Home » Budget 2001 - 02 » Union Budget 2001-02 » Finance Minister Speech : Drug Price Control

Finance Minister's Speech - Part A (contd...)

Drug Price Control

50. The domestic drugs and pharmaceutical industry needs support in order to meet the challenges and to avail of the opportunities arising out of liberalisation of our economy and the impending advent of the product patent regime. Government has been considering measures to lessen the rigours of the present price control mechanism where they have become counter productive. Towards this end, we have decided that the span of price control will be reduced substantially. However, keeping in view the interest of the weaker sections of society, Government will retain the power to intervene comprehensively in cases where prices behave abnormally. Changes in the Pharmaceutical Policy are being made accordingly.

Industrial Restructuring

51. Government had constituted a high level committee on law relating to revival, reconstruction and/or winding up of companies. The Committee has submitted its report and Government has accepted its key recommendations. It is proposed to repeal the SICA and also to amend the Companies Act in order to set up a National Company Law Tribunal. These legislative proposals are proposed to be introduced during the current session by my colleague, the Minister for Law, Justice and Company Affairs.

Labour Market

52. Along with these changes, it is also necessary to address the contentious issue of rigidities in our labour legislations. Some existing provisions in the Industrial Disputes Act have made it almost impossible for industrial firms to exercise any labour flexibility. The Government is now convinced that some change is necessary in this legislation. Chapter VB of the ID Act stipulates that employers in specified industrial establishments must obtain prior approval of the appropriate government authority for effecting lay-off, retrenchment and closure, after following the prescribed procedure. It is proposed that these provisions may now apply to industrial establishments employing not less than 1000 workers instead of 100. The separation compensation will be increased from 15 days to 45 days for every completed year of service. The enhancement of compensation would act as a deterrent on employers to take recourse to lay-off, retrenchment and closure in a routine manner.

53. Similarly, rigidities inherent in the existing legislation regarding Contract Labour inhibit growth in employment in many service activities. Section 10 of the existing Act envisages prohibition of contract labour in work/process/operation if the conditions set therein like perennial nature of job etc. are fulfilled. Section 10 enables the contract labour engaged in prohibited jobs to become direct employees of the principal employer. To overcome this difficulty and at the same time ensure the protection of labour, it is proposed to bring an amendment to facilitate outsourcing of activities without any restrictions as well as to offer contract appointments. It would not differentiate between core and non-core activities, and provide protection to labour engaged in outsourced activities in terms of their health, safety, welfare, social security, etc. It would also provide for larger compensation based on last drawn wages as retrenchment compensation for every year of service.

54. These measures will promote industrial investment in labour intensive, and export oriented activities providing for renewed industrial growth, while, at the same time safeguarding the interest of workers. My colleague, the Minister for Labour will introduce appropriate legislation to amend the Industrial Disputes Act and Contract Labour Act within this session.

Ashraya Bima Yojana

55. I am conscious of the short-term impact on organized labour force of the on-going liberalization of the economy. I therefore propose to introduce a new scheme of group insurance viz. "Ashraya Bima Yojana" to extend security cover to such affected workers. The policy will provide compensation of up to 30 per cent of last drawn annual pay for a period of one year to workers who lose their jobs. It is proposed that the policy will initially cover all employees drawing a salary up to Rs 10,000 per month. The four Government owned general insurance companies will administer this policy on a "No Profit No Loss" basis and will announce full details including premium rates of the proposed policy by the end of June 2001.