on adult franchise and a government responsible to the people. This has not happened in India. Some European countries have had a different history. It is obvious that the strategy and tactics, and methods of struggle of Trade Unions that are only concerned with the economic interests of workers will not necessarily be the same as the strategy and tactics and methods of struggle of Trade Unions that believe in combining economic and political considerations, and trying simultaneously to serve the economic interests of the working class, and the political and revolutionary interests of the Party of the working class, or looking upon Trade Union action only as a part of, and a preparation for revolutionary action to change the very nature of the State. In short, to destroy the bourgeoisie State.
2.193 We must now turn to the impact that Gandhi had on the working class and on those who were engaged in the struggle to eliminate exploitation. It has already been pointed out in an earlier chapter that Gandhi had come to India after leading successful struggles of the Indian workers in South Africa. He had succeeded in organising and deploying the strength of the most exploited sections of the working class who lived in conditions of slavery, ‘indentured labourers.’ On his return to India, at the end of the world war in 1918, he commenced his work in India with a struggle in Champaran to liberate Indian peasants and workers from the regime of exploitation and near enslavement that British indigo planters had established in North Bihar. This was followed by the great strike of textile workers that Gandhi led in Ahmedabad. We do not propose to deal with these struggles in any detail, but the words that Gandhi used to describe the textile strike revealed his attitude to all struggles of the exploited. He said that the strike was a “Dharamyudh or righteous struggle.” 2.194 Gandhi’s perception of the struggle of the working class, or of any exploited group or individual was based on his philosophy of Satyagraha. In particular, his attitude to the struggles of the working class flowed from his belief about work itself. He believed that “work” was essential for the dignity and the fulfilment (self-realisation) of the human being; that the social and economic order must be such as provides every individual with the opportunity to work; that all socially useful work had the same value; that industrial activity was a social necessity; that different factors relevant to industrial activity came together or was brought together to serve the interests of society; that workers and managers and the owners of capital were, therefore, equally important partners who contributed to the success of an economic activity; that “if capital was power, so was labour;” that incomes and incentives should not lead to inequality; that owners of capital and all that generated power, should regard their power, e.g. capital power or labour power as a trust that they held for the benefit of society; that both workers and entrepreneurs were trustees who were expected to use their power in the interests of society which was the community of beneficiaries in whose name the sources of power were held; that any difference of opinion between partners in a social activity or economic or industrial activity should be settled through dialogue, mediation and arbitration; that if these methods did not lead to solutions satisfactory to both sides, they had the Fundamental Right, human right, to non-cooperate with anything that led to their own undoing; that workers, therefore, had the right to ‘non-cooperate’ in their own exploitation; that this non-co-operation could take the form of a strike, but the purpose of the strike had to be to make the exploiter realise that his prosperity, and the profits that he sought, depended on the co-operation of the workers; that since both workers and employers depended on each other for the success of industry, their relationship as well as their conflicts had to be ruled by the logic of interdependence which dictated fairness to each other, and respect for the rights and interests of each; that workers’ organisations should not be exploited to serve the interests of ambitious individuals or political groups.
2.195 The textile strike that he led in Ahmedabad was a demonstration of the dynamics and strategies of struggle that he visualised for the working class
2.196 He wanted a continuing association of workers engaged in industrial undertakings. He believed that a trade union of this kind should not get involved in day-to-day political activity or be exploited by its leaders for their own political interests. He believed that a trade union must be an organisation that not merely leads workers in a specific struggle, but continuously serves the all round interests of the workers. He, therefore, held the view that Trade Unions were not merely instruments of combat. They had also to play a constructive role in promoting the welfare of the working class. They had to protect the rights and interests of the working class, and also to promote their welfare. The Textile Labour Association or Majur Mahajan that he established in Ahmedabad, therefore, ran schools, looked after sanitation, conducted co-operative societies and banking operations, and so on.
2.197 Apart from this example of organisation and struggle that Gandhi placed before workers who were engaged in the struggle for social justice, he also inspired the leaders of the national movement at various levels, to take interest in the organisation of the working class. He himself has been described in the report of the Royal Commission on Labour, as the leader of the strongest trade union, comprising of the maximum numbers, in the early days of the Trade Union Movement in the country. Under his leadership, as has been stated earlier, many leaders at many levels became active in the Trade Union Movement.
2.198 In some earlier paragraphs, we have talked of the kind of impact that different streams of thought have had on the methods of struggle adopted by the TUs, the perceptions of the working class and its organs, including TUs, as instruments of a proletarian revolution as well as instruments for achieving amelioration of economic and social conditions, as also the influence of the methods of struggle employed by the national movement for Independence. Gandhi believed in Satyagraha and non-cooperation, but he also believed, in the inescapable paradigms of interdependence. So he believed that conflicts should be resolved not by the extinction of adversaries, but by the discovery of what is common, that is, that which is of common interest. But at the gross or ostensible level, Satyagraha and non-co-operation often took the form of hartals or strikes or boycott. That he characterised even derisive talk as repugnant to the method of Satyagraha did not mean that all those who adopted the externals of his methods also adhered to the precautions and purity of means that he believed in. The results have been evident in many Satyagrahas in the country, and the Satyagrahas in the field of industrial relations have not been exempt from the same weakness or distortions. It is not necessary for us here to discuss these questions in greater detail. In some earlier paragraphs, we have talked of the kind of impact that different streams of thought have had on the methods of struggle adopted by the TUs, the perceptions of the working class and its organs, including TUs, as instruments of a proletarian revolution as well as instruments for achieving amelioration of economic and social conditions, as also the influence of the methods of struggle employed by the national movement for Independence. Gandhi believed in Satyagraha and non-co-operation, but he also believed, in the inescapable paradigms of interdepen-dence. So he believed that conflicts should be resolved not by the extinction of adversaries, but by the discovery of what is common, that is, that which is of common interest. But at the gross or ostensible level, Satyagraha and non-co-operation often took the form of hartals or strikes or boycott. That he characterised even derisive talk as repugnant to the method of Satyagraha did not mean that all those who adopted the externals of his methods also adhered to the precautions and purity of means that he believed in. The results have been evident in many Satyagrahas in the country, and the Satyagrahas in the field of industrial relations have not been exempt from the same weakness or distortions. It is not necessary for us here to discuss these questions in greater detail.
2.199 Thus, subtle differences in theory have often led to a mix of economic (Economist) and political motivations, with their perceptible impact on methods of “industrial action” (strikes, etc), reflecting varying nuances of the political or the revolutionary on the one hand, and the economic and the strictly Trade Unionist on the other. This has led to tussles between those who wanted to preserve the Party’s domination over fraternal Trade Unions and those who wanted to preserve the autonomy of the Trade Unions in spite of ideological loyalties or approximations. This has also led to the creation of separate Trade Union departments in Political Parties and tussles between the political apparatus and the Trade Union oriented sections in Political Parties. India cannot claim to have been an exception.
2.200 Meanwhile, the first trade union in India was established in Chennai in 1918 under the leadership of B.P. Wadia, a political and social worker. The period from 1918 to 1928 can be described as a landmark in the history of the Indian Trade Union Movement. Trade unions began to be formed in many cities of India, including Bombay and Calcutta. In 1919, ten new unions were formed. The most important among them were the MSM Railway Employees Union in Madras and the Seamen’s Union in Bombay. In succeeding years, unions sprang up among railway men, dockworkers, textile workers, engineering workers and others. The first Central Federation of trade unions came into existence with the formation of the All India Trade Union Congress (AITUC) in 1920.
2.201 In 1921, Shri N.M. Joshi, a trade union leader, who was also a member of the Central Legislative Assembly, spearheaded the demand for legislation on the registration and protection of trade unions. This led to the Assembly passing the Trade Unions Act in 1926.
2.202 We have referred earlier to the formation of the AITUC in 1920. One of the factors that quickened the formation of the Central Federation was the fact that India had become a member of the newly established International Labour Organisation which was a tripartite body, and therefore, needed representation of organisations of the employees and or the working class. The AITUC came into existence with over 107 affiliated unions and a claimed membership of over 1,40,000.
2.203 As we stated earlier, the national movement for Independence also contributed to the growth of the Trade Union Movement in India. Lala Lajpatrai, a well-known leader of the Congress movement was the first President of the AITUC. Other leaders of the Congress like Pandit Jawaharlal Nehru, C. R. Das and Subhash Chandra Bose also held office as Presidents of the AITUC.
2.204 There was no Communist party in India before 1920, but some time after 1923, communists began to play an active role in the Trade Union Movement, and after 1926 a number of trade unions came to be led by communists. Leaders like Dhundiraj Thengdi, S.V. Ghate, S.A. Dange were elected to high offices in the AITUC. We give below a table that gives information about the trade unions affiliated and sympathetic to the AITUC in 1920.
2.205 A large number of strikes followed the growth and spread of trade unionism. There were strikes in Madras, Bengal, Bihar, Orissa and Assam. This does not mean that there were well-established trade unions that led the strikes. ‘Strike Committees’ were formed to launch and lead strikes, but many of them did not continue after the strikes ended.
2.206 The condition of the trade unions of the time has been described by Rushbrook Williams, in a passage cited by Justice Desai and G.B. Pai in their introduction to the ‘labour code’ proposed by the National Labour Lawyers Association: “Very often as soon as a strike is settled, the union disappears since it has no regular constitution or definite subscription, no system of auditing or publishing accounts, and no funds for providing help to women and children in times of distress. As a result, the progress of the Trade Union Movement during the last few years has been disappointing, its existence being too much bound up with the occurrence and ...definite and real grievances, and particularly when there is a marked gap between nominal wages and the cost of living, the combination generally characteristic of Trade Unions in India, are comparatively effective. But when the economic stringency begins to pass away, the bond, which unites the workers setting out all but the few really well organised unions in India, tends greatly to weaken. This tendency, already noticed in 1923, continued to prevail during the period under review. The Trade Union Movement made but little progress, and in some places actually received a setback. The interest of the operations in the movement diminished; and all but the better conducted unions suffered a considerable loss of membership.”
2.207 But, gradually the landscape began to change. More and more trade unions came into being. There was increasing realisation of the need for ‘continuing association’ to fight for the cause and interest of the workers. The successes that the Trade Union Movement and the working class were achieving in European countries, including the United Kingdom, began to instil a new hope and sense of urgency in the leaders of the Independence movement and those who were interested in the working class coming into its own. The conditions in the country led to the passing of a number of Acts relating to the condition of workers and the organisations. We have already referred to the Central Assembly passing a Trade Union Act in 1926. Even before this a Workmen’s Compensation Act had been enacted in 1923.
2.208 It was during this period, in 1929 that the first Royal Commission on Labour was appointed by the British Government. As has been stated earlier, this Commission was headed by Whitley, a well-known leader of the Labour Movement in the United Kingdom. Its members were distinguished leaders from the world of industry, the Trade Union Movement and public life, persons like, the Rt. Hon’ble V.S. Srinivas Shastri, G.D. Birla, N.M. Joshi, Sir Victor Sassoon and others.
2.209 The appointment of the Commission was a landmark in the history of the Trade Union Movement and Labour Legislation in India. With meticulous care and devotion, the Commission enquired into all aspects of the situation of labour and industrial relations in India, beginning from the sources from which workers employed in plantations and factories were drawn, the methods of recruitment, wages, conditions of living, settlement of disputes, and so on. It made elaborate recommendations on all aspects of the rights, conditions and needs of the workers and their organisations, and the method and machinery needed to settle disputes. It is not necessary for us to recount the findings and recommendations of the Commission here, but it is necessary for us to place on record our deep appreciation of the pioneering work done by the Commission.
2.210 In the meanwhile, there were other developments that quickened the pace of the growth of trade unions, and the aspirations and expectations of the working class. The Indian National Congress adopted a Resolution on Fundamental Rights in 1931 which devoted many paragraphs to the rights of the working class and their organisations. We have referred to the ideas and promises contained in the Resolution, in earlier paragraphs in the First Chapter of our Report.
2.211 The interests and hopes raised by the Report of the Royal Commission led to increase in the number of trade unions registered between 1928 and 1930.
2.212 This period also witnessed the occurrence of splits in the Trade Union Movement. Pandit Nehru presided over the Nagpur Session of the AITUC in 1929. This Session, following the international communist line, passed a Resolution deciding to boycott the Royal Commission on Labour, to affiliate with the League against Imperialism and the Pan-Pacific Trade Union secretariat, and to appoint the Workers’ Welfare League as its agent in Britain. The conference also denounced the Asian Labour Conference, the Round Table Conference and the ILO. The passage of these resolutions led to a split in the AITUC, with leaders like, N.M. Joshi, V.V. Giri and Mrinal Kanti Bose, walking out of the AITUC and forming the Indian Trade Union Federation.
2.213 In 1930, M.N. Roy with his rich experience in the Communist Movement in Europe returned to India. His thoughts and leadership had their own impact on the Trade Union Movement in India.
2.214 The adoption of the United Front line by the Comintern, led to the return of the Red Trade Union Congress to the AITUC in 1938. The National Trade Union Federation (NTUF) and the Red Trade Union Congress merged in the AITUC.
2.215 Soon afterwards, elections were held all over the country on the basis of the Government of India (GOI) Act of 1935. In these elections, the Congress came to power in most Provinces. This again resulted in a tremendous fillip to the Trade Union Movement in India. We have already referred to the promises made by the Congress in its election manifesto in 1936. The Ministries that came to power in the States felt compelled to try to implement the promises that the Congress had made to the working class in its election manifesto. Many, if not, most of the Congress Ministries in the provinces, had leaders of the trade union movement as members of the Cabinet, often in charge of the portfolio of labour. Thus, trade union leaders like Gulzarilal Nanda, V.V. Giri and others joined the Ministries in their respective Provinces as Labour Ministers. Some of the Provincial Ministries introduced legislation to deal with the protection and welfare of labour and the machinery needed for the settlement of industrial disputes. The Ministry in Bombay was responsible for the enactment of the Bombay Industrial Disputes Act in 1938.
2.216 In earlier paragraphs, we have referred to the declaration that the Congress Ministry in Bombay made in 1938 setting out its views on minimum wages, trade disputes, collective bargaining and the like. We will not repeat them here. But, it must be pointed out that the declaration also emphasised the need to ensure the growth of strong organisations that would represent the ‘organised strength of the working class.’
2.217 The growth of the Trade Union Movement in India was in a sense interrupted by the outbreak of the Second World War in 1939. The Congress Ministries in the Provinces resigned in protest against the failure of the British Government to consult the representative Governments in the Provinces before declaring that India too was at war with Germany. The British Government of India was anxious to ensure industrial peace and uninterrupted production in India. The national movement under the leadership of Gandhi was against ‘Nazism and Fascism,’ and therefore, the Axis powers, but was keen that the British Government should agree on a schedule for the full transfer of power to the Indian people as soon as possible. We do not consider it necessary here to describe the history of the Indian National Movement and the Civil Disobedience Movement including the Quit India Movement which was started under the leadership of the Congress during the Second World War. We are concerned here with the impact of the war on the Trade Union Movement. The communist oriented section in trade unions, particularly in the AITUC, was first against co-operation in the War effort of the Government, but when the Soviet Union joined the War on the side of the British Government (Allies), they believed that the War had become a ‘people’s war,’ and therefore, wanted people to cooperate in the War effort. It is well known that during this period, the Communist Movement worked against the policies and programmes of struggle of the Indian National Congress and the nationalist movement in the country. The communist oriented section in the AITUC, therefore, had difficulties in formulating its line. Royists and leaders like Jamnadas Mehta argued for unconditional support to the War effort. Other leaders like N.M. Joshi and the Congress oriented leaders were against extending unconditional support to the War. Eventually, these differences led to another split in the Trade Union Movement and the formation of the Indian National Trade Union Congress (INTUC).
2.218 As has been stated in an earlier paragraph, the British Government was keen to ensure that there was no disruption of production through strikes or lockouts during the War. It, therefore, formulated a number of rules and regulations under the Defence of India Act. All strikes were prohibited under Rule 81(a) of Defence of India Rules. However, the Rule also provided for the adjudication of disputes between employers and employees.
2.219 With the end of the War, India became Independent, and acquired the power to fashion a new deal for the working class and industrial relations, in conformity with the declarations of intentions and policies that had been made during the struggle for Independence. The responsibility for formulating a constitutional set-up that guaranteed the rights of the working class devolved on the Constitutional Assembly. The responsibility for formulating laws that created a new set-up for the exercise of rights and duties, and the evolution of harmonious industrial relations, fell on the Provisional Parliament. We have already referred to the Articles in the Constitution that relate to Fundamental Rights and Directive Principles. We have also referred to some of the laws like the Industrial Disputes Act, Minimum Wages Act etc., that were passed by the provisional Parliament as early as 1947 and 1948.
2.220 The increase in political activity that followed the introduction of adult franchise and the formation of new political parties also had their impact on the Trade Union Movement. When India became Independent, there were only two Central Federations of Trade Unions in the country, namely, the AITUC and the INTUC. But, the desire of political parties and groups of distinct tendencies to influence the working class and the Trade Union Movement led to the formation of new Central Federations of Trade Unions, each of which was conceived to be platforms that would provide footholds to different political parties and groups. Thus, the Hind Mazdoor Sabha (HMS) and the United Trade Union Congress (UTUC) came into existence, and soon thereafter, in 1955, the Bhartiya Mazdoor Sangh (BMS) was formed. It must, however, be stated that all these Central Trade Unions, particularly the HMS and the BMS, were set up with declarations about the need to free the trade union movement from the control of political parties, and to build up a free and united trade union movement.
2.221 The Bhartiya Mazdoor Sangh Came into existence in 1955. One of the declared objective of those who founded the BMS was to build a trade union movement that was free from the domination or control of political parties. Many of them were persons who have been active in the trade union movement for long, and had felt that the interests of the working class were suffering because trade unions were giving their primary loyalty to political parties, and relegating the interests of the working class to a secondary position. There were also people who believed that the trade union movement have been under the influence of western ideas and perceptions, and who felt that the working class movement in India had to draw inspiration from traditional Indian concepts about society and the duties and obligations of the individuals and groups of the society. They believe that “philosophy of integral humanism was the philosophy that conformed to the Indian traditional thinking. In a very short time, the BMS set up unions in many sectors of industry and employment and soon built up an organization that could compete with the existing central trade union federation. By the year 1984, it had became the second largest central federation and after the verification of 1996 it has risen to the position of number one central trade union federation.
2.222 Meanwhile, a new chapter of industrial expansion had opened in the country. Many new undertakings came up in the private sector. But, the State itself undertook the responsibility for developing undertakings in the core sector that gave control of the ‘commanding heights’ to the State. Many new public under-takings and companies grew up in the public sector. Consequently, the number of registered trade unions in the country tripled during the period 1951-52 to 1961-62. During this period, the State was keen to play an important role in the determination of wages and working conditions. In many areas, wages were determined by Central Wage Boards or industry-wise Wage Boards. Demands and disputes were settled by ad hoc awards or adjudication. In the vast new areas of public enterprises, the Bureau of Public Enterprises set up by the Government, played a crucial, determinant role in negotiations for the fixation of wages. We have already referred to the effects of these on the demands of workers, the attitude of managements, the parameters of negotiations, the resultant residue of discontent etc. in an earlier paragraph.
2.223 At the enterprise level, the machinery that had been visualised for consultation and prevention of conflicts did not function well enough to fulfil expectations of the contribution they could make to the development of healthy industrial relations from the plant level.
2.224 On the other hand, a number of industrial disputes adversely affected the growth of co-operation and harmony in undertakings. The following table gives an idea of industrial disputes and the growth of trade unions during 1945 to 1954.
2.225 In 1954, the Congress and the Government adopted the objective of creating a socialist pattern of society in India. This led to an increase in the growth of industrial activity on the part of the State. We give below a table that throws light on the growth of unions and industrial disputes from 1955 to 1961.
2.226 It can be seen from the table that we have cited, that disputes and strikes resulted in increased industrial tension by 1958. The 15th Indian Labour Conference discussed the situation, and it was decided to develop a ‘code of discipline’ through tripartite consultation. The ‘code of discipline’ aimed at evolving harmonious relations between the employer, the employee and the State.
2.227 The political scenario in the country underwent a major change after the elections in 1967, when the Congress lost its near monopoly of power. Other parties or combinations of parties came to power in some States. The economy also began to face severe industrial stagnation, high rates of inflation, rise in the prices of essential commodities like food, increase in unemployment rates and failure to reach the growth rates targeted by the Five Year Plans. It had also to bear the impact of two wars with Pakistan and a war with China. This period witnessed considerable unrest in the industrial relations scene. The number of strikes and lockouts increased, and there was an air of distrust and aggressive-ness. We give below a table that indicates the number of industrial disputes and strikes, and the number of man-days lost in the period from 1965 to 1974.
2.228 A number of contributory causes have been identified by analysts: discontent with wages; feeling that labour was not getting a fair share of the profits it was helping to generate; discontent with laws and rules relating to the identification of bargaining agents; competitive militancy among unions; the rise of what has sometimes been described as adventurism in unions, or leadership more concerned with personal ambitions and un-concerned with the means necessary to ensure healthy and responsible industrial relations that protect the interests of the employers as well as the employees, that protect industry as a common asset of society Other causes that have been pointed out are the haughty and irresponsible attitude of some entrepreneurs who used industry as a means of selfaggrandisement, availed of financial and other forms of assistance, and then ran away from their responsibilities as employers or entrepreneurs. The aggressiveness and desperation that we have referred to (in the earlier paragraph), the mix of economic and political motivations and the dictates of competitive militancy, also led to the introduction of new methods of protest and new tactics in the theatre of conflict. This period saw frequent resort to go-slow, work-to-rule, dharnas, gheraos and bandhs. The frequency and fierceness of gheraos in the years 1967-71 led to quite a few cases of duress, physical and mental torture, even some cases in which the combination of physical and mental harassment led to heartattacks and deaths. The resultant conditions became so grave, that the legality of these forms of protests, particularly gherao and bandh, was questioned before courts of Law, and the High Court of West Bengal (in 1968) and the High Court of Kerala4 (in 1997) delivered judgements that held that these forms of protests or ‘struggle’ were illegal and constituted an infringement of the Fundamental Rights that the Constitution guarantees to the citizens of the country. Experience shows that industrial action or activities in support of industrial action that deteriorate into or get transferred into law and order situations, whether they be the handiwork of agents, provocateurs or hotheads, does not benefit those who go on strike. It becomes easy for governments to handle such situations on a different plane, i.e. the plane of law and order. Some may even look upon such situations as the result of diversionary tactics.
2.229 Such methods have yet another aspect that cannot be ignored, particularly in days when workers’ struggles need public support which cannot be gained by alienating public sympathy. There is no need to detail the sufferings that bandhs cause to the public, particularly to those who are in urgent need of medical attention or have to meet unforeseen eventualities. These often lead to the forfeiture of public sympathy. The absence of public sympathy helps those who are on the other side of the conflict, and often creates conditions that justify government intervention. One can cite instances where the courts have had to entertain Public Interest Litigation filed by common citizens on this count. One telling instance that can be cited, is that of the strike by pharmacists in Bihar, where the strike went on for more than 2 months, causing immeasurable suffering to patients who needed to buy medicines, reportedly resulting in a few deaths because life saving medicines could not be bought. Eventually, the State had to intervene. There have been other similar cases in which the Supreme Court and High Courts5 have intervened. In general, it can be said that wherever there are prolonged strikes affecting medical services in hospitals, the public not only suffers, but also turns hostile, and demands administrative or judicial intervention. In fact, there have been cases in the United Kingdom of patients and the public turning on striking medical personnel.
{4 Upheld by the Supreme Court of India in May, 2002}
2.230 We can cite an instance nearer home, in our own country: the recent strike by the employees of the State Government of Kerala. It involved nearly half a million government servants of all description. Initially, all the Central Trade Unions supported the strike. Yet, the strike caused considerable indignation in many sections of common citizens. In fact, newspapers reported that there was articulate and active resistance from many sections of the people, including students and parents, youth and others. The television showed pictures of confrontation between those who supported the strike and those who opposed the strike, including physical confrontation, people forcing the opening of schools, forcing teachers to teach, or volunteer-teachers taking classes, and so on. We are citing all this not to express any opinion on the demands of the strikers or the rights and wrongs of the action taken by the Trade Unions. We are aware that the strike was meant only to preserve rights and facilities that the strikers already enjoyed. But here we are concerned with another question: whether workers or Trade Unions who exercise their right to strike as part of industrial confrontation, or ‘direct action’ in industrial disputes, should take to action that will extend the conflict to other sections, inflict suffering on those who have nothing to do with their employers, and cause adverse effects on the life and interests of those who are not their employers; whether such action on the part of workers or Trade Unions will not estrange public support, and drive the public to range themselves against the strike, and indirectly, in defence or support of those who are opposing the strike.
{5 Judgment delivered by the High Court of Delhi, banning all strikes in the All India Institute of Medical Sciences (AIIMS) reported in the Indian Express, New Delhi on 26.05.02}
2.231 We have referred to this question in earlier paragraphs. We would like to reiterate that the Trade Unions that lead and represent workers have to reflect on the current situation, and the likely impact that the tactics they employ in their legitimate struggles will have on the success or failure of the struggles. It is apparent that when the organisations of the working class are weakened by fragmentation, disenchantment, poor unionisation, etc., and the forces ranged against them are strong and further strengthened by multinational forces, and when governments themselves are under pressure to withdraw from the field (of balancing the interests of the social partners), the organisations of the working class have to depend on public sympathy and cannot afford to alienate public sympathy by driving common citizens to the camp of those ranged against them. We feel that these are genuine considerations that every leader and well-wisher of the working class have to keep in mind while choosing the tactics of the struggles that, in fact, they can ignore only at the cost of their objectives.
2.232 What we want to point out here is the need for workers’ organisations or employers’ organisations to consider the impact of their actions on the common citizen, to consider whether innocent citizens can be vicariously punished for the guilt or cussedness of others, to consider whether in the present situation in which public support is essential for any social action to succeed, the forms of struggle that are chosen should not be such as to alienate public sympathy.
.233 To return to the decade between 1965 and 1975, one should recall that it saw industrial direct action by bank employees and municipal employees, and a strike by Central Government employees in 1968. Trade union activities among salaried employees increased during this period. These were years of turbulence in some of the States. The period also revealed a sharp decline in national income, especially during 1966-67 and 1967-68.
2.234 It saw considerable growth in trade union activity. The INTUC emerged as the most important trade union organisation. Some ascribed the ascendancy of the INTUC to its closeness with the Government at the Centre and Governments in many States and the advantage that it derived from the procedure for the recognition of the bargaining agent laid down by laws, like the Bombay Industrial Relations Act. We append a table on the strength of the Central Trade Unions in the period 1965-1972.
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