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Process Reforms: Enabling decision-making under uncertainty 195

Figure 7: Cross country comparison of Rule of Law indicator

100
90
80
Percentile rank 70

60
50
40
30
20 US
Singapore Canada UK India South Africa Brazil China Russia

Source: World Bank

6.34 The legal system is required not to fix ex-ante issues in the system but to be used as an
ex-post dispute resolution mechanism. This is just as true for government decision makers who
may find their decisions questioned later. An effective enforcement system should be able to
distinguish the negative outcomes arising due to uncertainties from outright frauds. There is
a need for reforms in the legal system in the country as as been argued by various Economic
Surveys in the past.

DIRECTION OF ADMINISTRATIVE PROCESS REFORMS

6.35 The above approach has several implications that are already informing recent reforms.
Here are two recent examples:

• Labour falls under the Concurrent List of the Constitution, therefore both Parliament and
state legislatures can make laws regulating labour. There were over 100 state and 40 central
laws regulating various aspects of labour such as the resolution of industrial disputes,
working conditions, social security and wages, making the landscape of labour regulation
very complex. To rectify this, Government merged the existing 29 central labour laws into 4
labour codes. The Code on wages was passed in July 2019. In Setember 2020, three bills (i)
Industrial Relations Code, 2020, (ii) Code on Occupational Safety, Health & Working
Conditions Bill, 2020 (iii) Social Security Code, 2020 were passed in the parliament.
• The regulatory framework for Other Service Providers (OSP) was till recently, outdated
and complex. For instance, the Business Process Outsourcing (BPO) industry increasingly
runs on global cloud-based systems but Indian regulations restricted its use and insisted on a
local EPABX. Further, there were restrictions on Work from Home and onerous registration
requirements. Hence, to reduce the compliance burden of the BPO industry, government
announced new guidelines on OSPs on 5 November 2020. Under the new regulations,
th
the registration requirement for OSPs has been done away with altogether and the BPO
industry engaged in data-related work has been taken out of the ambit of OSP regulations.