Political India: Engaging America

From The Hindu

After weeks of large-scale protests against legislative proposals to cut the bargaining power of unions in the state of Wisconsin, talks that sought to find a way out of the impasse appeared to be collapsing early this week.

The proposals, principally driven by Republican Governor Scott Walker, led to a dramatic sequence of events including 14 Democratic Senators fleeing the state on February 17, in a bid to foil the bill’s passage in the state Senate.

Protestors also took over the Capitol building in Madison, the state capital, until last Thursday, when a judge ruled that they could not continue doing so. However the same judge also ruled that the state had violated the public's free speech and assembly rights by restricting access to the building, media reports said.

Mr. Walker’s plans to cut the rights of unions to bargain for pay, health care benefits, working hours and vacations was purportedly based on his intention to trim the state’s out-of-control anticipated budget deficit. According to Mr. Walker, this would amount to $137 million in 2011 and he also expected a $3.6 billion shortfall over the next two years.

Mixed reports

Yet there were mixed reports over the weekend about how close the talks between Republicans and Democrats were to collapse. A report in the Wall Street Journal said that some of the state senate Democrats who fled the state were close to giving up the fight.

In particular, Senator Mark Miller was quoted as saying that he and his fellow Democrats “intend to let the full Senate vote on Governor Scott Walker’s “budget-repair” bill, which includes the proposed limits on public unions’ collective-bargaining rights.”

The WSJ said that Mr. Miller declined to comment on how soon the Democratic senators, now in Illinois, would return yet that Mr. Miller was clear that a Republican resolution passed last week holding Democrats in contempt and ordering police to detain them when they return to Wisconsin, needed to be addressed first.

However, other Senators including Democrat Chris Larson said that the Democrats would only return when the move against collective bargaining was off the table and “That could be soon based on the growing public opposition to the bill and the recall efforts against Republicans.”

His comments on recalls related yet another reaction to the move against unions — as a result of which some Republicans and Democrats have to face the possibility of their term in office being cut short depending on the outcome of efforts to “recall” them based on voter signature petitions.

Labels: labour unions, Republicans, strike, Wisconsin

# posted by Narayan Lakshman @ 3:23 PM 0 Comments

CHENNAI: Venu Srinivasan, president of the Confederation of Indian Industry, on Monday said his “biggest concern today” is where India will derive future competitiveness from in world markets, especially vis-À-vis competitors such as China and Indonesia.

Speaking to The Hindu, Mr. Srinivasan emphasised the role of reform in several key areas of the economy, including the labour market and the tax code, if India is to retain and strengthen its competitive edge in industry.

Touching upon the growing labour supply in India, he said, “For India to become competitive we need to create 15 million jobs. This is the single point that we need to consider.”

“Ultimately we are competing for the same space as large population countries like China, Indonesia and Brazil,” Mr. Srinivasan pointed out, suggesting that failure to improve competitiveness may lead to more jobs going to these countries than India.

“With fiscal deficits being high, we will not have investment in infrastructure. Our social infrastructure is creaking. So is our education system. If you go to schools run by government or primary health centres and hospitals, they are terrible,” he said.

In some areas such as value-added manufacturing, however, India is more competitive than China, he added. “This is because our design inputs are higher than China’s. While China is the biggest manufacturer of cell phones and washing machines, their value addition on exports is as low as 10% on electronics and maybe 15-18% on manufactures. India is close to 25% and is much higher in IT,” he said.

Emphasising that India could compete and get a fair share of the world market, he said, “China does see India as a competitive threat, not a political or military threat. Certainly as a competing country they would like to ensure that you are not as competitive as them and you cannot blame them for it. It is for us to make ourselves competitive and not for China to give way.”

On the labour market, Mr. Srinivasan said that despite labour union activity being low during the last few years of rapid growth, India had still not touched labour reform. “We are not talking about hire and fire. In fact, I have always maintained the view that hire and fire will create too much of a social discord in a country like India. But you should have the ability to continuously improve productivity and settle disputes quickly.”

Regarding tax reform, Mr. Srinivasan argued for a reduction in “multiple levels of taxation accumulating and making industry uncomfortable.” Such laws hinder the free movement of goods and services even across States, he said.

The direct tax code is well intended and the tax rates have been reduced. Yet a minimum investment or wealth tax could be a disincentive, for example, to foreign investment in infrastructure, Mr. Srinivasan said. “This has to be debated further,” he said, adding it was still not quite clear why this tax on assets has been imposed.

Mr. Srinivasan underlined the overall concern of labour market disparities across States, saying that while conditions for rural labour have improved in Tamil Nadu, in part due to policies such as the National Rural Employment Guarantee Scheme, in States in eastern and northern India, there would appear to be stagnation.

Labels: Brazil, China, CII, Indonesia, labour market, labour unions, NREGS, tax code, Venu Srinivasan

# posted by Narayan Lakshman @ 7:21 PM 0 Comments