India’s manufacturing sector has stagnated because “The very peculiar
structural” labour law in our country is rigid and it need to be made flexible,
India-born British economist Meghnad Desai.
“India’s manufacturing
sector has stagnated because of the very peculiar structural labour laws.
Flexible labour laws will help the growth of both organized and unorganized
sector,” Desai said at the event on March 21.
India’s growth failure
is mainly due to its failure in increasing manufacturing growth, Desai said.
According to the
Planning Commission data the manufacturing sector has stagnated at 16 percent
of the GDP with only 1.8 percent of India’s share in global manufacturing.
This is in strong
contrast to the other Asian nations experience at similar stages of economic
development, particularly china with 34 percent of GDP constituted by the
manufacturing sector and 13.7 percent of the world manufacturing.
Desai further stressed
upon the rural population work force utilization to increase the nation’s
productivity. “Productivity gap between agriculture and services is 1:9. The
only way to improve it is by increasing the labour for productivity. It is
estimated that 60 percent of our population is in rural areas. At least half of
the rural population must be moved out of the rural areas,” he said.
Labour reforms have
been pending in India for a long time and several amendments to various laws
have been waiting for the Parliamentary approval.
India has number of
labour laws dealing with trade unions, provident funds, industrial disputes and
establishment for increasing the labour force productivity but the country’s
economic growth rate has fallen to 4.5 percent in 2012-13.
As per Central
Statistical Organisation it is estimated that the economy is likely to grow by
4.9 percent in the current fiscal, ending March 31.
Reference: The Economic Times
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