Explainer: The Code on Occupation Safety, Health and Working Condition

Legislation

Explainer: The Code on Occupation Safety, Health and Working Condition

Anya Bharat Ram - July 31, 2019 Comments

Presently, there are around 40 central laws regulating different aspects of labour such as, industrial dispute resolution, bonus payments, and working conditions. The Ministry of Labour and Employment has proposed to consolidate these laws into four codes—wages, social security, industrial safety and welfare, and industrial relations.

The Occupational Safety, Health and Working Conditions Code, 2019 was introduced in Lok Sabha on July 23, 2019.[1] The Code consolidates 13 labour laws relating to safety, health and working conditions. These include the Factories Act, 1948, the Mines Act, 1952, and the Contract Labour (Regulation and Abolition) Act, 1970. In this context, we explain key provisions of the Code.

Who will be covered under the Code?

The Code applies to organisations employing at least 10 workers, and to all mines and docks. Provisions of this Code will cover both employees and workers. Employees include individuals in managerial and administrative positions. However, the Code does not apply to apprentices, or to offices of the central or state governments.

Does the Code create special provisions for different types of organisations and workers?

Apart from prescribing health and safety provisions that apply to all organisations, the Code also outlines special requirements for different types of organisations (such as factories and mines) and workers (such as beedi and cigar workers). These special provisions include exceptions or additional requirements. For example, under the Code, factories are required to get a license in addition to registering under the general provisions of the Code. Similarly, the Code requires certain contractors to get licenses before hiring any contract labour. Further, audio-visual workers can only be hired after signing an agreement with employers, which must be registered with a government authority.

What are the duties of employers and employees?

The Code lays down several duties of employers. These include, providing a workplace that is free from hazards that may cause injury or diseases, and providing free annual health examinations to employees. For certain organisations such as, factories and mines, the employer may have additional responsibilities. These include the obligation to notify authorities in case of an accident at the workplace that leads to death or serious bodily injury of an employee.

Under the Code, employees must take care of their own health and safety, comply with the specified standards, and report unsafe situations to the inspector-cum-facilitator. Employees also have the right to obtain information related to safety and health standards from the employer. They may do this by directly approaching the employer, or through a Safety Committee representative.

Will work hours be uniform for all workers and employees?

Work hours for different types of organisations and employees will be notified by the government. This is different from the current labour laws, many of which specify work hours within the law itself. For example, the Factories Act, 1948 provides for a maximum 10 hours of work per day and 60 hours of work per week.[2]

The Code also changes work hour requirements for women. The current laws such as, the Mines Act, 1952, and the Plantations Labour Act, 1951, prohibit women from working after 7 pm and before 6 am.^{[3]^,[4]} However, the Code permits female workers to work past 7 pm and before 6 am with their consent and the approval of the government.

What working conditions and welfare facilities does the Code provide for?

The employer is required to provide a hygienic work environment with: (i) ventilation, (ii) comfortable temperature, (iii) sufficient space, (iv) clean drinking water, and (v) latrine and urinal accommodations. In addition, the government may specify certain other facilities such as, canteens, first aid boxes, and crèches that an employer must provide for. This is a shift from the current legislation which provides for welfare facilities like canteens and crèches, in the law itself. For instance, the Factories Act, 1948 requires the provision of canteens, ambulances, and first aid kits for organisations depending on the number of workers employed in the organisation.²

What is the leave policy for workers?

The Code states that no employee can be made to work for more than six days a week. However, exceptions could be provided for motor transport workers. Annually, workers must receive one day off for every 20 days they have worked. While calculating annual leave, maternity leave and periods of lay off will be counted as days spent on duty.

What are the authorities set up under the Code?

The Code requires central and state governments to set up Occupational Safety and Health Advisory Boards at the national and state level, respectively. These Boards will advise the central and state governments on the standards, rules, and regulations to be framed under the Code.

The composition of the National Advisory Board includes five representatives for employers, five representatives of employees, and five reputed persons from the fields related to occupational health and safety, amongst other members. The composition of State Advisory Boards will be decided by state governments.

How is the Code being enforced?

An inspector-cum-facilitator may be appointed by the government to inspect workplaces, inquire and investigate accidents, and provide safety information to workers. In the case of factories, mines, and docks, the inspector may close or restrict employment in parts of the organisation if there is a health and safety risk.

The Code also prescribes penalties for violating provisions of the Code. An offence that leads to the death of an employee could result in imprisonment of up to two years, or a fine up to five lakh rupees, or both. Further, at least 50% of such fine may be given as compensation to the heirs of the victim. For any other violation where the penalty is not specified, the employer will be penalised with a fine between two and three lakh rupees. On the other hand, if an employee violates provisions of the Code, he could be fined up to Rs 10,000.

Does the Code provide gender specific provisions?

The Code includes certain provisions specific to female and transgender workers. With respect to women, the government can prohibit employment of women in certain organisations if working there may be dangerous to their health and safety. Further, the Code allows female workers to work night shifts with their consent and subject to approval of the government. The Code also acknowledges transgender persons as a third gender by requiring separate urinal and latrine accommodations, rest rooms, washing spaces, and locker rooms for male, female, and transgender workers.

[1] Occupational Safety, Health and Working Conditions Code, 2019, Ministry of Labour and Employment, https://www.prsindia.org/sites/default/files/bill_files/Occupational%20Safety%2C%20Health%20and%20Working%20Conditions%20Code%2C%202019.pdf.

[2] Factories Act, 1948, Ministry of Labour and Employment, https://labour.gov.in/sites/default/files/TheFactoriesAct1948.pdf

[3] Mines Act, 1952, http://www.dgms.gov.in/writereaddata/UploadFile/Mines%20Act,%201952.pdf.

[4] Plantations Labour Act, 1951, https://labour.gov.in/sites/default/files/The-Plantation-Labour-Act-1951.pdf.

[5] Beedi and Cigar Workers (Conditions of Employment) Act, 1966, http://labour.bih.nic.in/acts/beedi-and-cigar-workers-act-1966.pdf.

Recent rise in LPG prices

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Anurag Vaishnav - February 20, 2020 Comments

Last week, oil-marketing companies (or OMCs, such as Indian Oil Corporation Limited and Hindustan Petroleum Corporation Limited) raised the price of domestic LPG in the country. [1] The price of a domestic cylinder (14.2kg) has increased from Rs 714 in January 2020 to Rs 858.5 in February 2020. This is a 20% hike in the price of a LPG cylinder. Note that this is the sixth consecutive month for which LPG prices have been revised upwards. Figure 1 shows the variation in price of a domestic (non-subsidised) LPG cylinder in Delhi over the last year.

Figure 1: Variation in price of non-subsidised domestic LPG cylinder

Sources: Indian Oil and Corporation Limited; PRS.

How is the price of LPG cylinders determined?

LPG prices are revised every month. The price is determined by public sector OMCs namely, Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited, in line with the changes in the international market prices and other market conditions. [2] The international market price affects the import parity price of petroleum products (the price that importers pay for import of product at the respective Indian ports). This includes exchange rate, ocean freight, insurance and customs duty among others.

The Ministry of Petroleum and Natural Gas has stated that the recent hike in the price of LPG cylinder is due to a sharp rise in international LPG prices during January 2020 (from USD 448/Metric Tonne to USD 567/Metric Tonne). [3]

What is the difference between the price of a subsidised and non-subsidised cylinder?

The price determined by the OMCs reflects the price of a non-subsidised domestic LPG cylinder. The government modulates the effective price to provide subsidised LPG cylinders to consumers under the 'Pratyaksha Hastaantarit Laabh' direct benefit transfer (or DBT-PAHAL) scheme. [4] Under the scheme, a consumer (with annual income of up to Rs 10 lakh) can avail DBT cash-subsidy for a LPG cylinder. The beneficiaries buy LPG cylinders at market rate and subsequently receive subsidy directly in their bank accounts.

With the recent increase in price of a LPG cylinder, the government has increased the subsidy amount for PAHAL consumers from Rs. 153.86 per cylinder to Rs. 291.48 per cylinder (89% increase).³ This is done to ensure that the subsidized LPG consumers are insulated from the volatility of LPG prices in the international market. Table 1 shows the amount of subsidy provided by the government for LPG cylinder. Note that price of a subsidised cylinder has increased from Rs 494 to Rs 567 (14.8%) from February 2019 to February 2020.

Table 1: Difference between the price of subsidised and non-subsidised LPG cylinder

As on	Non-subsidised cylinder	Subsidised cylinder	Subsidy
February 2018	Rs 736.00	Rs 495.63	Rs 240.37
February 2019	Rs 659.00	Rs 493.53	Rs 165.47
February 2020	Rs 858.50	Rs 567.02	Rs 291.48

Sources: Unstarred Question No.1211, February 13, 2019, Ministry of Petroleum and Natural Gas, Rajya Sabha.
Note: Prices are at Delhi.

How many people avail the subsidy on LPG cylinders?

Currently, there are a total of 27.16 crore LPG (domestic) connections in the country.³ Of these, 26.12 crore (94%) consumers are beneficiaries under the PAHAL scheme, and therefore, can avail LPG cylinders at subsidised rates. Note that, under the scheme, a maximum of 12 subsidised cylinders per year can be availed under one connection. Further, a household cannot have more than one connection.

What is the cost of subsidy for the government?

The subsidy on domestic LPG is met through the budgetary grants of the Ministry of Petroleum and Natural Gas. In 2020-21, the government is estimated to spend Rs 37,256 crore on LPG subsidy. This includes Rs 35,605 crore for DBT-PAHAL and Rs 1,118 crore for Pradhan Mantri Ujjwala Yojana. This is an increase of 9.3% from the expenditure in 2019-20 of Rs 34,086 crore (revised estimate). Note that LPG subsidy constitutes 87% of the Ministry's total budget (Rs 42,901 crore).

Figure 2 below shows the year-wise expenditure on LPG subsidy, and as a proportion of the total budget of the Ministry from 2015-16 to 2020-21.

Figure 2: LPG subsidy over the years (2015-16 to 2020-21).

Sources: Union Budget Documents; PRS.

For more trends and analysis related to the finances of the Ministry of Petroleum and Natural Gas, see here.

[1] "LPG price hiked by Rs 144.5 per cylinder", Economic Times, February 12, 2020, https://economictimes.indiatimes.com/industry/energy/oil-gas/lpg-price-hiked-by-rs-144-5-per-cylinder/articleshow/74096745.cms.

[2] Frequently Asked Questions (FAQ), Petroleum Planning and Analysis Cell, https://www.ppac.gov.in/content/137_3_Faq.aspx.

[3] "LPG Price is Derived based on International Market Price", Press Information Bureau, Ministry of Petroleum and Natural Gas, February 13, 2020.

[4] PAHAL-Direct Benefits Transfer for LPG (DBTL) Consumers Scheme, Ministry of Petroleum and Natural Gas, http://petroleum.nic.in/dbt/whatisdbtl.html.

Union Budget 2020-21: Are the fiscal targets realistic?

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Gayatri Mann and Suyash Tiwari - February 6, 2020 Comments

Today, a general discussion on the Union Budget 2020-21 is being held in both Houses of Parliament. In the budget, the government presented the estimates of the money it expects to spend on various ministries, and how much money will be raised from different sources such as levy of taxes and dividends from public enterprises in 2020-21. In addition, the budget presented the revised estimates made by the government for the year 2019-20 in comparison to the estimates it had given to Parliament in the previous year’s budget. The budget also gave an account of how much money the government actually raised and spent in 2018-19.

What are revised estimates?

Some of the estimates made by the government might change during the course of the year. For instance, once the year gets underway, some ministries may need more funds than what was actually allocated to them in the budget, or the receipts expected from certain sources might change. Such deviations from the budget estimates get reflected in the figures released by the government at later stages as part of the subsequent budgets. Once the year ends, the actual numbers are audited by the Comptroller and Auditor General of India (CAG), post which they are presented to Parliament with the upcoming budget, i.e. two years after the estimates are made.

For instance, estimates for the year 2019-20 were presented as part of the 2019-20 budget in July 2019. In the 2020-21 budget (February 2020), the government presented 2019-20’s revised estimates based on the actual receipts and expenditure accounted so far during the year and estimations made for the remaining 2-3 months.

Is there a way to find out the government’s actual receipts or expenditure mid-year?

The actual receipts and expenditure accounts of the central government are maintained by the Controller General of Accounts (CGA), Ministry of Finance on a monthly basis. On January 31, 2020, the CGA updated the accounts figures for the period April to December 2019. Thus, we have unaudited actuals for the first nine months of the financial year.

How do the actual figures for the year 2019-20 so far compare with the revised estimates?

Table 1 gives the revised estimates presented by the central government for the year 2019-20 and the monthly account figures maintained by the CGA for the nine-month period April to December 2019. The difference between these two figures gives us the three-month target that the government will have to meet by March 2020 to reach its revised estimates.

Till December 2019, the government has spent Rs 21.1 lakh crore, which is 78% of the revised estimates for 2019-20. While the expenditure has reached 78% of the target, so far, the government has been able to generate only Rs 11.8 lakh crore or 61% of the receipts (excluding borrowings) for the year 2019-20. This implies that the receipts will have to grow at a rate of 41% in the three-month period January-March 2020 to meet the revised estimates of Rs 19.3 lakh crore. So far, receipts have grown at a rate of 4%.

Table 1: Budget at a Glance – Comparison of 2019-20 revised estimates with Apr-Dec 2019 figures (Rs crore)

Budget at a Glance	Actuals	Revised	Nine-month period	Three-month target	Growth rate so far	Growth target
Budget at a Glance	2018-19	2019-20	Apr-Dec 2019	Jan-Mar 2020	% change (Apr-Dec 2018 to Apr-Dec 2019)	% change (Jan-Mar 2019 to Jan-Mar 2020)
Revenue Expenditure	20,07,399	23,49,645	18,54,125	4,95,520	14%	28%
Capital Expenditure	3,07,714	3,48,907	2,55,522	93,385	21%	-3%
Total Expenditure	23,15,113	26,98,552	21,09,647	5,88,905	15%	22%
Revenue Receipts	15,52,916	18,50,101	11,46,897	7,03,204	6%	50%
Capital Receipts	1,12,779	81,605	31,025	50,580	-33%	-24%
of which Disinvestment	94,727	65,000	18,100	46,900	-47%	-22%
Total Receipts (without borrowings)	16,65,695	19,31,706	11,77,922	7,53,784	4%	41%
Revenue Deficit	4,54,483	4,99,544	7,07,228	-2,07,684
Fiscal Deficit	6,49,418	7,66,846	9,31,725	-1,64,879
Primary Deficit	66,770	1,41,741	5,07,411	-3,65,670

Sources: Union Budget 2020-21; Controller General of Accounts, Ministry of Finance; PRS.

How do the actual tax receipts fare in comparison to the revised estimates of 2019-20?

A lower than estimated growth in nominal GDP has also affected the tax receipts of the government during the year. The 2019-20 budget estimated the nominal GDP to grow at 12% over the previous year, whereas the latest estimates suggest this growth rate to be 7.5% in 2019-20. The revised estimates for 2019-20 show gross tax receipts of Rs 21.6 lakh crore (includes states’ share). Till December 2019, tax receipts of Rs 13.8 lakh crore has been collected, which is 64% of the target. The tax receipts will have to grow at 19% in the three-month period January-March 2020 to meet the target. Table 2 shows similar comparison for the various taxes and also for the tax receipts devolved to states. While the budget estimated a growth in receipts from all major taxes, receipts from taxes such as corporation tax (-14%), union excise duties (-2%), and customs (-12%) have declined during the period Apr-Dec 2019.

Table 2: Tax receipts – Comparison of 2019-20 revised estimates with Apr-Dec 2019 figures (Rs crore)

Revenue Receipts	Actuals	Revised	Nine-month period	Three-month target	Growth rate so far	Growth target
Revenue Receipts	2018-19	2019-20	Apr-Dec 2019	Jan-Mar 2020	% change (Apr-Dec 2018 to Apr-Dec 2019)	% change (Jan-Mar 2019 to Jan-Mar 2020)
Gross Tax Revenue	20,80,465	21,63,423	13,83,035	7,80,388	-3%	19%
Devolution to States	7,61,454	6,56,046	4,76,113	1,79,933	-2%	-34%
Net Tax Revenue	13,17,211	15,04,587	9,04,944	5,99,643	-3%	57%
Dividend and Profits	1,13,420	1,99,893	1,61,979	37,914	175%	-30%
Other Non-tax Revenue	1,22,284	1,45,620	79,974	65,646	-10%	96%
Revenue Receipts	15,52,916	18,50,101	11,46,897	7,03,204	6%	50%

Note: Figures for income tax exclude receipts from the Securities Transaction Tax.

Sources: Receipts Budget, Union Budget 2019-20; Controller General of Accounts, Ministry of Finance; PRS.

If we look at sources of receipts other than taxes, non-tax revenue during Apr-Dec 2019 is Rs 2.4 lakh crore, i.e. 69% of the estimated Rs 3.5 lakh crore. Disinvestment receipts till date amounted to Rs 18,100 crore, i.e. 17% of the budget target of Rs 1.05 lakh crore. Though the investment target has been revised down to Rs 65,000 crore, it implies that Rs 47,000 crore would need to be raised in the next two months.

How does this impact the borrowings of the government?

When the expenditure planned by the government is more than its receipts, the government finances this gap through borrowings. This gap is known as fiscal deficit and equals the borrowings required to be made for that year. Given lower than expected receipts, the government has had to borrow more money than it had planned for. Borrowings or fiscal deficit of the government, till December 2019, stands at Rs 9.3 lakh crore, which is 22% higher than the revised estimate of Rs 7.7 lakh crore. Note that with three months still remaining in the financial year, fiscal deficit may further increase, in case receipts are less than expenditure.

When we look at fiscal deficit as a percentage of GDP, the 2019-20 budget estimated the fiscal deficit to be at 3.3% of GDP. This has been revised upward to 3.8% of GDP. However, till December 2019, fiscal deficit for the year 2019-20 stands at 4.6% of GDP (taking the latest available GDP figures into account, i.e. the First Advance Estimates for 2019-20 released in January 2020). This increase in fiscal deficit as a percentage of GDP is because of two reasons: (i) an increase in borrowings as compared to the budget estimates, and (ii) a decrease in GDP as compared to the estimate made in the budget. The latter is due to a lower than estimated growth in nominal GDP for the year 2019-20. The 2019-20 budget estimated the nominal GDP to grow at 12% over the previous year, whereas the latest estimates suggest this growth rate to be 7.5% in 2019-20.

Note that, in addition to the expenditure shown in the budget, the government also spends through extra budgetary resources. These resources are raised by issuing bonds and through loans from the National Small Savings Fund (NSSF). The revised estimates for 2019-20 show an expenditure of Rs 1,72,699 crore through such extra-budgetary resources. This includes an expenditure of Rs 1,10,000 crore by the Food Corporation of India financed through loans from NSSF. Since funds borrowed for such expenditure remain outside the budget, they do not get factored in the deficit and debt figures. If borrowings made in the form of extra-budgetary resources are also taken into account, the fiscal deficit estimated for the year 2019-20 would increase from 3.8% of GDP to 4.6% of GDP due to extra-budgetary borrowings of Rs 1,72,699 crore. This does not account for further slippage if the targeted revenue does not materialise.

Explainer: The Code on Occupation Safety, Health and Working Condition

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