Dear Sir, There is a tendency to blame the Labor Laws for the ills bedeviling Manufacturing. I think, this is short sighted, because it sees the recalcitrance of the workers as a major stumbling block. The labor laws have evolved after a long history of exploitation. At first, it was believed that it was because of the social structure which encouraged exploitation, then it was Marx who revealed that it was the evolution of the capitalist or the free economy that created condition for exploitation. Now, after the collapse of communism in the old Soviet Union, it is recognized that the State control of the economy is no guarantee for the exploitation of the labor.
The way labor laws have evolved is thru a series of negotiations between the Unions and the Manufacturers and also between the Unions and the Government.
Even now it is felt that the Govts of the day are made and run by the Capitalists and Big Business and this combination make a case for repealing the labor laws to achieve progress. This is just a mirage.
Long ago, Gandhiji realized that it was also the responsibility of the Big Business to care for the labor in their factories and establishment in a fair and just manner. This he called as the Principle of Trusteeship.
On the other side, our socialist leaning Govt went overboard and created conditions for irresponsible labor behavior by granting all kinds of rights that are now being exploited by the Big Labor for shirking work, demanding high wages and going on strikes on flimsy excuses.
There is thus need for a balance between the three main constituents of the economy Labor, Business and the Govt.
Best Regards,
K.Paranjpe
On Sat, 31 Aug 2013 22:12:15 +0530 wrote
> Hi all friends
I totally agree with the statement that Development takes place only if it was possible to bypass it.
Our Indian Labour Laws are all outdated, not friendly to Employees and Employers. Time has come to the Government to have a Look at replacing these old provisions of the Labour Laws.
R. Nagarajan, ACS, LLM
Associate Professor
Vels University
Chennai
I
From: Vijay Kane
To:
join_mtc@googlegroups.com
Sent: Saturday, 31 August 2013, 20:56
Subject: Re: [MTC Global] Fw: Why India's Economy Is Stumbling
Very interesting observationsIn retrospect [unfortunately only in retrospect ] some reasons are obvious
Development took place in areas where it was possible to bypass the structural problems.
for example --1] Our labor law reforms -- We have a very large pool of low skilled labor. but it is "guarded by archaic laws which presume that labor and managementare enemies of each other"
a] IT sector progressed as it was not hampered by these archaic laws.Imagine where would be IT sector if shackled by these lawsb] Manufacturing sector succeeded partially by using contract labor and partially by mechanizing low skill jobs
2] Another big stumbling block -- Lack of availability consistent electric power -- To some extent it was bypassed by captive power generation to fill the gaps.,I was amazed to read that majority of mobile towers - there are literally thousands of them -- use diesel generators [ consuming colossal amount of diesel]
Also by extensive use of "third shift " which is supposed to be used for contingencies only
There are other blocks --- I am not knowledgeable enough to comment on them - how ever things might not be much different.
Progress took place in spite of government.Government did its best to squander the generated surplus [ rather than reinvesting for productive purpose]for political gains
V A KaneAssociate prof Mech EnggMarathawada Inst Of TechAurangabadMaharashtra
On Sat, Aug 31, 2013 at 12:08 PM, Satish Oberoi wrote:
From: T.S. Krishnamoorthy
August
30, 2013
Why
India's Economy Is Stumbling
By
ARVIND SUBRAMANIAN
WASHINGTON — FOR the past three decades, the Indian economy has grown
impressively, at an average annual rate of 6.4 percent. From 2002 to 2011, when
the average rate was 7.7 percent, India seemed to be closing in on China —
unstoppable, and engaged in a second "tryst with destiny," to borrow Jawaharlal
Nehru's phrase. The economic potential of its vast population, expected to be
the world's largest by the middle of the next decade, appeared to be unleashed
as India jettisoned the stifling central planning and economic controls
bequeathed it by Mr. Nehru and the nation's other socialist
founders.
Enlarge This Image
Karen Barbour
Related
Rupee
Drops, and Outlook Grows Darker for India (August 31,
2013)
But India's
self-confidence has been shaken. Growth has slowed
to 4.4 percent a year; the rupee is in free fall, resulting in higher prices for
imported goods; and the specter of a potential crisis, brought on by rising
inflation and crippling budget deficits, looms.
To some extent, India has been just another victim of the ebb and flow of
global finance, which it embraced too enthusiastically. The threat (or promise)
of tighter monetary policies at the Federal Reserve and a resurgent American
economy threaten to suck capital, and economic dynamism, out of many
emerging-market economies.
But India's problems have
deep and stubborn origins of the country's own making.
The current government,
which took office in 2004, has made two fundamental errors. First, it assumed
that growth was on autopilot and failed to address serious structural problems.
Second, flush with revenues, it began major redistribution programs, neglecting
their consequences: higher fiscal and trade deficits.
Structural problems were inherent in India's unusual model of economic
development, which relied on a limited pool of skilled labor rather
than an abundant supply of cheap, unskilled, semiliterate labor. This meant that
India specialized in call centers, writing software for European companies and
providing back-office services for American health insurers and law firms and
the like, rather than in a manufacturing model. Other economies that have
developed successfully — Taiwan, Singapore, South Korea and China — relied in
their early years on manufacturing, which provided more jobs for the
poor.
Two decades of double-digit growth in pay for skilled
labor have caused wages to rise
and have chipped away at India's competitive advantage. Countries like the
Philippines have emerged as attractive alternatives for outsourcing.
India's higher-education system is not generating enough talent to meet the
demand for higher skills. Worst of all, India is failing to make full use of the estimated
one million low-skilled workers who enter the job market every
month.
Manufacturing
requires transparent rules and reliable infrastructure. India is deficient in
both. High-profile scandals over the
allocation of mobile broadband spectrum, coal and land have undermined
confidence in the government. If land cannot be
easily acquired and coal supplies easily guaranteed, the private sector will shy
away from investing in the power grid. Irregular electricity holds back
investments in factories.
India's panoply of
regulations, including inflexible labor laws, discourages companies from
expanding. As they grow, large Indian businesses prefer to substitute
machines for unskilled labor. During China's three-decade boom (1978-2010),
manufacturing accounted for about 34 percent of China's economy. In India, this
number peaked at 17 percent in 1995 and is now around 14 percent.
In fairness, poverty has sharply declined over the last three decades, to
about 20 percent from around 50 percent. But since the greatest beneficiaries
were the highly skilled and talented, the Indian public has demanded that growth
be more inclusive. Democratic and competitive politics have compelled
politicians to address this challenge, and revenues from buoyant growth provided
the means to do so.
Thus, India provided guarantees of rural employment and kept up subsidies
to the poor for food, power, fuel and fertilizer. The subsidies consume as much
as 2.7 percent of gross domestic product, but corruption and inefficient
administration have meant that the most needy often don't reap the
benefits.
Meanwhile, rural
subsidies have pushed up wages, contributing to double-digit inflation.
India's
fiscal deficit amounts to about 9 percent of gross domestic product (compared
with structural deficits of around 2.5 percent in the United States and 1.9
percent in the European Union). To hedge against inflation and general
uncertainty, consumers have furiously acquired gold, rendering the country
reliant on foreign capital to finance its trade
deficit.
Economic stability can be
restored through major reforms to cut inefficient spending and raise taxes,
thereby pruning the deficit and taming inflation. The economist Raghuram
G. Rajan, who just left the University of Chicago to run India's central bank,
has his work cut out for him. So do Prime Minister Manmohan Singh, also an
economist, and the governing party, the Indian National Congress. These steps
need not come at the expense of the poor. For example, India is implementing an
ambitious biometric identification scheme that will allow targeted cash
transfers to replace inefficient welfare programs.
India can still become a
manufacturing powerhouse, if it makes major upgrades to its roads, ports and
power systems and reforms its labor laws and business regulations. But
the country is in pre-election mode until early next year. Elections increase
pressures to spend and delay reform. So India's weakness and turbulence may
persist for some time yet.
Arvind Subramanian, a senior fellow at both the Peterson Institute
for International Economics and the Center for Global
Development, is the author of "Eclipse: Living in the Shadow of China's
Economic Dominance."
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