Governmental regulations are inevitable policy tools purported to prevent or deal with problems that markets do not manage well. However, the limits of regulation have often been contended and are perceived to be the result of skewed judgment on the government’s part, allowing for only short-term benefits. The context of regulation as a policy tool varies with time. Hence, it is incumbent on the authorities concerned to do a systematic review of the existing regulations and propose progressive reforms based on the current state of affairs.
Many of the labour laws in India are archaic and the Indian labour market has continuously drawn flak for creating a burdensome business environment. The Central Government proposed the Model Shops and Establishments Act in 2016, intending to address the inadequacies in the provisions of the existing Act, which impinged on Ease of Doing Business (EoDB) in the country. The provisions of the Act are expected to facilitate EoDB and generate employment opportunities. The State Governments have to bring about necessary changes in their existing Acts in line with the proposals of the Model Act.
The Maharashtra Model
Maharashtra has pioneered in clearing the bill, amending the Maharashtra Shops and Establishments Act, 1948. As proposed in the Model Act, the Maharashtra Act is applicable only for those shops and establishments with more than 10 employees. A major reformative proposal of the Model Act is the provision allowing shops and establishments to run 24/7. Though Maharashtra has adopted this provision, allowing even shops and establishments with less than 10 employees to open 24/7, it requires the permission of the local police. The police have been endowed with the power to decide the timings and the norms to be followed, citing repercussions on law and safety. It is also enlisted in the bill that the Government may fix the opening and closing hours of different classes of establishments in different premises, considering public interest. The police can take action, if the residents file complaints against the establishments operating in the night. Furthermore, same types of establishments and those located in the same area are entailed to have the same timings in order to operate in the night.
The 24/7 reform intended to benefit the trading community by giving it more freedom has instead created a penumbra, as the terms for granting permission to operate in the night are indeterminate and subject to the discernment of the police. The State is being protective, considering the safety of the market and the civil society, and thereby justifying its strident stance to entrust the police with deciding the night-time operations of the establishments. This does not make much difference to the existing state of affairs. Ensuring the safety of the citizens is the duty of the government but the question that needs to be pondered is whether the operations of a class of people need to be restricted, so that it is easier for the State to prevent crime.
In Sydney, lockout laws were introduced in 2014 upon the incidence of assaults at night, which resulted in loss of jobs and revenue to the economy. But cities like Amsterdam and New York have resorted to effective alternative strategies to combat crime in the night. For instance, Amsterdam has a Night Mayor to ensure cooperation among the stakeholders and pragmatically deal with the problems.
Why should India Switch to the 24/7 Mode?
One of the principles of regulatory reforms is that it should focus on outcome rather than the process. Regulations often focus on the inputs into the process that creates a problem, rather than the output that is the problem itself. Changing lifestyle and evolving careers smack of a rising demand for late-night avenues for shopping and services. If occurrence of crime is the problem, then larger questions need to be asked on why people commit crime and what the loopholes are in the law. These issues need to be addressed rather than prohibit the operations of the market. The problems are deep rooted in the society and solution in the form of restrictions is not ideal.
Initiatives need to be taken to facilitate safe night-time business, instead of infringing on the freedom of those who would like to operate in the night, where there is demand. Restricting the market based on the assumption that 24/7 operations will take a toll on safety will be detrimental to India’s growth trajectory. Moreover, allowing the police to decide the timings seems to be an indirect response to the question of what could be the extent of crime that is acceptable. The primary responsibility of the police is to protect the citizens and not to restrict their activities, unless they lead to a situation that endangers life and property.
The bill cleared by Maharashtra raises ambiguity over the attainment of the expected benefits of the Model Act in India, as it will make no difference if other states follow suit. The Maharashtra bill also hints at the need for giving the reforms a facelift. Regulations and reforms are imperative but they should not be at the cost of incentives to innovate and introduce new approaches to change the status quo.
*This article is written by Sara John (Project Associate, Centre for Public Policy Research). Views expressed by the author is personal and does not reflect that of CPPR.
This article was first published in The Dialogue
 Adrian T Moore and Tom Rose, ‘Regulatory Reform at the Local Level: Regulating for Competition, Opportunity, and Prosperity’ (1998)