From anti-worker labour codes to caste-based schemes and weakened green laws, Modi government's shift from constitutional duties is harming economy and rights
The Narendra Modi government, backed by the RSS, is on a mission to make India a 'Hindu Economy', increasingly tailoring its policies along tenets prescribed in ancient Hindu texts. The Federal presents a three-part series decoding what this involves and how it impacts the nation and its people.
Part I spoke about the draft labour policy, which shifts the Indian state away from its constitutional duties and leaves workers to fend for themselves. Part II looked at how the policies based on a rigid caste hierarchy have eroded India's prosperity.
Part III argues that policies grounded in the concepts of dharma and the monarchical order are alien and antithetical to the constitutional state and its responsibilities.
Paradigm shift
As discussed earlier, the Shram Shakti Niti 2025 proposes the Indian state to withdraw from its prescriptive and regulatory power to protect, promote workers' rights and wellbeing, letting private employers take over those functions.
It also proposes to pass the responsibility of implementing the Centre’s four Labour Codes of 2019 and 2020, billed as “reforms”, to state governments.
Part 1: How Shram Shakti weakens workers, shields Centre from constitutional duties
Part 2: How a 'dharma-ordained' caste system has killed India's prosperity
The draft calls its approach a “paradigm shift” in labour governance, aligning its approach to dharma and ancient Indian texts – which go back to the time when kings ruled, and the constitutional state or democracy didn’t exist. Those were the times when private guilds (artisans, traders etc.) engaged in caste-determined occupations – sanctioned by dharma. Kings remained aloof, stepping in only to resolve disputes.
Constitutional state vs dharmic state
This paradigm shift has consequences.
The Indian government has been functioning as a constitutional state since 1950, unlike any monarchy. It is accountable to the people and obliged to uphold the values and rights enshrined in the Constitution of India.
The Constitution promises to secure to all its citizens (including women, Dalits and minorities) social, economic and political justice; liberty of thought, belief, faith and worship; equality of status and of opportunity; promote fraternity, assure dignity and has a set of fundamental rights which the Supreme Court has expanded over the years to include new fundamental rights such as right to life with dignity, right to livelihood, right to live in a pollution-free environment, and right to privacy, among others.
Then there are the central rights-based laws – on food security, employment, education and others.
Also read: Shram Shakti Niti 2025: Draft labour policy steps back to Manusmiriti
Further, the Preamble to the Constitution declares India a Socialist and Secular Republic, which the apex court has ruled to mean equal respect for all religions and elimination of all forms of exploitation – social, political and economic.
The central and state governments have taken oath to uphold the Constitution, which means all the above, not dharma or ancient Indian texts.
Labour codes, farm laws
The first part of the series had explained how the four dead letter labour codes were noticeably anti-worker and exploitative, running afoul of the constitutional values and rights and the Indian state’s constitutional obligations.
There was another such example. Billed as mega “reforms”, the Centre brought in three “new farm laws” in 2020 for agricultural workers.
It steamrolled these farm laws – first through ordinances and then through the Parliament, both during the pandemic-induced lockdown of 2020. There was little debate, no parliamentary scrutiny and no consultations with state governments, even though agriculture is a state subject and most provisions relating to agri-trade remain in the state list.
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Those new farm laws were: Farmers’ Produce Trade and Commerce (Promotion and Facilitation) Act, 2020; The Farmers (Empowerment and Protection) Agreement on Price Assurance and Farm Services Act, 2020; and Essential Commodities (Amendment) Act, 2020.
Flawed legislation
Notice the titles. Like the Shram Shakti Niti 2025, they promised to protect farmers’ interests but did the exact opposite.
The first law set up private, unregulated mandis – in parallel to state-controlled APMC mandis – in which the minimum support price (MSP) regime didn’t apply. That meant farmers (86 per cent being small and marginal ones) were vulnerable to exploitation by traders and private corporates.
The second law created a private contract farming system, bypassing states’ contract laws – pitting farmers directly against private traders and corporates. Even for resolution of disputes, the state governments and courts were kept out. The power was transferred to Central government officials.
The third law withdrew the stock and price limitations on essential commodities – threatening hoarding and black marketing.
After two years of intense farmers' protests, the Centre withdrew these farm “reforms”.
Environment laws
Similar abandonment of constitutional obligations is visible in forest and environmental governance.
With green clearances, the Centre has given a free pass to private projects, completely bypassing the Forest Rights Act (FRA) of 2006 and Panchayat (Extension to Scheduled Areas) Act (PESA) of 1996, which override all other Indian laws.
This has been done through the Forest (Conservation) Rules of 2022, which allow automatic green clearances without settling forest rights and without prior consents of the gram sabhas that the FRA and PESA, respectively, mandate.
The Jan Vishwas (Amendment) Act of 2023 further damages green safeguards (right to live in pollution-free environment) by de-criminalising violations of the Environment Protection Act of 1986; Air (Prevention and Control of Pollution) Act of 1986; and Water (Prevention and Control of Pollution) Act of 1974. Another such law is in the offing.
Promotion of swadharma
The Centre is now promoting swadharma. Here is how.
In September 2023, it launched a Central Sector Scheme (CSS), named PM-Vishwakarma, to provide “end-to-end support” to traditional artisans and craftspeople engaged in 18 trades: carpenter, boatmaker, armourer, blacksmith, hammer and toolkit maker, locksmith, goldsmith, potter, sculptor, stone breaker, cobbler, mason, basket/mat/broom maker/coir weaver, doll and toy maker, barber, garland maker, washerman, tailor and fishing-net maker. The budget outlay for this scheme was Rs 13,000 crore.
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These are caste-based occupations and as it would be clear now, swadharma is a thin disguise.
The swadeshi/atmanirbharta model has very serious consequences for India’s prosperity. It has so impoverished the country that 58 per cent of Indians now need “free” ration to survive – since April 2020.
The Hindu Economics’ swadeshi or atmanirbharta philosophy — introduced since 2014, first through tariff walls and then through non-tariff walls to protect domestic industry — has hurt India the most.
Policy paradox
On the one hand, domestic manufacturing keeps moving downwards despite tax cuts and numerous subsidies rolled out virtually every single year and in a veritable alphabetical soup, named PLI, DLI, ELI, PM-RPY, ABRY, and so on.
The Federal has shown ('Why Swadeshi chest-thumping falls flat against production numbers') how the manufacturing’s GVA share has progressively gone down from 17.4 per cent in FY12 to 13.9 per cent in FY25 (current prices); its job share has also progressively gone down from 12.1 per cent in 2017-18 to 11.4 per cent in 2023-24 (PLFS).
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As for manufacturing output, growth in manufacturing IIP and that of eight ‘core’ sectors (infrastructure sectors getting maximum fiscal push) have substantially gone lower now (during FY13-FY25) than they were earlier (FY06-FY13).
On the other hand, this protectionism has led to the United States' 25 per cent “reciprocal” tariff. The US has imposed an additional ‘penalty’ tariff of 25 per cent on India for buying discounted Russian crude since 2022. This cheap crude hasn’t benefited average Indians as retail prices have remained unchanged. But it produced windfall gains to the extent of USD 16 billion for refiners – as the Financial Times reported in August.
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Net result? Indian exports to the US fell by 12 per cent in September, causing a loss of $740 million. This loss would keep mounting month after month, unless the Centre compromises with its sovereign rights.
Meanwhile, imports from China are soaring because the protected swadeshi industries are incapable of producing quality products or inputs across a wide swath of industrial sectors. Technological innovation and breakthroughs are not built into the swadeshi way of doing business.
Rising doles for survival of millions
The swadeshi/atmanirbharta model has very serious consequences for India’s prosperity.
It has so impoverished the country that 58 per cent of Indians (813.5 million) now need “free” ration to survive – since April 2020. But this is not enough.
Also read: Freebies and fiscal discipline: Can Bihar afford a revdi culture? | Capital Beat
Over 100 million families get annual cash handouts of Rs 6,000 under the PM-KISAN scheme. Over 100 million families get subsidised LPG cylinders (at 20 per cent of market price) under the PM-Ujjwala scheme. An annual average of 66 million rural Indians take to menial, below statutory minimum wages under the job right scheme called MGNREGS.
There is more.
Announcement of revdi or freebies invariably heralds that elections are due – either for the Lok Sabha or state Assemblies.
A few weeks ago, the Prime Minister handed out Rs 10,000 to 75 lakh (7.5 million) women in Bihar – ruled by a coalition that includes the BJP. This dole is meant to help these women set up business – about which neither they have been informed or applied. Several BJP-ruled states such as Maharashtra, Madhya Pradesh and Delhi give monthly cash handouts of Rs 1,500-2,500 to women.
Nobel laureates Acemoglu and Robinson must surely be chuckling to themselves.
