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Sweeping changes in labour laws mooted

The task force on employment has recommended the abolition of the need to seek prior permission from the government for retrenchments and lay-offs.

It has also sought a hike in compensation to workers from half-a-month's pay per year of service to one month's pay to ensure growth in employment.

Comprehensive changes in the existing labour laws were recommended as these are making India "uncompetitive in the exports as well as domestic markets".

The task force, headed by Planning Commission member Montek Singh Ahluwalia, said: "A system of short-term employment contracts should be introduced under which workers hired on contract basis can be terminated at the end of the period without scope for dispute."

The task force opined that the Industrial Disputes Act should also be amended to make a reasonable notice mandatory in all cases, it said. A strike ballot could be introduced wherein a strike is called only if it is supported by a qualifying majority of workers, it said.

The 13-member task force also suggested amendments to the Contract Labour Act for allowing all peripheral activities to be freely outsourced from specialised firms.

Stressing the need to improve the efficiency of the banking system, the task force said that competition among all categories of banks would lead to an improvement in the quality of banking sector services.

It said that competition needs to be encouraged by following suitably liberal bank licensing policies which would allow qualified private banks to expand their presence.

An important mechanism through which banks can meet the credit needs of the informal sector is by financing self-help groups, which provide micro-credit for informal sector activities, it said, adding that significant progress has been made in this area and the effort should be extended.

Referring to agriculture, it said that there is an urgent need to increase public investment in agriculture, especially in irrigation and water management.

The ability to do so is severely constrained by resource availability at the state level, it said, adding that part of the solution lies in bringing about a general improvement in the resource position of the states.

Underlining the need to extend the benefit of decontrol to agriculture, it said that the Essential Commodities Act should be repealed and restrictions on marketing of agricultural produce through Agricultural Produce Marketing Committee should be removed as they act as an impediment to the development of a national market.

The task force further said that forward trading should be allowed in agricultural products.

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