REWIND

New Delhi, 5 June 2026

ECONOMIC ISSUES TO THE FORE

By Inder Jit

(Released on 14 December 1976) 

Economic issues with particular reference to the problem of prices and production are receiving New Delhi's top priority, notwithstanding the excitement caused by developments in Orissa and West Bengal and the visits of the Hungarian President and other VIP friends from abroad. At Gauhati, the AICC spotlighted the renewed demand for a national wage and prices policy. Mrs Gandhi also addressed a massive workers rally organised by the Assam unit of the INTUC at Jawahar Nagar and gave an inkling of her mind on certain important issues agitating the working class. Following return to New Delhi, the Prime Minister received an INTUC deputation, led by its President, Mr B. Bhagavati, and discussed with it the general labour situation, especially the need for improvement in the system for payment of bonus. Meanwhile, the Finance Minister, Mr C. Subramaniam, has initiated meetings with the labour leaders, top economists and leading industrialists to hear their views on the general economic situation. 

The situation on the price front has been causing concern. This was reflected in Mrs Gandhi's own speeches at Jawahar Nagar. She said that the prices of certain commodities had risen when there was no reason at all for this to happen. She then did some "loud thinking" and added that perhaps the answer lay in deliberate public control on prices and incomes. Mrs Gandhi's remark was not off the cuff. She has, in fact, been keen for some time now to forge a national policy on wages, incomes and prices. But as she and Mr Jagjiwan Ram pointed out at Jawahar Nagar, the subject bristles with any number of difficulties in a country as large and varied as India. The employees of the nationalised banks, the Life Insurance Corporation and the two airlines, IA and AI, for instance, draw high salaries in the national context. Under a national wage policy, either their wages would have to be brought down or those of the others raised. The first alternative would pose many practical problems. But the second is clearly not possible at present. India is in no position to foot the additional wage bill. 

INTUC and its leaders, who were warmly complimented by Mrs Gandhi at Jawahar Nagar for "serving the interest of the workers and standing behind the Congress even in the most difficult times", appreciate the many constraints faced by the Government in coming forward with a national wage policy. They also concede the need to ensure that any policy in regard to limitation on incomes does not in any way hit what is described as the "principal source for capital formation at present in India, namely, the contribution of the individual investor. They are, therefore, willing to wait until such time as the Government is able to evolve a formula which does not affect the all-important individual saving and ensures a minimum rate of growth. However, these leaders are pressing the Government for a fair deal on at least one count: payment of bonus. 

A review of the bonus formula is sought on the ground of the workers’ “magnificent response to the call of Emergency and acknowledgement by the Prime Minister at Gauhati of the good work done by them. ("We have congratulated the workers on their cooperation during the emergency in terms of improved production, especially in the public sector," she said and then significantly added: They rightfully ask what the management is doing in exchange and, frankly, I have not been able to answer that.") The number of man days lost due to strikes has been reduced almost to nil and production has gone up all round, availability of consumer goods has increased. But INTUC and other leaders are bugged by one fear: increasing productivity is not matched by a required increase in the purchasing power of the people. This, it is argued, is all the more so in a situation in which wages have remained, more or less, the same. 

Specifically, the INTUC, as urged by the President of its Assam unit, Mr K.P. Tripathi, former MP and Assam Minister, feels that the payment of bonus should not be linked to "allocable surplus". It is argued that under the existing system a company has "allocable surplus" for distribution as bonus "only when it makes a profit of 30 to 40 per cont". Under the present formula, four charges are first made on profits before allocable surplus is determined. The charges are: a guaranteed return of 8.5 per cent on equity capital, a provision of 6 per cent for the reserve fund, payment of income-tax and, finally, provision for past losses. It is pointed out that in the case of tea plantations, for instance, no allocable surplus is available even where profits have totalled Rs 2 crores or more. Allocable surplus is available only where profits are more than 35 per cent. Not unoften, there is insufficient "allocable surplus" even to pay the minimum statutory requirement of four per cent, causing not a little hardship to the workers, 

Happily, there is no adamant insistence that bonus should be linked to profit and profit alone. INTUC leaders would be equally pleased if bonus is linked to production or productivity instead of to profit-sharing. Indeed, INTUC and its affiliates are increasingly seeking a link with productivity. But, as Mr Bhagavati told the Prime Minister, the response from the managements has been far from positive. In some cases, even such managements as had agreed in the past to link bonus to production had dragged their foot, taking shelter under the formula of prior changes and the law. This law as it stands today provides for the payment of bonus on the basis of productivity only if a management agrees. The INTUC would, therefore, like the Government to provide for a tripartite agreement (the Government being the third party) or to lay down that whenever workmen demand payment of bonus on productivity, it should be made obligatory on the part of the employers to accept the basis and negotiate in good faith. 

Two other interesting points have been advocated in this context for New Delhi's consideration. First, it is stated that in multi-unit companies bonus is not being given to workmen even in units which have earned substantial profits on the ground that the overall company's balance sheet and profit and loss account do not permit payment of any bonus, at present, whether the bonus is to be unit-wise or industry-wise is left to the employer. This, according to the case argued before the authorities, should be changed and the choice left to the workers. Second, INTUC leaders have conveyed their gratitude to the Prime Minister for amending the Constitution to include in the Directive Principles of State Policy the worker's right to participate in the management of Industries. But they have also argued that if the workers are to participate in management intelligently and effectively they should be enabled access to all financial and other economic information pertaining to the undertaking. 

Mrs Gandhi and her colleagues are, no doubt, anxious to ensure a fair deal to the workers. At Jawahar Nagar, she not only voiced her concern over the welfare of workers but went one step further to cast a specific responsibility on Government-appointed Directors in companies. She said it was their duty to protect the workers interest in those companies, besides ensuring that these companies carried out Government policies and programmes. Referring to the demand for the repeal of the "iniquitous" allocable surplus formula for bonus, she also significantly remarked: "One thing which has to be done is to ensure proper accounting by companies”. At the same time, however, there is no question of the Government allowing itself to be stampeded into doing anything against its better judgment. First, Mrs Gandhi candidly told the workers' rally in Gauhati that they must "bear in mind that they will not benefit from more increase in bonus and wages if prices go up and the value of rupee falls." More important, she declared that while the Government was committed to the workers welfare it had to see that the country's "economic boat" did not sink.---INFA. 

(Copyright, India News and Feature Alliance)