Tuesday, August 26, 2014

Rigid labour laws have hampered India's growth

A leading daily has pointed out about India's agriculture share in GDP, which has declined from 40% in 1973-74 to 14% now. The service sector takes the large chunk in the pie now. But this paradigm shift does not seem to have helped in creating enough employment. Despite India moving away from agriculturally-oriented economy towards the service sector; agriculture still employs large chunk of population. Besides, inflexible labour laws, poor infrastructure and ample red tapism have pushed a lot of our workforce in the unorganized sector.

Clearly, the government has not made far-reaching efforts to bring about the change in this direction. The government needs to bring in massive reforms in labour lawstake measures to make the climate more conducive for capital investments by pushing through reforms and implementing them. This may seem like a considerable challenge however, it is left with no option but to take a tough stance in the longer term health and interest of the Indian economy
. It also needs to take a relook at its various policies. This in turn will push labour from the unorganized sector to organized ones. It is well acknowledged that ramp up in capital spending and infrastructure goes a long way in taking a country's growth to the next level. Thus ramp up in capital spending and infrastructure can help to address this issue. On a much macro level, to raise India's growth trajectory, a broader reform agenda is needed. Thus the government will have to

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