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Labouring under laws

The maze of labour laws in India has made it difficult for the country to rejuvenate its manufacturing sector

By Vivek Kaul | Jan 8, 2016

Earlier this year in April, while addressing businessmen at a meet organised by the business lobby Confederation of Indian Industries (CII), Arvind Panagariya, the Vice-Chairman of the NITI Aayog, said: ‘Here is my charge to you: if I look around, none of you invest in industries, in sectors that would generate lots of employment; all of you just run away from hiring purpose.’ As Panagariya further said: ‘Every year, 12 million enter the labour force. What is your plan for the country so that more people are employed? We really need to think. You know the ground conditions; why you are not investing in sectors which are more labour-intensive such as food processing, electronic assembly, leather products.’

Panagariya, of course, knows that success in manufacturing is important for any country to succeed economically, to draw people out of poverty and not continue to be a developing country, or to put it more euphemistically, an emerging market.

As Matt Riddley writes in The Evolution of Everything: ‘To this day, it is very hard for a country to become a knowledge economy without being an agricultural success and then a manufacturing success first… It’s the path that Britain and America followed at a more leisurely pace in the eighteenth, nineteenth and twentieth century.’

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