While the Centre has started a tripartite dialogue with trade unions and employers on labour reforms and is considering amendments in the Apprentices Act and Factories Act, Rajasthan has gone a step further. The state has sought the President's assent on key labour reform Bills, relying on Article 254(2) of the Constitution regarding legislative bid on items in the concurrent list.
What would pave the way for Rajasthan is the fact that the state is ruled by the BJP which is also in power at the Centre and so, the Union government, itself keen on labour reforms, won't object to the President giving assent to the state law. "It (the amendments) has gone for presidential assent. It's the normal process," Rajasthan labour secretary Rajat Kumar Mishra told FE on telephone.
The labour reforms, being planned by Rajasthan, among other things, include amendments to the Industrial Disputes Act to raise the threshold workforce limit from 100 to 300 workers for a company to compulsorily seek government approval to slash jobs or close a unit. "Labour being part of the concurrent list, a state can make amendments in labour laws provided it gets presidential assent. It should not be too much in variance of the (central) Act," said Sudha Pillai, former labour secretary and member secretary of the Planning Commission.
If Rajasthan gets the presidential assent, it may trigger a competition among states to ease labour laws to woo investment in manufacturing. The rule change assumes importance in the wake of the government's ambitious plan to ramp up manufacturing capacity through initiatives such as industrial corridors and SEZs to accelerate economic growth to over 8-9% in coming years.
Article 254(2) states that where a law made by the Legislature of a State with respect to one of matters enumerated in the concurrent list contains any provision repugnant to the provisions of an earlier law made by Parliament or an existing law with respect to that matter, then, the law so made by the Legislature of such State shall, if it has been reserved for the consideration of the President and has received his assent, prevail in that State.
There is a caveat: nothing in this clause shall prevent Parliament from enacting at any time any law with respect to the same matter, including a law adding to, amending, varying or repealing the law so made by the Legislature of the State.