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India Should Ease Law on Firing Workers, Ex-Modi Adviser Says

India should ease norms for hiring, firing workers to make it easier for companies to do business in the country, says Panagariya.

India Should Ease Law on Firing Workers, Ex-Modi Adviser Says
Arvind Panagariya. (Photographer: Udit Kulshrestha/Bloomberg) 

(Bloomberg) -- 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, Arvind Panagariya, the head of government think-tank NITI Aayog, said in an interview in New Delhi. “You need consistency across labor laws.”

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

India Should Ease Law on Firing Workers, Ex-Modi Adviser Says

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

--With assistance from Archana Chaudhary.

To contact the reporter on this story: Santosh Kumar in New Delhi at sthakur10@bloomberg.net

To contact the editors responsible for this story: Ruth Pollard at rpollard2@bloomberg.net, Karthikeyan Sundaram, Arijit Ghosh

©2019 Bloomberg L.P.