Change The Laws

Apropos the thought provoking article by Deepak Lal (February 6), it cannot be gainsaid that one of the stumbling blocks in the matter of attracting higher quantum of foreign investment in India in comparison with China is the labour laws. In view of the urgent need for economic reforms and in the context of globalisation, it is essential that labour laws must be drastically amended so that unproductive and useless labour is not allowed to add to the cost, and productive labour is duly recognised.

It should indeed be an eye-opener for the politicians and the policy makers to know that for investments in the non-state sector, China has created a completely free labour market where the employers do not have to adhere to any of the labour practices. Thus, they enjoy the freedom to hire and fire workers. Due to this policy, there is a low cost of obtaining disciplined though low-skilled labour force which has proved to be quite attractive to foreign investors who have poured in billions to set up various labour-intensive export industries in China.

 

In contrast, Indian labour laws tend to protect a small aristocracy of industrial labour at the cost of the prosperity of the mass of Indias labour. One hopes that the central government will act with alacrity and take up the task of labour law reform as an essential part of reforms.