InvestorQ : Will the move by the government to withdraw its compulsory wages order be positive for markets?
Katherine Gonsalves made post

Will the move by the government to withdraw its compulsory wages order be positive for markets?

Answer
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3 months ago


Yes, it will be positive.


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Rutuja Nigam answered.
3 months ago


The Ministry of Home Affairs, Government of India has finally withdrawn its order on compulsory wage payment during the lockdown. The order was impractical in the first as expecting employers to pay full wages with no revenues was not feasible at all. Industry bodies had already petitioned the government to withdraw the order as it was likely to make most businesses unviable. Companies also pointed out that letting people take a pay cut or a furlough would be better for them than losing jobs. Due to fiscal constraints, the government had ruled out any support. The latest order is in the light of the pain in the corporate sector in India.


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Roshni Hegde answered.
3 months ago


Despite order announced on March 29 on compulsory payment of wages for employers, many employees in the private sector had filed complained against their companies on not receiving the promised money. Few allegations were found duped into signing resignation papers.

As per reports, Deepak Sood, secretary-general of Assocham, said “pressure is mounting on working capital” and industry expects “banks to stretch their helping hand beyond RBI forbearances” and a “large fiscal package”.

CII president Vikram Kirloskar said in his one report, “it is critically important that we do not resort to retrenchment” but that costs were a concern. Also one of the reasons to withdraw the promise of wages and benefits is missing attendance of workers because of the expectation that full wages will be paid even without showing up for work.

Heavyweights stocks in  India are already bleeding, Due to lack of liquidity during prolonged COVID-19 lockdown many firms have been filing bankruptcy. I think this order will help Indian firms to take control of capital and put the focus on managing liability and market stability.