The missing agenda
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PM pointed out that employment in manufacturing has not grown. So what is government doing about it?
In his press conference last week, Prime Minister Manmohan Singh flagged an area of concern: employment in manufacturing has not grown despite high economic growth. This is a longstanding problem in India due to laws that make it difficult and expensive to fire workers and shut down factories. Economic growth has been biased towards services and unorganised industry. India has been unable to fully utilise its enormous labour endowment as a source of growth or benefit from economies of scale.
Changing labour laws, such as the Industrial Disputes Act, is no longer even part of the government's agenda. The last time the government was heard saying it wanted to change labour laws was in Yashwant Sinha's budget speeches in his first two years as finance minister. While the problem of lack of employment growth is not new, its pain is exacerbated during business cycle downturns.