The Hindu Editorial

8-November-2023

1. The problem with the ‘70 hours a week’ line.

Topic: GS3 – Indian economy.

N.R. Narayana Murthy’s 70-Hour Workweek Proposal: A Cloak for Profit

• Infosys co-founder N.R. Narayana Murthy suggested that Indian youth should work 70 hours a week to make the country competitive.
• Several members of India Inc. supported this proposal, which conceals profit-driven motivations behind a veneer of virtue.

The Fallacy of Extended Working Hours

• Contrary to Murthy’s claim, advanced countries have seen a consistent decrease in working hours over the past 150 years.
• In Germany, weekly working hours have reduced by about 59% from 1870 to 2017.
• Japan also reduced its working hours significantly over the years.
• Working hours tend to decrease as incomes rise, and workers have the means to enjoy more leisure.
• The International Labour Organization (ILO) emphasizes the impact of working hours on workers’ well-being and the economy.

70-Hour Workweek is Detrimental to India’s Workforce

• Advocating a 70-hour workweek could lead to early burnout for India’s young workforce.
• This is detrimental to a country that views its young population as a significant asset for development.

Innovation and Productivity

• The level of a country’s productivity depends on the strength of its innovation system.
• India’s investment in research and development (R&D) is low compared to other countries.
• Private sector investment in R&D in India is declining, in contrast to countries with strong innovation systems.

International Labor Standards (ILS) and Global Trade Rules

• ILS are becoming increasingly important in global trade rules.
• Bilateral free trade agreements (FTAs) with advanced countries often include ILS.
• India’s negotiations with the European Union and the United Kingdom include ILS provisions.
• The Indo-Pacific Economic Framework for Prosperity (IPEF) also emphasizes adherence to labor rights, including acceptable working conditions.

Supply Chain Regulations and Labor Rights

• EU member-states have enacted regulations on supply chains, obliging companies to implement due diligence processes to address human rights violations and environmental degradation.
• France, Germany, and the EU have passed laws requiring companies to monitor and act on labor rights violations in their supply chains.
• Developed countries are moving toward strict enforcement of ILS in global supply chains, making it important for Indian companies to respect labor rights.

Conclusion:

         N.R. Narayana Murthy’s proposal for a 70-hour workweek contradicts the global trend of decreasing working hours in advanced countries and poses risks to the well-being of India’s workforce. Additionally, India needs to be mindful of the importance of adhering to international labor standards and labor rights in a global context.

Question:  How does the proposal for a 70-hour workweek in India align with global labor standards, and what are the potential implications for the country’s workforce and competitiveness?

2. A verdict that hampers international law obligations

Topic: GS3 – Indian economy.

Uncertainty in Taxation Measures: A Challenge for Foreign Investors

• Foreign investors in India face challenges due to uncertainty in taxation measures.
• This uncertainty is not only caused by executive actions but also by judicial decisions, making it difficult for foreign businesses to operate in India.

Supreme Court Judgment in Nestle SA Case

• The recent Supreme Court judgment in the Assessing Officer Circle (International Taxation) New Delhi vs M/s Nestle SA case involved 11 petitions from corporations like Nestle (Swiss) and Steria (European).
• The key question was whether the Most Favored Nation (MFN) clause in tax treaties, like Double Taxation Avoidance Agreements (DTAAs), can be applied in India without notification under Section 90 of the Income Tax Act.

Most Favoured Nation Status in DTAAs

• DTAAs with countries like the Netherlands, France, and Switzerland require a 10% withholding tax on dividends paid by Indian entities to residents of these countries.
• These DTAAs also contain Most Favoured Nation (MFN) provisions, implying that any preferential tax treatment given to third countries should also apply to these countries.
• The Supreme Court’s ruling in this case may impose a tax burden of ₹11,000 crore on foreign investors and could affect past cases.

Interpretation and Dualism

• The Supreme Court’s reasoning is criticized for interpreting the treaty provisions in a time-frozen manner.
• The court advocated the doctrine of dualism, stating that international law is not enforceable domestically without transformation into municipal law through enabling legislation.
• While dualism is present in the Indian Constitution, the court’s approach contradicts the principle of incorporating international law into the domestic legal system when not inconsistent with domestic law.

Impact and Implications

• The decision allows the executive to bypass international law obligations by not issuing necessary notifications domestically.
• It raises concerns about violations of international law and the potential for international claims against India under bilateral investment treaties.
• The judgment is seen as a setback to the progressive judicial approach of harmonizing international and domestic law, which was followed in previous cases like Vishakha.

Conclusion:

         The Supreme Court’s decision in the Nestle SA case raises concerns about the interpretation of international law, inconsistency with domestic law, and the impact on foreign investors operating in India.

3. India and Bhutan can change the development story of the region.

Topic: GS2 – International relations.

Bhutan-India Talks on Infrastructure and Connectivity

• India and Bhutan held talks focusing on infrastructure and connectivity.
• The joint statement highlighted key initiatives, including rail links, trade facilitation, and border checkpoint upgrades.
• These initiatives aim to bring about positive regional development, particularly in West Bengal, northeastern India, Bhutan’s southern and eastern districts, and northern Bangladesh.

Challenges in Bhutan’s Economy

• Bhutan’s economy has been dependent on hydropower and tourism, impacting by the COVID-19 pandemic and global warming concerns.
• Lack of opportunities has led to emigration of educated youth and professionals.
• New projects proposed, such as a Special Economic Zone and an airport at Gelephu, aim to boost growth and investment in Bhutan.

Preferential Trade Agreement with Bangladesh

• Bangladesh’s signing of a Preferential Trade Agreement with Bhutan in 2020 is expected to enhance Bhutanese exports and create new markets for Indian and Bangladeshi producers.
• India’s “energy exchange” plans to bring more hydropower suppliers from Bhutan and Nepal online and distribute energy to Bangladesh and Sri Lanka, driving regional growth and revenues.

Efficient Execution Is Crucial

• Efficient and time-bound execution is vital for the success of these ambitious plans.
• Geopolitical conflicts, sanctions on Myanmar, and concerns about China’s influence in South Asia have pushed India to work with neighboring countries to build connectivity, markets, and energy links.

South Asia’s Need for Cohesion

• South Asia has struggled to achieve regional cohesion, despite increasing geopolitical conflicts and anti-globalization trends.
• These initiatives offer security and prosperity for the involved countries, with a focus on Bhutan, India’s trusted regional partner.

A Step Towards Regional Prosperity

• These projects are steps toward more secure and prosperous regions, mitigating concerns about China’s influence and enhancing India’s engagement in the sub-region.

Conclusion:

         The talks and initiatives between Bhutan and India focusing on infrastructure and connectivity aim to address economic challenges, create opportunities, and promote regional prosperity while strengthening India’s role in the region.

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