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. You need consistency across labor laws,” Arvind Panagariya, the former Vice-Chairman NITI Aayog, said

Panagariya said that 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 is needed is the reform of labor laws and not just streamlining of existing ones.

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. He added that that some of India’s labor laws are probably more than 100 years old. Almost all of them are more than 30 years old.

Related Topics