One of the consequences of economic liberalization in India, as elsewhere in the world, has been to encourage the informalization of labor, so that the share of organized, formal employment in the labor force as a whole has been declining (Harriss, 2010).
India’s labor laws, many conceived during British rule, have stifled manufacturing and hindered job creation. Companies with more than 100 employees must obtain government permission to fire workers, a provision that discourages companies from expanding and hiring. In 2012, about 84 percent of manufacturers in India employed fewer than 49 people, keeping a large majority of the work force in the informal sector with little job security and few benefits (16, October 2014, New York Times).
Development and Job Creation
The national program, ‘Make in India,’ is designed to transform India into a global manufacturing hub. The reforms include plans to streamline labor laws and make scrutiny of factories transparent to curb harassment by government inspectors, cut red tape, develop infrastructure and make it easier for companies to do business.
Prime Minister Narendra Modi was elected on a platform of development and job creation. “For the success of ‘Make in India,’ ease of doing business should be given priority,” said Modi at the event launch in September 2014. Labor regulations are among the biggest challenges to setting up manufacturing in India, which fell to 134th place this year in a World Bank index of countries for doing business.
Aligning India’s Labor Strategy
There is a great deal of variation in the conditions of life and labor of the Indian ‘working class,’ and it cannot be expected that a common political class consciousness can be at all easily developed (Harriss, 2010).
At the India Economic Summit (2011), delegates sought to align India’s labor strategy with the evolving global context as well as the development priorities for India and South Asia. The success of ‘Make in India’ also depends on realizing youth potential, with added improvements in the education system, infrastructural investments, and an agenda for equitable distribution of opportunities.