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Montek for flexible labour laws, contract farming

Montek outlines the need for faster infrastructure development, which would push up growth and create more jobs.

india Updated: Feb 10, 2006 16:39 IST

Favouring labour reforms but without "hire-and-fire" system, Planning Commision Deputy Chairman Montek Singh Ahluwalia on Friday said that rigidities in labour laws were affecting the domestic job market and raising costs of companies especially in manufacturing sector.

"We (UPA Government) have categorically said that we are not in favour of hire-and-fire. But there should be some flexibility in labour laws. We need to find a consensus," Ahluwalia told a conference of trade union body AITUC.

Flexibility in labour laws, contract farming and speedy infrastructure development were vital for attaining 10 per cent economic growth.

Ahluwalia also agreed that trade unions in India need to be strengthened as, at present, they represented only 8 per cent of organised labour, a level lower than most nations.

Admitting that the country was witnessing jobless growth, Ahluwalia said higher growth will generate more jobs. There was a need for generating "quality jobs" for which stress has to be given to education.

He outlined the need for faster infrastructure development, which would push up growth and create more jobs.

"The country is slated to grow by 8.1 per cent this fiscal and the average growth will be 7.5 per cent in the last three years... Now, 8 per cent growth is taken for granted. We are looking at 10 per cent," he said.

However, he said "this is not going to happen unless there is a massive increase in investment.

He said the decline in investment in farm sector has led to lower growth and wide-spread distress to farmers.

In this context, he said contract farming should be encouraged with proper safeguards for farmers.

Ahluwalia said the government has decided to revive rural credit cooperatives and favours diversification of agriculture to improve the earnings of farmers.

However, CPI leaders Gurudas Dasgupta and AB Bardhan strongly opposed the idea of allowing contract farming in agriculture and labour reforms

"Government's commitment for aggressive labour reform has really induced violation of labour laws. Trade unionism is being suppressed. Under-paid workforce with total job insecurity cannot sustain higher productivity," Bardhan said.

Bardhan asked government to increase rural credit and hike spendings on social sectors.

Both Dasgupta and Bardhan said Left parties were not against high growth and reforms but were opposed to the way government was pursuing the reforms process.

First Published: Feb 10, 2006 16:39 IST