 | | PICTURE SPEAK | |  | "Legal reforms are critical but aren't on anyone's agenda. Parliament needs to act on it."
BIBEK DEBROY, SECRETARY-GENERAL, PHDCCI | | A few years ago when a municipal sanitary inspector visited the Infosys campus in Bangalore-probably just as recognisable a symbol for India today as the Taj Mahal-he pulled up the company for slipping on sanitary standards as the tile size in the conveniences at the campus in Bangalore did not match the laid down dimensions for the correct tile size at employee washrooms. Infosys, much lauded for its work atmosphere, is just one among a series of cases where business houses have to deal with archaic laws of the country and a babudom that revels in leveraging them. Directly or indirectly, consumers too bear the brunt. Chocolate-lovers may wonder why Indian chocolates taste sweeter than others. It's because our inward-looking policies in the past made cocoa a luxury product and put stiff import duty on it. Chocolate makers used sugar, which cost much less, to save costs thus skewing the recipe and taste for ever. Laws seem to govern every aspect of business-from telling us what should go into our biscuits to where we should keep our phones and what size tiles employers should use in office washrooms. While such laws persistently strangle businesses, there is precious little they have done to deal with the real concerns. For instance, the law has dismally failed to curb piracy and abuse of intellectual property, causing serious concerns for the new economy. The Information and Technology Act, 2000 is all that we have in the name of cyber laws right now, which offer little more than the validity and enforcement of digital signatures and electronic records. This, when India is dreaming of becoming the knowledge centre of the world! An increasing number of Indians are buying commodities, services and even news on the Internet. Little do they realise that clicking "I accept" while making an online purchase tantamounts to acceptance of the contractual terms when in fact it is an offer. This is because India still has no rules for enforcement of digital contracts. Net surfers who expose themselves to identity pirates have no legal means of securing their privacy. And if bloggers have developed a dislike for you, you are in for stinging defamation online. WHITEWASH RECORDS
Companies have to keep a "register of lime washing" to show how often are office walls whitewashed | | POWER OF 100
The Industrial Disputes Act requires firms employing more than 100 workers to seek government approval to fire employees.
| | GROUNDED REALITY
Section 2A, Aircraft Act, 1934, defines kites and balloons as aircraft. No kite or balloon can thus be flown without the permission of the Directorate General of Civil Aviation. | SPIT STIPULATIONS
Labour law stipulations require companies to provide sufficient number of spittoons for employees, and at the right places for the convenience of workers. Failure to do so attracts penalties. | CAUGHT IN A JAM
Artificial sweeteners are allowed in jams and jellies according to one particular law, and forbidden by another. | ADULT-ERATION
Food infested with insects is a violation but not that infested with larva, because larva are not adults and thus not insects. Does not cover mineral water. Wheat can have rodent hair and excreta but not more than five pieces per kg. | THE RIGHT GLUCOSE
Glucose biscuits must contain the ingredients specified under the Prevention of Food Adulteration Act. Low-cost substitutes will not work. | GET YOUR FAX RIGHT
Fax numbers cannot be obtained without permission from the Department of Telecom, Government of India. Every number requires permission. | STIFF DIRECTIONS
Section 259 of the Companies Act, 1956 says that the appointment of more than 12 directors on the board of a public company requires Government approval. | | While being completely insensitive to the requirements of the new age economy, Indian laws obnoxiously over-regulate the old economy. The manufacturing sector has to conform to 45 different labour laws. These were crafted ostensibly for workers' benefit but they actually serve as arm-twisting handles for corruption by government officials and inspectors. The stipulations under this maze of statutes range from requiring employers to maintain a "register of lime washing" for keeping records of how often they paint their factory walls to providing a sufficient number of spittoons in convenient places. "Even in factories that have the most modern amenities, an inspector may still demand to see spittoons," says Diljeet Titus, a Delhi-based lawyer. The food processing industry is governed by 16 different laws, which are regulated by seven different state ministries. These are outdated and restrict innovation and consumer-orientation. A glucose biscuit, for instance, must contain the specific ingredients stipulated by the Prevention of Food Adulteration Act, 1954. Glucose biscuits can be produced at much lower cost by using substitutes, but the law wouldn't permit that. Artificial sweeteners are allowed to be used in jams under one law (Food Products Order) but not under another (Prevention of Food Adulteration, 1954). Jam producers are constantly confused over which one to comply with. But these archaic laws give rise to problems far serious than these. They are to be blamed for skewing the production structure of the Indian manufacturing industry, which, despite abundant labour, prefers to invest in labour-saving technology. Most companies are not blind to the cost advantages of deploying more labour, but they choose to overlook those gains due to the prevailing tax and labour regulations. The Industrial Disputes Act of 1947 requires companies employing more than 100 workers to seek government approval before they fire employees or close down. Not only does this raise the cost of production, it also seals job opportunities for workers. Another such example is the Contract Labour Act of 1970. It bars companies from hiring temporary workers for their core business needs, hindering their ability to meet sudden spurts in demand. Thus the Indian textile industry has often had to turn down lucrative Christmas season orders. There were 2,500 central laws, according to a 1998 Law Commission report on the repeal of obsolete acts. The oldest of these being one that was enacted in 1836. This was the third report from the law commission on modernisation of Indian laws. Committees under the ministries of finance and personnel had also submitted reports which recommended junking 1,500 Central laws. Of these about 350 laws were repealed by Parliament in 2003. Why is our legal system in such a shape? Says Secretary General PHDCCI Bibek Debroy: "Legal reform is on no one's agenda. The law ministry is treated as an unnecessary portfolio by most governments." The real question is what is the Parliament, which is supposed to legislate, doing. "Parliament seems to be doing every thing but its business of legislating," he adds. Debroy headed a project initiated by UNDP and the ministry of finance, LARGE, in 1993 on economic laws reform. He prescribes five steps to achieve law reform: junking redundant laws, ensuring more than one law does not govern an area and reducing unnecessary state intervention and delays in dispute resolution. Also, fresh laws are needed for emerging sectors such as the Internet. Another suggestion is to make laws close-ended so that the redundant ones can expire. The futility of laws is accentuated by the astounding success of the services and the BPO sectors. Spared of the inane laws, these sectors have played upon their strengths and have earned an enviable reputation for themselves on the global map. Maybe, a similar latitude will push other sectors into the big league. Index
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