The most interesting parts of Reversing the Gaze, a remarkable 44-year diary of Amar Singh, are his honest reflections on the ironies of an Indian serving in the British Army. The irony of trying to raise employee wages without employer productivity — encouraged by overselling of fiscal and monetary policy — stands exposed because the flow of jobs since 1991 has not reduced the stock of farm employment despite government spending increasing from roughly Rs 1 lakh crore in 1991 to Rs 100 lakh crore. As our wage challenges shift from chronic (long-term) to acute (immediate), reversing our gaze by moving from a bird to a worm’s eye policy view of the daily life of employers suggests private, productive, formal non-farm jobs that pay higher wages need digitising, decriminalising and rationalising regulatory cholesterol.
Many of our wage challenges arise from global changes in the world of work; manufacturing creates fewer jobs per rupee invested than before, the trade political backlash implies rising tariffs for exports, and the multi-decade global growth outlook is weaker because of prosperous countries ageing and debt. Modern states must redistribute — especially if companies generate higher profits — but rich country governments face a backlash because of the illiberality of unelected power in universities, journalism, and central banks (the US Fed balance sheet grew from $1 trillion to peak at $9 trillion through quantitative easing that should never have been invented). Argentinian President Javier Milei says, “My contempt for the state is infinite”, and US President-elect Trump unrealistically promises to cut $2 trillion from federal spending. China’s recent party plenum aims to return to evaluating bureaucrats by successfully cultivating private enterprises and seeks to protect firms from “arbitrary actions, multiple inspections and selective law enforcement”. A delegate even suggested the Chinese government’s actions should be like ding xin wan, which roughly translates to “chill pills”.
India’s wage challenges are different, so let’s use the lenses of science (understanding our world), engineering (applying scientific understanding to real-world problems), and ethics (deciding which problems to focus on) suggested by the excellent new book Accelerating India’s Development: A State-Led Roadmap for Effective Governance by economist Karthik Muralidharan. The understanding lens suggests there are no poor people but people in poor places; your wages depend on your state (Karnataka and UP have the same GDP with a five times differential in populations), your city (if everybody in India lived in Bangalore, India’s GDP would be more than China), your sector (if everybody in India worked in software, India’s per-capita GDP would be higher than England), your firm (if every Indian firm was as productive as TCS, India’s per-capita GDP would be higher than Germany), and your skills (wages double for security guards who can double up as polite and effective office receptionists). This suggests our agenda should include urbanisation, factories, financialisation, formalisation and human capital.
The “engineering” lens knows agriculture is self-exploitation rather than self-employment, taking jobs to poor states is more complicated than taking people to jobs, the average car in Bangalore travels at walking speed (8km/h), software jobs will stay a rounding error in our labour force (currently 0.9 per cent) even if they double as expected, and skilling is now about preparing and upgrading more than repairing. The Nobel Prize economist Daniel Kahneman suggested that we instinctively step on the accelerator to go faster but better results come from releasing the brake; shifting the view from a bird to a worm identifies three vectors around regulatory cholesterol; rationalisation, digitisation and decriminalisation.
The rationalisation vector is hard since it now equates with civil service reform — our 25 million civil servants have shifted from being a steel frame to a steel cage — because of thought worlds like prohibited till permitted and guilty till innocent. The digitisation vector involves adding compliance to our unique Digital Public Infrastructure through a National Open Compliance Grid (NOCG) to enable paperless, presence-less, and cashless employer compliance. Recent announcements about a Unique Enterprise Number (PAN 2.0) and Enterprise Digilocker lay strong foundations for NOCG.
The decriminalising vector must learn from Jan Vishwas 1.0 (only 50 central government employer jail provisions removed) whose meagre outcomes arose from the flawed methodology of asking bureaucrats to cut the tree they are sitting on. Jan Vishwas 2.0 must reverse the gaze by removing everything that doesn’t fit five clear criteria for jail: Must involve physical harm to other individuals, must involve intentional defrauding of stakeholders (employees, lenders, shareholders, government), must involve externalities to societies so large that the violator cannot compensate, like public order, national integrity, trust in property rights, etc., no jail provisions in general clauses that define the crime too broadly or do not specify the crime, and no jail provisions related to delayed and inaccurate filings, procedural infractions, incorrect calculations, and wrong formats. These five criteria will eliminate almost half of the 5,000 plus central government jail provisions and create a template for the 20,000 plus state government jail provisions.
Our regulatory cholesterol vilifies, distrusts and discourages entrepreneurs. Change will create better teamwork (between the government, private sector, and civil society), enable policy risk-taking (more non-farm jobs will enable labour law reform and handing agriculture pricing and subsidies to state governments), and catalyse long-term thinking (a 25-year plan is not 25 1-year plans). Wages raise wages through the spontaneous combustion of alignment between ideas and execution. The Greek historian Thucydides believed any army with too much gap between its thinkers and doers will have its fighting done by fools and its thinking done by cowards.
India’s low wages are a big challenge but the worm’s eye view of employers’ daily life identifies policy steps for higher numbers of higher productivity employers. These steps will enable entrepreneurs to obey poet Faraz — shikwa-e-zulmat-e-shab se to kahin behtar tha ki apne hisse ki shama jala dete — rather than lamenting the darkness of the night, better to light a candle for your share.
The writer is with Teamlease Services
