RIL’s decision to roll back pay cuts could create a ripple effect prompting other corporates to follow suit, and, this could spur the economy and give Aatmanirbhar Bharat a shot in the arm
Stakeholder capitalism is only good when it is also seen to be practised, and there could not have been a better way for an Indian conglomerate to demonstrate its commitment to this principle than the way Reliance Industries Limited has done by rolling back the salary cuts of its huge workforce with retrospective effect.
At a time when none would have faulted RIL had it persisted with the reduced pay policy for some more time to conserve resources, the present move by the Mukesh Ambani-led company is visible proof of a conglomerate which gives equal importance in taking care of its employees’ interests as it does in bolstering revenues and profitability.
It will not be a surprise if other large businesses are spurred in the days ahead to follow Reliance’s lead and rollback pay cuts. Now that a clear benchmark has been set by Reliance on how far a corporate can go on employee-friendliness in a new normal world where volatility, uncertainty, complexity, and ambiguity (VUCA) are the only things that can be taken for granted.
Economy Booster Shot
However, Reliance’s decision could have a larger pan-India impact as well. The pay cut rollback, taken by one of the biggest companies in India, could hold tremendous implications for the overall economy, and in lending momentum to the creation of an Aatmanirbhar Bharat.
The financial impact and positivity that this would bring about could help in the economic revival in India. The positive signal this sends out about the economy, and the ripple effect it could create will have a multiplier effect and lead to a more sustainable demand for products and services — and not just the spur seen because of the festive season.
By putting money into the hands of its employees, it is expected that this will reduce the general aversion towards spending given that we are in the midst of a pandemic. However, RIL’s actions could not have come at a better time, when Aatmanirbhar Bharat is the mantra, and it resonates with Prime Minister Narendra Modi’s “vocal for local” reminder in his October 25 Mann Ki Baat address.
Various sectors — from FMCGs to automobiles and real estate — could benefit through this one decision given its likely ripple effect on other large companies, domestic and multinational, operating in India. Job generation in these segments could go up substantially once more corporate groups follow RIL’s example.
Even the banking and consumer financing sectors could gain, as fresh loans could increase, and so could EMI payments. If more companies rollback their pay cuts the pressure on the Employees’ Provident Fund Organisation could reduce as withdrawals would reduce.
At the end of the day, no great change is ever possible without all relevant stakeholders stepping up to the plate when it is needed most. Reviving an economy that experts have projected would witness double-digit contraction in the current financial year is a mammoth job in which everybody must play a part. Reliance has shown the way.
Sumali Moitra is a current affairs commentator. Twitter: @sumalimoitra. Views are personal.Disclosure: Reliance Industries Ltd. is the sole beneficiary of Independent Media Trust which controls Network18 Media & Investments Ltd.