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    India should ease law on firing workers, says Arvind Panagariya

    Synopsis

    But what’s needed is the reform of labor laws and not just streamlining of existing ones, said Panagariya.

    Modi’s government, which was re-elected for a second straight five year term in May, can do more to help grow the economy, Panagariya said.
    By Santosh Kumar

    India should ease norms for hiring and firing workers to make it easier for companies to do business in the country, according to a former adviser to Prime Minister Narendra Modi’s government.

    Easing the rules are crucial for employers, as their primary aim is not to fire workers, Arvind Panagariya, the former head of government think-tank NITI Aayog, said in an interview in New Delhi. “You need consistency across labor laws.”

    Finance Minister Nirmala Sitharaman, in her maiden budget this month, proposed combining multiple laws governing workers to form four sets of labor codes to improve the ease of doing business. But what’s needed is the reform of labor laws and not just streamlining of existing ones, said Panagariya.

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    He said the government’s plan to introduce a single minimum wage across the country may hurt businesses in smaller towns considering the wide differences in costs across urban and rural India. It could especially hurt small exporters and erode their competitiveness globally.

    Modi’s government, which was re-elected for a second straight five year term in May, can do more to help grow the economy, Panagariya said, adding that some of India’s labor laws are probably more than 100 years old. Almost all of them are more than 30 years old.
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    21 Comments on this Story

    Nilesh378 days ago
    It is true that standard of living is different at urban and rural areas.But if workers of rural area and of small towns get better wages then problem of overcrowding of urban areas will also reduce.
    Shaji 378 days ago
    What reform ?? The labour ministry is staffed by IAS officers who don''t even respond to grievances sent to them by their own Delhi office - this is my experience during first term of Modi !! Nothing changes as long as bureaucrats run the show without accountability.
    Hanwant Mal Singhvi378 days ago
    Very right. Too much of protection to the working class particularly in the government/public sector has resulted in inefficiency, low productivity and higher cost.
    The Economic Times