Dark fumes engulfed the shed as straightened coils of steel got pickled in hot acid, cooled in water, and dunked in liquid zinc, to emerge as galvanised wire, which was rolled up into coils again.

Overseeing the process were two dozen men in drab overalls and tired faces.

“One of them fell in the pool of acid once,” said Nirmal Bhattacharya, the general manager of Bajrang Wire, who carefully sidestepped mangled wire and pools of effluents as he took me on a quick tour of the factory before retreating to his air-conditioned office, “but we spent Rs one lakh and got him treated.”

Such is the hazardous nature of work on its shop floor that unlike most other manufacturers in Jaipur’s Vishwakarma Industrial Area, Bajrang Wire prefers to hire permanent workers over cheaper contract labour.

Nearly 200 workers are employed in its two units that manufacture galvanised wires.

But across the road from the main wire factory, the company’s ancillary unit which produces steel balls employs just 24 workers.

If the unit can retrench five workers, it would no longer be counted as a factory under Rajasthan’s newly amended Factories Act, one of the three labour legislations that was amended in July.

The amendment has changed the definition of a factory. Earlier, manufacturing units employing more than 10 workers while using power, and those employing more than 20 workers without using power, had to register as factories and open themselves up for the state’s scrutiny.

Now, the threshold of workers for units with power has been moved up to 20 and those without power has been moved up to 40.

Units employing workers below the threshold would no longer be liable to follow government regulations under the Factories Act.

The Factory Inspector

Passed soon after Independence, the Factories Act 1948 is an exhaustive piece of legislation which in its zeal to ensure the well-being of workers has ended up regulating everything inside a factory from safety guards to spittoons.

While some of its provisions appear archaic today, the law in itself remains relevant in the way it aims to enshrine workplace basics: appropriate light and sound levels, facilities like drinking water and toilets, medical checks, leave and overtime payments.

To enforce the Act, the states have specialised departments under the labour ministry. In Rajasthan, it is called the Department of Factories and Boilers.

Officially, there are 39 positions for factory inspectors in the department. Twenty are lying vacant. This makes the 19 factory inspectors in the state no less than superheroes. Last year, on an average, each inspector watched over the safety, health and welfare of 25,217 workers in 679 factories by carrying out 424 inspections, which came to 35 in a month.

Between them, 19 factory inspectors in Rajasthan were supervising 12,907 factories employing 479,141 workers, until the state amended the Factories Act, taking nearly 3,000 factories out of its purview.

The amendment has reduced the workload of the factory inspectors. But that is clearly not its aim.

End of Inspector Raj

In the amendment, the government spells out its objective as “establishing of small manufacturing units be promoted resulting in creation of more employment opportunities for workers”.

In simpler words, the government hopes the amendment will spur industrial growth and employment by making it easier to set up small manufacturing units.

This is a tacit acceptance that registering and abiding by the Factories Act is a headache for industry.

Last year, Rajasthan’s department of factories and boilers made 8,050 inspections. But the inspections led to just 56 prosecutions. Less than 0.6% of factories visited were found in violation of the rules.

Industry owners believe the factory inspection is nothing more than a “harassment drive” aimed at extracting bribes over non-issues. Workers agree that the inspectors take bribes – but to gloss over serious issues.

Oddly enough, Rajasthan government had already put in place a mechanism to reduce the reach of the factory inspectors. In 2006, the government introduced the self registration scheme whereby factory owners who declared that they were abiding by all government regulations would be spared regular inspection, unless on a specific complaint. Only 10% of the state’s factories would be inspected every year through a randomised draw.

Explaining the concept, a labour officer said, “The traffic policeman cannot check the licence of every driver. But his presence itself serves as a deterrent.”

But factory owners chose not to switch to the new system. In the last eight years, not a single company has opted for the self registration scheme.

“Industrialists think it is easy for people to make complaints,” said another officer. “Once a complaint is made against them and they are found at fault, they would have to pay higher fines in the new scheme compared to those under regular law, so why switch?”

Now, by amending the law, the state government has not only taken away the bribe-taking traffic policeman for 3,000 existing factories, but also the fear of traffic regulations.

“No one is against reforming the law to make its provisions more relevant to modern industry,” said Harkesh Bugalia, the leader of a workers union, “but why reverse the basic tenet that the employer is liable for the safety of his employees?”

“This question did come up during our discussions,” admitted a senior official. With no satisfactory answer available, the officials fell back on rhetoric: “Earlier, when units with less than ten workers were not covered under the act, did it mean that for the government, the lives of five workers were not important?” Another answer relied on the road metaphor: “If I kill you in a road accident, I am liable under the Indian Penal Code. So what if a factory does not come under the Factories Act? If a worker is injured or harmed, the criminal law can still be invoked.”

Jobs and employment

Such justifications for the loosening of labour laws rest on the assumption that lifting the stranglehold of regulation would spur industrial growth.

Within the government, many take a cautious view. “The law is the same across the country. Why are some states more industrialised than others?” asked a senior official. “Industry comes if you provide good roads, infrastructure, power. It does not come by simply changing the law.”

But a change in law, the government hopes, will act as a signalling device. “By amending labour laws, the government has shown that Rajasthan is friendly to industry,” said K L Jain of the Rajasthan Chamber of Commerce and Industry. He believes the amendment to the Factories Act will help more small scale industrial units sprout in Rajasthan, and encourage existing units to employ more workers.

The statistics, however, indicate that the law was never a serious impediment to small scale industry: Rajasthan has 386,094 small scale industries employing 17.5 lakh workers. On an average, one industrial unit employed less than five workers. Less than 1% of the units are large enough to come under the Factories Act.

In the immediate future, it seems likely that the amendment will encourage existing large scale companies to break up into smaller units. Already, government tax incentives for small scale industries have promoted “ancillarisation”, whereby companies no longer make a product in one large unit place, but instead make components in several small ones.

The amendment in the Factories Act add another incentive for companies to ancillarise. It also encourages them to downsize existing ancillary units to less than 20 workers. Counterfactually, instead of creating more jobs, it threatens to reduce jobs in the near future. It would not be surprising if the steel balls unit of Bajrang Wire was to soon give the pink slip to five workers.