‘Current labour laws are pro-jobs, not pro-workers’

The global economic scenario may be tense but India's domestic reform story can power it back to an 8 per cent growth trajectory. Rajat Kathuria, director and chief executive of ICRIER tells Surabhi that the government must work at pressing reforms such as labour laws and improving governance issues in infrastructure projects.


What are the key challenges for Budget 2013-14?

As far as challenges are concerned, the usual suspects of the growth story are infrastructure and fiscal consolidation. I think the Budget would play a major role. Expenditure cutting has already begun. Though I don't know how successful the spectrum auction will be, disinvestment will bring some money. So expenditure cuts and revenue generation have already begun. There is a lot of foreign investment potential, a renewed focus on SEZs as well as a lot of investments planned in infrastructure. All this will help improve chances of over 6 per cent growth in 2013-14.

What are the major domestic reforms needed?

One long-standing issue is labour reforms. I think, labour laws only protect a small percentage of workers in the organised sector. The current labour laws are not pro-workers but pro-jobs. But it is a politically very intense problem especially as labour is a state subject. While it is an issue that needs to be addressed, I don't think it will happen in this political cycle. The more doable reforms are in the infrastructure sector, where the potential impact would be immense. Take the example of any big ticket infrastructure projects, such as the Pune- Mumbai highway or the Manali-Chandigarh route. It has revolutioned the activities in the area. So imagine what a good power plant could do or a good railway freight system could do. While public private partnerships are clearly the way forward... , there are governance issues. The private sector also has to recognise that it is equally to blame and they can't manipulate their way all the time.

... contd.

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