are a strategy used by a group of employees in an
attempt to force the employer to meet their demands. But this strategy must
be the weapon of last resort because if this right is misused, it will
create a problem in the production and financial profit of the industry and ultimately affect the
economy of the country.
There are mainly two hypotheses on the effects of strikes on economic growth. First, a negative
effect of strikes on economic growth as assumed to be a part of the rent
seeking activities of trade unions and political parties
and, second, strikes are considered to be the most
effective mechanism to curb excessive use of managerial powers and
discretion. Very few studies have examined the effects of strikes on
economic performance. Now is the time for our academicians and policy makers
to think about reconciling both conflicting objectives.
Of all the issues surrounding strikes, the biggest question resolves around
the issue of legality of strikes. Much of the
debates on the legality of strikes under the Indian Constitution have been on
the issue of the right to strike. Constitutionally, strikes may be analyzed
through fundamental duties under part IVA of the
Constitution. A strike is defined in Employments Rights Acts (ERA)
1996 as, “a concerted refusal, or a refusal under a common understanding of
any number of employed persons to continue to work for an employer in
consequence of dispute”. Everyone has the right to protest, but when it
hampers the growth of the nation and mass people, they need to decide
what’s more important.
The history of labour legislation in India is
naturally interwoven with the history of British rule, but there is “no
right to strike” as such in British rule. In USA, most of the state
government employees and medical professionals’ strikes are illegal under the
common law. In Marxist-Leninist regimes such as the former USSR or the China, striking is illegal and
viewed as counter-revolutionary.
state and company employees strike is already having an impact in several
agencies like health, transport, and agriculture. Based on some recent
findings, I try to analyze how strikes effect the economic growth. On
January 5 when thousands of truckers stayed off the roads after talks broke
down with Indian officials to cut taxes and diesel prices ultimately pushed
up prices of food and commodities across the
country. According to the All India Motors Congress, due to the truckers’
strike, Rs10,000 crores per day loss was incurred by the country’s overall
business. To protest against rising prices of essential commodities, the
main Opposition National Democratic Alliance (NDA) will form a human chain
to observe a countrywide strike. The question arises now whether the
BJP-ruled states will also observe the shutdown.
In case of a strike at a healthcare facility, the third party consists of
patients who may have neither the ability to switch to another provider nor
the power to apply pressure on the employer and employees. Recently, the
Jet Airways pilots’ strike was hogging the limelight in most newspapers. Just
after 24 hours of the pilots’ strike, both the Left parties and the BJP
came out in support of the strike and tried to inject politics. They tried
to politicise a purely legal matter relating to the enforcement of
However, in every civilised society the right to strike is an important
element of human rights, but at the same time the objective of economic
growth is equally important. Thus, trying to avert costly strikes seems
only reasonable. Strike as a weapon has to be used sparingly for redresses
of urgent grievances when no other means are available or when available
means have failed to resolve it. It is indeed ripe for the Government to
enact legislation so that strikes in any sector may be banned, if deemed
must increase revenue to contain fiscal deficit DEBAJIT
A stimulus package is an attempt by the government to boost the economic
growth. The fiscal and monetary are the two main ways for
stimulating the economy.
So far not a single Indian bank or financial institutions
have failed and all of them well regulated by the RBI. Rather than come out
with a new stimulus plan government should decide
on the rollback of stimulus once the economy returns to the path to
The three stimulus packages implemented between December 2008 and February
2009 to revive the economy has already created fiscal deficits. The
government had cut taxes and hiked expenditure to stimulate the economy
following the globalfinancial
crisis. The fiscal deficit is the difference between the
government’s total expenditure and its total receipts (excluding
There are two ways government can reduced fiscal deficit, by raising
revenues or by reducing expenditure. However keeping in view of the present
economic situation the government has not increased revenues. Government
expenditure in sectors such as agriculture, education, health and poverty
alleviation has been reduced leading to greater hardship for the poor. So,
more economic stimulate packages mean increase the fiscal deficit when the
economy going through a recession and more importantly the government has not
been able to play any role in boosting demand. Government should have ruled out any further special packages to
stimulate the economy and should have adopted exit strategy because now the
time ripe to end the stimulus.
Will the Indian economy be able to manage if stimulus measures are
withdrawn to bring down the current level of fiscal and revenues deficits?
Before withdraw government needs to focus on rural agricultural policies
which can infuse faster economic growth, investment in infrastructure and maintain
an appropriate fiscal and monetary policy. Both
Government and Reserve Bank of India should working in
close cooperation with each other to evolve the appropriate fiscal and
monetary policy. Even the global leaders should address the problems faced
by the international community due to economic meltdown in the platform
like G-20 so that the multilateral negotiations on trade can be
Markets have begun looking up this quarter and the growth forecast also
returned to positive. Some economists pointed should continue another 4-6
months in stead of withdrawing stimulus packages. The turbulent period of
the Indian economy is going on right now and initiating any negative step
can derail the whole process of recovery. India’s Planning Commission
Deputy Chairman Montek Singh Ahluwalia told that Indian economy, which is
grow at its slowest pace in six years in the fiscal year ending March,
needs stimulus to sustain growth.
is becoming a global innovator for high-tech products and
services. As per the World Bank report two per cent of India’s population, 20 million people,
staying abroad earn the equivalent of two-third of India’s GDP. Indian Government
should seek policies that stimulate the employment market mostly revolve
around measures being implemented at the national and international level
to tackle problem of job losses arising out of recession.
The crisis is forcing India
around the world to test the limits of fiscal and monetary policies. To
navigating these uncertain times a sound and resilient banking sector,
well-functioning financial markets and robust liquidity management are the
pre-requisites for financial stability. The banking system in India
is sound, adequately capitalized, well regulated and capable of withstanding
the global shock without any further stimulus packages.
Do skilled workers prefer going abroad for job? Devojit
economic liberalization in 1991 a lot of Indian people
are everywhere around the globe. If going to foreign countries is good then what are
and why? As per
the survey report
conducted by CNBC the main reason for people leaving India is
the lack of sufficient opportunity and lower salaries. The report revealed
that the average income
of an Indian labour class ranges between Rs 5000 -Rs10000 a month but the
same person gets more money abroad because in India
labour charges are less.
Another section holds the view that skilled people are migrating from India not for money or career, but a loss of
faith in India.
has some big issues like caste-based reservations, rampant corruption,
dirty politics, lack of infrastructure
and lack of willingness to develop infrastructure
eventually which led people to start losing faith in their own country.
India went through phases of
emigration under the British rule and during that time several Indians
migrated to countries in the East and West Indies, Africa and Australia
as indentured labourers and as trading entrepreneurs. Now the information technologies
are producing a form of migration that adds a new dimension to what is termed as
“the international division of labour”.
The three traditional settlement countries Australia,
Canada, and USA, later joined by the Germany attracted the highly skilled workers
once their highly selective immigration policies were modified. To
illustrate the practical consequences, Germany’s new Immigration Act, which
has replaced the Green Card scheme is focused on attracting more skilled
workers in areas such as natural science, engineering, technology,
academicians and scientists by providing granted permanent residence and
permission to work from the beginning rather than five-year work permits as
was previously the case. The new Act even allows family members of highly
skilled workers too to work in Germany.
Even after thousands of job cuts by US companies almost daily over the past
few months, the US Congress still allows temporary workers to enter the country annually on H1-B visa upto a limit of 65000. As per the US Government data for 2008 shows that about
5.7 lakh Indians were issued H1-B visas and other non-immigrant visas.
A new destination that has rapidly gained popularity is the Middle-East.
The oil-rich countries mainly attracted semi-skilled and unskilled labour
on a temporary circulating basis. The semi-skilled and unskilled workers
have a high rate of turnover as their contracts are for short period
usually not more than two years at a time. This has facilitated the
proliferation of recruitment and placement agencies and exploiting job
seekers range from withholding of the passports, refusal of promised
employment, wages and over-time wages, inadequate medical facility, denial
of legal rights for redressal of complaints etc.
Regarding opening of financial sector for foreign players, Commerce and
Industry Minister Kamal Nath said that if foreign players open their labour
market for us, we will do it for them. Labour markets means more jobs for Indians
abroad especially in US. Is this an indication of encouragement for skilled
workers to catch the human capital flight? Also the question for our
policymakers, should the financial sector be opened up?
After the world economic crisis on the last quarter of 2008, there has been
a steady rise in the number of Indians migrating to other countries for
employment purposes. The number of emigration clearances by the Indian
Government was 4.75 lakh during the period January to May 2009. India is
slowly moving from a protective framework to a regulator of migration. Can
our Government do anything to use their skill domestically? This situation
can be avoided by the Government by making some policies and identifying
Finally to assess whether migration has changed society in
whether it has adequately benefited social and economic development in India
the greater co-operation between sending and receiving countries is needed
to ensure a fair distribution of benefits.
Is speculative trading responsible for commodity price hike?
As lot of reasons have been cited for the steep hike of essential
commodities during the past few months. Depreciating Indian money against
the dollar, and vagaries of weather, besides stubborn and greedy oil
companies. But recently, the reason cited is ‘commodity market speculator’.
Addressing the energy ministers’ meeting in London, India’s
Petroleum and Natural Gas Minister Murli Deora said the current pandemonium
in oil prices lay in speculative trading in the futures market. There is a
need for the oil industry to re-assert its leadership in price formation
and not remain passive speculators. But we should not forget that a small
proportion of oil production is traded in the futures market. Global oil
sales at current price levels amount to about $4.3 trillion. The futures
market accounts for only $260 billion.
The Standing Committee on Food, Consumer Affairs and Public Distribution
(Government of India, 2006-07) seeking amendments to the Forward Contract
(Regulation) Act had stated that since small farmers do not participate in
commodity trading, there is no need for these markets. World over,
commodity futures market are used by large farmers, traders, banks and
insurance companies. They are allowed to participate in futures markets, as
they can hedge their exposure to farmers and give better terms to them. The
fundamental inadequacies in the system cannot be covered by banning futures
which seeks to protect consumer at the expense of the farmer.
The Government of India in 2007 and 2008 imposed a temporary ban on futures
trading of tur, urad, channa, soy oil, potato, rubber, wheat and rice
citing futures trading as a source of inflationary pressure on spot prices.
As per the 2006-07 Economic Survey report, the average daily turnover of India’s 25
commodity exchanges put together barely crosses Rs. 8000-9000 crore.
Of this, the share of fine cereal grains (wheat and rice) is insignificant,
ranging below Rs.30 crore per day, while tur, urad, channa, soy oil, and
potato accounted for the share below 15 percent. Also in the case of urad,
urad futures have been lower than the spot prices for over five months just
before the ban. If the logic that futures prices or speculative trading
affects spot prices is true, then spot prices should have come down, which
did not happen as supplies are weak. India produces 70 million
tonnes of wheat per year and only 20,000 tonnes are traded in the commodity
Hence it is highly improbable that speculative trading in the commodity
exchange could have any significant impact on price of wheat. We observed that
of the four banned commodities like channa, soy oil, potato and rubber in
2008, only the price of potato declined after the ban due to the bumper
crop. Given the insignificant volume of trading in commodity futures of all
the recently banned commodities, it is rationale to assume that futures
trading cannot and do not have any direct contribution to their price rise
of such commodities. The bulk of inflation which is substantially caused by
commodities, specially fruits and vegetables, are not traded on our
commodity exchanges. Thus futures trading cannot be held responsible for
One of the main reasons that speculators are playing in the commodity
futures market is that equity and other investment markets became too risky
sub-prime crisis where already a large Pension and Hedge fund have
stockpiled. Several studies have revealed the scope for considerable
improvement in the regulation of the commodity trading market to curb
excessive speculative activity. There is a definite need to distinguish
between hedgers and speculators, and treat them differently in terms of
To understand the fact, it is necessary to examine the forces behind the
price rise for different commodities. In the case of food products, this essentially
requires a more determined effort to increase the viability of food
cultivation, expand and strengthen the public system of procurement and
distribution. Even for other commodities, public intervention and
regulation of market is essential.
hit by vagaries of weather DEVAJIT
Vagaries of weather in place of regular monsoon
rains, which otherwise sustains India’s economy, has pushed India to the
brink of drought, putting pressure on food prices, energy supplies and
finally affecting economic
is risky and vulnerable, but it plays an important role in our national economy
because it contributes 60 percent
of the cropped areas and 45 percent
of the total agricultural
output. Though the rains have picked up since July, still it is 19 percent
below normal for the
nation as a whole. Deficit rainfall
is an increasing threat because more than 50 percent
population rely on farming for their livelihood and only 40 percent
of farmlands are irrigated.
impact consumers in a big way because it exacerbates food
prices coupled with rising global oil prices. India is
one of the world’s largest exporters of rice and sugar. The notable fall in
output due to below average rains is putting upward pressures on both
domestic and global prices. Insufficient crops could add to inflation
RBI sources claim that food price inflation has been persistently high at
as on July-’09. Falling water reservoir levels coupled with poor monsoon
not only for GDP and inflation, also affects the UPA government’s proposed
Food Securities Act for providing guarantee food securities to poor
families, i.e., providing 25 kg of wheat or rice per month at Rs 3 to every
family below the poverty line.
has slowed the refilling of India’s
main water reservoirs, and threatened supply of hydropower. Central
Electricity Authority Chairman Rakesh Nath said that hydropower generation
has fallen 20 percent.
monsoons directly impact agriculture
and hence the economy,
since the agricultural
sector contributes approximately 24 percent
of the GDP. India’s
four month rainy season starts in early June and runs through September
which is known as South-West monsoon.
It affects production of rice, millet, sugarcane, oilseeds and cotton. As
per the Met report, the June-09 rainfall
was 46 percent
below normal, it’s lowest since 1926.
The recent drought condition has created a question in the financial
market. “Is there a monsoon
effect in the stock
market?” For the Sensex, it has six times out of ten lost
value during this period. Most of the analysts say that stock markets have
a tendency to rule weak between June and September. Several companies,
especially in the FMCG, automobiles, fertilizer and construction segment
keep their fingers crossed because of demand close to saturation point in
However, if the
government increases rural spending and supports programmes, then
this problem will be negated. The government
can take some important
measures to mitigate the economic, agricultural
and social affects of a poor monsoon.
It can implement a scheme to allow duty free import of raw sugar, rice and
essential commodities as India
did when the inflation rate reached double digit.
The Central and state governments should activate the public distribution
system to keep down prices of essential commodities.
should increase grain stocks for distribution in drought-affected regions.The
Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia has
claimed that India
has enough food stocks to counter inflationary pressures.
Government should distribute seeds among farmers for a second
attempt at planting, besides subsidized diesel to farmers to operate
irrigation pumps in drought-hit areas.
Modernized Met department is the need of the hour to stave off
uncertainties of weather. For more accurate prediction, the
government should provide state-of-the-art equipment to the Met
However, the Indian monsoon
remains an elusive phenomena despite all the advances in modern technology.
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Is the fuel price hike justified? By
Just two days before the Budget session, the UPA government hiked
petrol price by Rs 4.00 and diesel price by Rs 2.00.
Any increase in price affects the general people. Doubts arise as to
whether the increase is justified? Increase in petrol and diesel prices
become emotive and political issues because both the petro products are
consumed by the disadvantaged section – in the agricultural sector, road
transport division and railways. And importantly, it upsets the common
man’s family budget. In the face of these facts, it is difficult to defend
any price increase despite sound reasons.
Petrol and diesel price hike is an inter-ministerial Cabinet issue. But
interestingly, there was no Cabinet decision made before the price increase
was announced by Petroleum Minister Murli Deora this time. This is the
second consecutive time that the Manmohan Singh government has increased
petrol and diesel prices without Cabinet decision. The previous hike in
prices had taken place in June 2008, when the retail prices were raised by
Rs 5.00 for petrol and Rs 3.00 for diesel.
The Budget session of Lok Sabha started on a stormy note on July 2, with
the Opposition and UPA allies, namely DMK and Trinamool Congress protesting
the hike in petrol and diesel prices and demanding a rollback which was
rejected by the Petroleum Minister. He said the Government had no choice
but to raise prices after the continuous increase in global prices. The Petroleum
Minister also assured the Lok Sabha that if there is a fall in
international crude prices, the Government will again roll back petroleum
Petro-products price increase has a spiral impact on the prices of other
commodities. In most cases the prices of other commodities which are
increased are not in proportion to the price increase of petrol, but much
higher. Some economists pointed out that due to huge taxes charged by the
Government, petrol and diesel prices are so high. If the Government reduced
the tax rates, oil companies can sell all their petro-products in much
lower price. But if taxes on petro-products are slashed, the immediate
effect will come in the form of dearth of funding for government schemes,
will hit the common man much more than the price hike.
India is the fourth largest
oil consumer in the Asia-Pacific region after Japan,
China and South Korea,
and bears an unmanageable oil pool deficit of almost Rs 24,000 crore, up
from the April figure of Rs 9,000 crore due to the recent upward trend of
international crude price. The Government without any futuristic plan has
in the last few years changed petro-product prices several times to protect
the oil company’s interests and reduce the burden of oil pool deficit,
rather than keep the interest of the common man in mind.
To minimise dependence on the international market, the Indian Government
should try to put into place a mechanism to meet the crisis caused by oil
price hikes. This can be achieved in two ways. First, by boosting domestic
production of crude oil and natural gas, and second, by working out
bilateral deals with oil producing countries like Iraq, Iran etc which will
enable reduction of vulnerability of the international market.
Instead of wasting more time on the present crisis, the Union Petroleum and
Power Minister has to come up with a long-term strategy to provide the
common people with cheaper fuel.
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Sualkuchi needs to go for product diversification By
ON JANUARY 9, 1946 Mahatma Gandhi went to Sualkuchi to ask people to
weave their clothes instead of buying but when he saw that every family had
a loom he said, “Women of Assam can weave dream on their looms.”
Sualkuchi, about 35 kms from Guwahati, is the largest village in Assam and also known as ‘Manchester of the East’.
Sualkuchi silk comprises three major types – golden muga, white pat and
warm eri silk. The handloom heritage village of Sualkuchi
is a labour-intensive industry.
Considering the potential of the industry, the Kamrup District
Administration in association with the North Eastern Council and National
Institute of Fashion Technology, Kolkata has set up the Sualkuchi Institute
of Fashion Technology (SIFT) in 2008 under the aegis of the Ministry of
Textiles to impart fashion-related education and to create professionals to
meet the varied manpower needs of the industry there so that international
challenges could be met.
To generate self-employment in weaving through self-help groups and to
facilitate the gainful utilization of muga and eri yarn products in
Sualkuchi through the yarn bank, the North Eastern Council approved the
‘Project Sualkuchi’ in 1987 towards implementation of the schemes
‘Integrated Product Policy’ (IPP).
Government subsidies for the silk project and marketing schemes (like IPP
and SIFT) to develop the silk industry there has hardly influenced the
weavers to give up the traditional methods of weaving.
The existence of mahajans at Sualkuchi has made it a difficult task for the
weavers to establish self-help groups. These mahajans own a large number of
looms and provide employment to the weavers. Apart from that they lend money
to weavers to operate the looms. Thus weavers have no control over their
cash inflow. To keeping away the middlemen and mahajans from the entire
cycle, the yarn bank and auction market should be further developed for the
benefit of the weavers.
Also the industry is facing a big challenge from the China which is dumping their silk products
at rates much below their production cost. So there is urgent need to
modernize the industry by inducting more efficient machines and power looms
if it is to compete with the silk produced in China.
After the fighting for a foothold in the international markets by fending
off the Chinese companies, the global economic meltdown now seems to be
playing spoilsport as the exports have gone down considerably.
Lack of consistency in production, neglect of marketing linkages, low end
technology use and reluctance to use costlier technologies due to fears
that there might not be corresponding improvement in price realisations are
the reasons causing imbalance between the demand and supply position in the
domestic silk market.
Silk, the queen of all fabrics, is historically one of India’s most important industries which
employs over 700,000 families and is mostly concentrated in Assam, Karnataka, Tamil Nadu, Andhra Pradesh
and West Bengal. After China, India is the second largest
producer of silk, contributing 18 percent to the world production. Apart
from employment, the silk industry is also a good foreign exchange earner. India exports silk goods worth over Rs 2,100
crore mostly to the UnitesStates and the
The artisans of Sualkuchi should now try to increase their value added
handicrafts product range and establish links with reputed international
design and research institutions
To enhance the livelihood of a sizeable population and also to create a new
brand for Sualkuchi silk, the government should initiate intensive training
programme on research and development for product diversification and
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