Making a strong case for relaxation of labour laws, World Bank chief economist Kaushik Basu on Monday said rigid regulations were hurting India's growth.
“India's labour market is over regulated. India's rigid labour laws are hurting India's growth... Flexible labour laws will help both organised and unorganised sector,” Basu said at an World Bank event.
He said there was a need for flexibility in labour market even as there exist regulatory framework.
“If we will create legal environment, there would be much demand for these workers...so we need regulatory framework but we need greater flexibility in labour market. But we don't want completely free labour market,” he said.
Labour reforms have been pending in India for long. Amendments to various labour laws have been awaiting Parliamentary approval. India has plethora of labour laws dealing with trade unions, provident funds, industrial disputes and industrial establishments.
India's economic growth rate has fallen to a nine-year low of 6.5 per cent in 2011-12. In the first (April-June) quarter of the current fiscal, the growth has slowed to 5.5 per cent.
As per the estimates of the Reserve Bank the economy is likely to grow by 5.8 per cent in 2012-13.
Basu was earlier the Chief Economic Advisor in the Ministry of Finance, before being chosen as the chief economist by the World Bank.
Basu further said manufacturing jobs are gradually moving from developed countries to developing economies.
“With new technology and new innovation, jobs move around the world...This is to remind industrial countries to not to indulge in protectionism. It is bad for rich country, it is bad for poor countries,” he said.