Tuesday, 31 May 2022

Right of Government to make Economic Reforms


The states of the Indian Union have been vested with jurisdiction over important areas and assigned independent sources of tax and other revenues and are fairly autonomous within their spheres. However, the states’ powers are circumscribed by: a list of concurrent powers; powers given to Parliament to legislate with respect to any matter in the state list under certain conditions (Article 250); a requirement to obtain the president’s approval of proposals for state legislation in areas of concurrency before they can be enacted; and the placing in Entry 52 of the Union list Industries, the control of which by the Union, is declared by Parliament by law to be expedient in the public interest.

With respect to a subject in the concurrent list, supremacy is given to the law passed by Parliament. Furthermore, the president can supersede a state government if he or she determines that there is a breakdown of the Constitution or a financial emergency subject to the approval of Parliament.

These provisions make the Indian Constitution a quasi-federal one. To be sure, these Constitutional powers given to the Union (central) government in this regard are in the nature of enabling provisions, to be used when necessary in the national interest. So in practice, states could have had autonomy over broad areas of policy. Since, the economic reform policies are also made with the national interest, the aforesaid provisions enable the government to make the economic reform policies for the nation.


The economic reforms or liberalization initiated by the Government of India in the beginning of July 1991 brought in sweeping changes to the Indian economy. It sought to unshackle the economy from the numerous restrictions imposed by the license and quota raj. Even though belated attempts to liberalize the Indian economy were made from the early 1980s, radical steps in that direction were made in 1991. The objectives of the Indian economic reforms, backed by the IMF and the World Bank, were to open different sectors of the economy to the forces of global trade. Hence, the Indian economic reforms are nothing but integrating the Indian economy with global trade and commerce by making structural adjustments in tune with global practices.

Even though a decade has passed since the reform measures have been initiated, it is still a matter of debate whether the reforms have been beneficial to India or not. What is seen from different studies by scholars and academician is that the economic reforms are not really proving beneficial to the working class. An analysis of the Industrial relations in the pre – reform period (1981–90) shows that as against 402.1 million man days lost during the decade (1981–90) the number of man days lost declined to 150.5 million during 1991–97 – the post reform period. The economic reforms have strengthened the hands of the managements and owners and are anti-labor in spirit. Currently, employers are using different strategies like out – sourcing, permanent contractual employees, etc. to reduce the cost of production and in the process hurting the genuine interests of the workers and the working class.

Consequently, the workers are being pushed from the organized to the unorganized sector. The economic reforms in India have created an anti worker environment. However, what should give hope is the fact that the judiciary is gradually becoming critical of its judgments concerning trade unions and workers rights. To quote Justice G S Singhvi, a Division Bench Judge, the attractive mantras of globalization and liberalization are fast becoming the raison d’etre of the judicial process, and an impression has been created that the constitutional courts are no longer sympathetic towards the plight of industrial and unorganized workers. Hence, Trade Unions would continue to remain relevant provided they adopt a pragmatic and realistic approach in spreading its popularity and solving the genuine problems of the workers.

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