BENGALURU: Modi government is preparing to revamp the labour laws, which would be the biggest ever economic reform after 1991. The objective behind this mega reforms as it is said is to create millions of manufacturing jobs.
Three officials from labour ministry told Reuters that the ministry was gearing to up, to draft a bill that loosens the strict hire and fire rules in the upcoming session of parliament. The proposed reform would make it difficult for the workers to form labour unions.
Not many days after Modi’s land acquisition bill was referred to as ‘anti-farmer’ bill, the government is now aiming at the biggest ever labour reforms that could be termed as ‘pro-corporates’, as reported by Reuters.
One of the officials reported that, having tested the peaceful implementation of similar reforms in this arena in Rajasthan and Madhya Pradesh, the labour ministry now wants to extend it to the entire nation. These corporate friendly reforms would help accelerate the ambitious ‘Make in India’ project.
Rajiv Biswas, Asia-Pacific Chief Economist at IHS Global Insight, told Reuters that, “Modi has little option but to push ahead with the measures. Without these reforms, the economy would stagnate, and frustrated investors would look elsewhere. You cannot make political opposition an excuse for not taking tough decisions."
This will be one of those incremental steps taken by the Modi government to make India a better place for businessmen and foreign investors. Certainly, but at the same time this could generate immense opposition from other political parties and even the citizens.
As part of the reforms, a factory employing less than 300 employees would be allowed to fire workers without government’s permission, only on a condition that those who are fired get three times the existing severance package. At present only those factories that have 100 or below employees are allowed to fire workers without permission.
Reuters states that as per the World Bank figures, India has one of the most rigid labour markets in the world, which reflected in the poor manufacturing. Manufacturing sector in India accounts for only 16 percent of India's $2 trillion economy, compared to China's 32 percent.
Therefore eminent economists view these reforms as a positive sign to encourage manufacturing in India and in-turn boost economic growth.
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