In Rajasthan’s wake

State governments could set the ball rolling on contentious reform.

Published:August 8, 2014 2:19 am

Many reforms that need legislative change have been stalled in Parliament over the last two decades. Does the federal structure of the Constitution provide a way forward? Can states make suitable legislative amendments? Is it desirable to adopt such a path?

First, let us recap the role of the Centre and states in making law. The Seventh Schedule of the Constitution contains three lists which enumerate the items that fall under the purview of the Union, the states and both (the concurrent list). Both Parliament and state legislatures can make laws on items that fall within the concurrent list. If there is a contradiction in the laws passed, the Central law shall prevail. However, there is an exception — if a state legislature passes a law that contradicts a Central legislation, and that law is reserved for the president’s consideration and receives his assent, then the state law shall prevail on the issue.

The core idea of having three lists can be summarised in the following way. There are some subjects that need uniform treatment across the country (currency, defence), which should be on the Union list. Some subjects have a local character and each state may be best positioned to decide on the way to handle them — these can be included on the state list. There is a third category of items, on which some level of national uniformity is desirable but with the flexibility to tailor to local needs — these can be included in the concurrent list. Therefore, one way to deal with concurrent list items is for Parliament to make a skeletal law, leaving room for states to fill in the details according to local requirements.

Land acquisition, for example, falls within the concurrent list. The question is whether a uniform law — the Central land acquisition act — is workable for a country with a high level of diversity in population density, land use, economic development, geographical features etc. Would it have been better for Parliament to outline the main principles and let states work out the details of the process of acquisition, compensation etc?

The new government in Rajasthan seems to believe so. It has piloted amendments to four labour laws (a concurrent list subject), which have been passed by the Rajasthan assembly and sent to the president for his consideration. These include amendments to the Factories Act to define a factory as a unit with 20 workers if using energy and 40 workers otherwise (increased from 10 and 20 workers, respectively), to the Industrial Disputes Act to require employers having 300 workers or more to take the state government’s permission for retrenchments (earlier this was 100 workers or more), to the Contract Labour Act to cover establishments with over 50 employees (earlier 20), and to the Apprentices Act to reduce the training period, allow third-party training and set the minimum pay for apprentices at the level of unskilled labour. If the president gives his assent, these amendments will be valid in Rajasthan.

Rajasthan has also passed the Rajasthan State Highways Act, which makes it easier to acquire land for state highways. This act regulates and provides a process for the acquisition of land for them. This process differs from the Central land acquisition act. The Central act has a detailed procedure that can take about 50 months to be completed, if one assumes that all sequential steps take the maximum permitted time. The Rajasthan act skips some steps — including the social impact analysis and the need to procure the consent of landowners — and the acquisition can be completed in 81 days. It also reduces the compensation provided for acquisition in rural areas, which in the Central act is between two and four times the market value, depending on the proximity to an urban area. The Rajasthan act mandates compensation of twice the market value if the distance is less than 20 kilometres and two-and-a-half times for greater distances. This law takes advantage of a provision in the Central act, which contains a list of 13 laws that are exempt from it and allows the Central government to modify the list through a notification. The Rajasthan act proposes that it be added to this list.

These examples show instances of a state taking the lead on certain legislative issues. It remains to be seen whether other states will follow in a similar manner on issues on the concurrent list. That said, we must caution against such laws being passed in haste. All the Rajasthan bills were introduced and passed within a few days, leaving little time for legislators to understand the implications or to have public consultations. The need is for states to tailor various laws to suit their needs, but to do that after due deliberation, both in the public space and in the legislature.

The writer is with PRS Legislative Research, Delhi