'Labour reforms not crucial to 8% growth'

NEW DELHI: Industry and economists might call for labour reform as a key driver to accelerate labour-intensive growth, but Planning Commission deputy chairman Montek Singh Ahluwalia has spared the UPA government the blushes.

He says that labour law reforms may not be necessary to achieve 7-8% growth in the economy in the remaining two years of the plan period. But toning up the regulation of infrastructure’s a must.

While he does believe that the country’s labour laws need to be modernised in the medium to long term, Mr Ahluwalia says that the inability to do so in the near future would not be a “fatal handicap�.

In an interview with ET, Mr Ahluwalia said, “We have a very big agenda of things that need to be done to accelerate growth, and if we move on to those issues, there is no harm in taking more time to a build consensus on labour laws.�

Among the things that need to be done, according to him, would be improving the regulatory framework to make the environment more conducive to increased private sector participation as well as public-private partnership in areas like infrastructure.

Prime minister Manmohan Singh has already asked the plan panel to prepare a paper on the regulatory structure. Mr Ahluwalia says the Commission would carry out a comprehensive review of the existing structure and identify the gaps that need to be addressed and standards that are required to be met. He feels that the real problem with the regulatory structure today is that they are not independent.

Also, in several cases, the regulator is not clear about the role it is required to play. “We need to clarify that in law.�

The infrastructure committee chaired by the prime minister, to which the Planning Commission would be the executive arm, would prepare the ground for speedy implementation of projects, ensure interministerial coordination and apply pressure on the ministries to act.
His final words on the committee, “If we expect everything to be perfect, you can be sure that it will not be. The real issue is: on a scale of 0-10, if we don’t have a committee we will get to 5, if we have a committee we will get to 8.�