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The Big Picture – Liberalising labour laws: Will it improve the industrial climate?


One of the long felt demands of the Industry and corporates in this country has been to bring about changes in the labour laws.

The liberalisation of these laws, it has been argued for years, is the key to increase investments in manufacturing and allied sector and also more importantly generation of new jobs by lakhs.

The successive governments have been cautious in bringing major changes as demanded.

This area should be given the highest priority to get rid of poverty.

Labour reforms have often been associated with competitiveness.

It is imperative that labour reforms are viewed in a holistic manner so that India is able to gain demographic dividends by becoming manufacturing destination of the world owing to higher labour productivity, flexible labour market practices and lower labour cost without compromising on labour standards.

The ecosystem and regulatory framework is not seen as a conducive to labour intensive industries in India.

Indian labour market is spoiled by over-arching complexities of archaic labour laws, unmindful bureaucratic control and corrupt inspectorate.

India has numerous labour laws such as those prohibiting discrimination and Child labour, those that aim to guarantee fair and humane conditions of work, those that provide social security, minimum wage, right to organise, form trade unions and enforce collective bargaining.

Indian labour laws are considered to be very highly regulated and rigid as compared to those of other countries in the world. The intensity of these laws have been criticised as the cause of low employment growth, large unorganised sectors, underground economy and low per capita income.

Labour is a subject in the concurrent list of the Indian Constitution and therefore labour matters are in the jurisdiction of both central and state governments. Both central and state governments have enacted laws on labour relations and employment issues.

Archaic labour laws are the greatest roadblocks in realization of an industry-friendly labour market in India.

Rajasthan has made some modifications in its labour laws which are employer friendly.

It is important to eliminate absurdities, dualities and ambiguities from existing labour laws so that industry is in a better position to leverage full potential of labour market in the country without any fear of the law.

A radical legislative intervention in labour market will be impossible without developing a