Saturday, January 5, 2002

Holidays are holding economy to ransom

K.R.N. Swamy

THE News Year is here and it is important to note what excessive holidays are doing to our national economy. A few years ago an efficiency expert checking on holidays found that, for that year, virtually every third day was a public holiday for the offices of a state government. The official notification had said that the state government offices would remain closed for 119 days, including 52 Sundays and an equal number of Saturdays and 15 other gazetted holidays. Besides, the employees would be entitled to avail themselves of two out of the eight restricted holidays mentioned. These holidays were exclusive of the gazetted holidays like Republic Day, which were falling on public holidays during that year. To this, add the sick leave, casual leave and the annual privilege leave.... Last, but not least, the days you do not come to work due to "rains, bandhs,deaths of VIPs." In fact, almost one day off for one day of work!

According to the Global Competitive Report of the World Economic Forum, out of 59 nations evaluated, Japan came first, Switzerland second, Taiwan fourth, Hongkong fifth, and India came 53rd. India has the shortest average working year in the world at 1357 working hours annually, while Europe and USA have 1700 to 1800 working hours.


Especially in the months of October and November, when the festival season is in full swing, the bank holidays hit the economy and business community the most with the Letters of Credit expiring during crucial weekends, there is no chance of renewing them till the next working day. Conservatively annual losses due to bank holidays was put at Rs 1500 crore to Rs 2000 Crore (Rs 100 crore per bank holiday) by the President of All India Importers and Exporters Association. The problems were additional interest payment, delay in meeting export commitments and delay in terms of imports. For each day a ship is delayed at a port, the shipping company has to pay on an average USD 50000 Rs 24 lakh per day as demurrage charges, which they pass on to importers and exporters. M.R. Pai, an eminent consumer votary, says India, with 196 holidays and 430 million bank accounts, must have a more rationalised policy.

The Goiporia Committee in 1995, which had representations from all banking institutions and trade unions, had recommended that the number of bank holidays, including sectional holidays, should not exceed 15. However the least number of holidays is 16 (in Haryana and Pondicherry), while the states of Maharashtra, Gujarat, Punjab and Jammu & Kashmir have 24 sectional holidays.

Many NGOs have paid much thought to this problem and the Mumbai-based Citizens Organisation for Public Opinion says only eight national and festival holidays, namely Ramzan Id, Holy Independence Day, Ganesh Chaturthi, Dasehra, Divali, Christmas, and Republic Day, should be allowed. Further five holidays should be optional or sectional to be taken by those who need it.

Some private companies have gone to court, for having to pay their workers for the government-notified public holidays. A few years ago, the Supreme Court ruled that compulsory closure of industries on national and festival holidays couldnot be treated as unreasonable and therefore does not violate the fundamental right to carry on trade and business, dismissing an appeal by the MRF Ltd against festival holidays.

A considerable study has been done to see if the holidays can spur up sales. Psychologists have noticed that unless a person or family gets at least seven consecutive days of leave, there is no urge to go on holidays or go on an impulsive buying splurge. But the problem seems to be that in India, the religious holidays (10 out of 14) come one at a time, making it impossible for people to club their holidays for a long period. If holidays alone would make people spend more and travel, the recession would have ended much earlier in India. But except during the Divali bonanza, the spending spree is not there.

In China, for instance, the authorities are convinced that the occasional long holidays provide a kickstart to the sluggish domestic economy and during the days off, people splurge overcoming their traditional frugal nature. As such in China, last year on International Labour Day, millions of workers in factories, shops, offices were given a seven-day vacation, so that they could travel, go on a shopping spree and spend away their savings. Later surveys showed that one quarter of the citizens in Beijing and one-seventh of them in other cities splurged, helping the economy!..