Indian labour law concerns overstated: FM

Indian labour law concerns overstated: FM

 Amid rising pitch about India having too many labour regulations, Finance Minister P Chidambaram on Wednesday said these concerns were exaggerated and that labour laws never posed any impediment in setting up businesses in the country.

“I think concerns about labour laws are exaggerated. Only 8 to 9 per cent of India's workforce is unionised. Over 90 per cent is beyond the pains of labour laws. In fact, complaints of the labour unions is vast majority of labour force is out of labour laws,” Chidambaram said at the UK-based magazine Economist’s India summit here.

He, however, said that labour law enforcement has been lax in some areas that has led to “casualisation” of labour in some sectors over a period of time.
Chidambaram recalled how the textile sector, mostly spinning mills, have exploited labour laws to “casualise” workers in the country, a development that was “a step backward” according to him.

Chidambaram’s assertion on one hand, sends out a signal to those exploiting industrial labour force that they need to mend implementation of labour regulations. On the other, it acts as a sentiment booster to investors who have been discouraged to expand their base due to tough laws.

“Thirty years ago, it was one of the best organised workers in the textile industry. Today most of the textile industry, especially spinning mills employ casual labour, employ women. The causualisation in the textile industry is a step backward not the step forward,” he said.

Concerns have grown in the recent past about India’s rigid labour laws, both in and outside the country, with economists and policymakers saying a tad flexible regulations can accelerate industrial performance and its growth.

The World Bank in its recent report had identified flexible laws and accelerating urban development as key thrust areas for creating more jobs in India. It had emphasised that labour laws were hindering business growth.

Government’s own policymakers have been most vociferous about India’s labour policy hurting labour-intensive sectors like manufacturing. Planning Commission Deputy Chairman Montek Singh Ahluwalia had last week argued that a reform in country’s labour laws could accelerate industrial growth by about 4 per cent more.

Concerned about slowing economic growth, Chidambaram also said that the government was serious about taking more political and executive measures to spur investment in the slowing economy, but sought Opposition’s support for moving certain important bills in the Parliament.

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