Labour Reforms Can Help Reshape India's Growth Trajectory

The changes in labour laws will help both workers and industry. These will boost entrepreneurship and investments and are an important step in reviving our economy.

- Chandrajit Banerjee

India is projected to have the largest working population in the world between 2022 and 2034, with 10 million youth entering the workforce every year. Unleashing the true potential of such a strong workforce demands the employment capacity of the industry. Therefore, rigidities and administrative burden in the labour regime were required to be addressed through substantive reforms. The passage of three labour codes in Parliament marked a milestone in this process and came after many years of consultations and discussions between the government, industry, trade unions and other stakeholders.

In the last five years, India has seen several legislative reforms to boost employment generation such as the Shram Suvidha Portal, MUDRA (Micro Units Development and Refinance Agency), Startup India, Make in India, Skill India, digitisation of labour law compliances, etc. With the codes on wages, industrial relations, social security, and welfare and safety, a new environment for job creation is underway.

Existing labour laws were found to be out of sync with the evolving business regulatory environment and India’s growth aspirations. Successful emerging economies on a development path have leveraged their labour supply for accelerating growth; however, India’s labour laws were applicable to around 80 million workers in the formal sector, leaving the rest of the 500 million-strong workforce out of these benefits.