About Maadhyam
Maadhyam is an initiative to capture inputs from interested stakeholders and use them for policy making with the aid of technology. The vision is to make policy making a more participatory process. To this end Maadhyam will establish a digital platform acting as a bridge between policy stakeholders and enabling flow of communication and feedback. Right now in its concept stage, Maadhyam will launch a series of experiments to gauge the interest of people to engage in policy making.
Few Bills have been identified which are most likely to be discussed in Parliament in the coming session. These Bills will be summarily analyzed and inputs will be invited from interested stakeholders. These inputs will be collated and circulated to Members of Parliament who have shown an interest in being a part of this initiative. It is hoped that these inputs will improve and add to the policy making process.
The first Bill to be taken up in this series was the Mental Healthcare Bill, 2016. (Read the analysis here). The second Bill to be taken up in this series is the Factories (Amendment) Bill, 2016. Watch this space for other initiatives by Maadhyam.
Maadhyam is founded by Maansi Verma, a law graduate from Campus Law Centre, University of Delhi, a Young India Fellow and a LAMP Fellow. She currently works as a Legislative and Policy Analyst.
Background of the Bill
The Factories (Amendment) Bill, 2016 was passed by Lok Sabha in August this year and is likely to be taken up by Rajya Sabha in the upcoming Winter Session of Parliament. The Statement of Objects and Reasons attached to the Bill points out that a comprehensive Factories (Amendment) Bill, 2014 was initially introduced in Lok Sabha in 2014 and later referred to a Parliamentary Standing Committee. The Standing Committee in its report raised serious objections to many of the proposed amendments while welcoming some of the amendments. Since the 2014 Bill saw no movement after that, the Government decided to come out with the present Bill amending just two sections of the Factories Act – Section 64 and 65. The stated objective is, “with a view to boost the manufacturing sector and to facilitate ease of doing business so as to enhance employment opportunities”. The Bill further mentions that this amendment is being made based on demand from industries as certain factories need to finish work on an urgent basis.
Power to make rules - Centre vs. State
Welfare of labour including conditions of work” is a subject of Concurrent List of our Constitution, which means that both Centre and States can make laws on this subject. The Factories Act, 1948 itself is a central piece of legislation. But sections 64 and 65 provided certain rule making powers exclusively to states. Now this is being amended to empower the Central government also to make rules on those subjects. Such overlapping of powers can result in confrontations and could be against the principle of ‘cooperative federalism’ that the government has been espousing since the start of its term. But, it must also be noted that certain states like Rajasthan have been more forthcoming in initiating labour reforms, which have been condemned as anti-labour by some sections of the society. Through this amendment the government could impose these reforms on other states as well by itself making rules if the state is not taking initiative.
Increasing overtime limits
Section 64 provided that a state can prescribe rules to set the overtime limit but such overtime should not exceed 50 hours in a quarter (a period of three months). This is being amended to say that now the Centre or the state can prescribe rules governing overtime limits but the overtime limit cannot exceed 100 hours in a quarter. The limit has been expanded from 50 to 100 hours. Further any rule made under this section was to be in operation for 5 years only but now the rules made under this section can be in operation for an indefinite period of time.
Section 65 earlier provided that state can relax certain conditions like period of work under some circumstances and to “enable the factory or factories to deal with an exceptional press of work”, it can prescribe overtime limits which must not exceed 75 hours in a quarter. Now, Centre as well as state can make rules in this regard and can prescribe an overtime limit which cannot exceed 115 hours. The limit has been expanded from 75 hours to 115 hours.
The Bill further adds a proviso enabling the Central or the state government and even the Chief inspector with the prior approval of the state government, to increase the number of overtime hours to 125 in a quarter in “public interest”.
The Parliamentary Standing Committee reviewing the 2014 Bill had taken serious objection to the amendments to Section 64 and 65 and had observed that such a move is likely to negatively affect “employment generation”. The Committee recommended that rather than increasing overtime limits across all factories, those industries / seasonal factories can be identified where overtime is inevitable and rules be made separately for those.
Present Scenario
It seems like the present circumstances do not warrant the insistence on passing this Bill. For a better part of the last one year, the Index of Industrial Production (IIP) which measures growth in various sectors like manufacturing etc., has shown contraction instead of growth. As per reports, even our exports declined continuously for many months before picking up marginally recently. The manufacturing sector especially has been suffering from capacity underutilization and orders registered have declined year on year. Even the bank credit to industrial sector has registered negative growth for the first time in a decade. As per reports, many industries like textiles, construction, petroleum, food processing registered decrease in credit. In these circumstances, it is not clear what ‘exceptional press of work’ exists, or what ‘public interest’ will be served or even how ‘employment generation’ will be enhanced by increasing the overtime limits.
Some questions that can be raised on the Bill
  • Should powers be given to both central and state governments to make rules on the same subject, considering that it can lead to confrontation?
  • Do the present circumstances require increasing the limit of overtime for workers across all industries?
  • Is such a change in line with the stated objective of “enhancing employment opportunities” as mentioned in the Bill itself?
  • What “public interest” could be served by increasing the overtime limits?
The Bill can be found here.
Your inputs can be recorded here.