Skip to main content
xYOU DESERVE INDEPENDENT, CRITICAL MEDIA. We want readers like you. Support independent critical media.

Investing in UP: Despite Labour Law Exemptions and Tax Rebates, Just 13% Promises Realised

Subodh Varma |
Seven key labour laws have been relaxed and a slew of concessions announced, but gala events are not translating into investment on the ground.
Modi and Yogi UP Development Projects

At a gala event in Lucknow on 29 July, Prime Minister Narendra Modi conducted the ‘ground breaking ceremony’ for 81 investment projects in Uttar Pradesh worth about Rs.60,000 crore. He was flanked by state chief minister Yogi Adityanath, and a bevy of top industrialists of the country.

The ceremony itself was an innovation of sorts. It was to mark the “grounding” of these projects proposals of which had emerged in last February’s equally grand UP Investors’ Summit. What “grounding” means is anybody’s guess. No further details of these projects are available as of date.

The UP govt. has meanwhile said on a website dedicated to the Investors’ Summit (of February 2018) that of the Rs.4.28 lakh crore worth of promises made then, it has been able to “materialize nearly 13% of the investment intents received during the Summit”. In case there is any confusion it clarifies that “State Government approached all the investors individually, who had shown their intents to invest in the State and made all conceivable efforts to translate their intents into actual investment”.

In other words, of the Rs.4.28 lakh crore announced as the achievement of the February Summit, 13% or about Rs.55000 crore has ‘materialised’. This is the thin sliver of ground on the basis of which PM Modi declared the “record breaking”  achievement of UP state govt. and its pace of development. 

As pointed out by Newsclick earlier, the investment summits made fashionable by Modi since his days as Gujarat chief minister usually turn out to be damp squibs. Clearly, UP is no exception. Between 2003 and 2016, the share of projects completed was just 35% of the investment promised.

Read More: Investment Summits: All Dressed Up and Nowhere to Go

Since coming to power in March 2017, the Yogi govt. has been bending backwards to attract investments like rarely seen anywhere else. It has announced a new state-wide industrial policy, and a set of new policies for Civil Aviation, Agro & Food Processing, ITES, Electronics, Solar Energy, Handloom Textile and Garment, IT, Defence and Aerospace, Films, Warehouse & Logistics and Tourism sectors.

What do these sectoral policies say? Two elements mark out their sum and substance: 1) a slew of rebates, waivers, concessions and exemptions from various taxes, duties, tariffs etc. and 2) exemption from a range of labour laws.

Take, for instance, the IT and ITES policy. It gives a 5% interest subsidy, 100% exemption on stamp duty, 100% reimbursement on electricity duty, reimbursement of cost of certification, 100% reimbursement of EPF contributions, recruitment assistance of Rs.20,000 per employee, reimbursement of patent filing cost, reimbursement of 25% of cost of purchasing land from state agencies, besides incentives that can be determined on a case to case basis. It also allows private developers to develop parks for IT industries. That’s a lot of concessions.

It also exempts such units from the UP Pollution Control Act except in the case of over 25 KVA power generation sets.

The policy goes on to allow IT and ITES companies to file self-certification for seven key labour laws: Factories Act, Maternity Benefit Act, Shops & Establishments Act, Contract Labour Act, Payment of Wages Act, Minimum Wages Act and Employment Exchanges Act. Self-certification means that companies have to file a statement saying they are complying with these laws giving details of such compliance. There will be no inspections or regulation once you do that.

These exemptions from labour laws means that industrialists will get a free rein to exploit workers to the hilt. It is worth remembering that the official minimum wages in UP are a mere Rs.7600 per month although most workers do not even get that much. The labour law enforcement machinery was gutted many years ago and is completely toothless and ineffective. 

So, an already over-exploited working class in the state is now faced with an investment bonanza which will further curtail their rights under labour laws. But then, workers have never been in focus for either Modi or Yogi. The exemptions in labour laws are meant to show to potential investors that UP is the place where you get the cheapest and most pliant labour.

But the strange thing is this: despite all these concessions and incentives, just 13% of the promises materialised. Now what Mr. Modi and Yogi?

 

Get the latest reports & analysis with people's perspective on Protests, movements & deep analytical videos, discussions of the current affairs in your Telegram app. Subscribe to NewsClick's Telegram channel & get Real-Time updates on stories, as they get published on our website.

Subscribe Newsclick On Telegram

Latest