Why does India Inc want changes in labour laws?

India Inc is still worried about labour laws in the country. Even OECD recommends a rationalisation of these laws if a 9% growth rate is to be attained. Such views usually make people think that there is some kind of favouritism going on towards labour. They are unable to understand that labour laws that exist today were also according to the needs of India Inc, but these needs themselves are dynamic, they change with the changes in the regime of accumulation – the way the capitalists accumulate and profit. Thus they often demand laws to be rationalised according to their dynamic needs.

Let’s see how they fare under the existing labour law administration.

India’s Minister of State for Labour and Employment, Harish Rawat informed on December 7, 2009 in a written reply in the parliament that in the year 2007-08, 39115 inspections took place in the “central sphere” (which does not include action taken by the State Governments) under various labour laws on receipt of complaints regarding their violation. These inspections led to prosecution in 65 per cent of the inspected cases (i.e. 25801 cases in absolute figures). In comparison to the previous two years, this definitely shows an increased efficiency of the labour administration, as in 2005-06 it was just 38 per cent, while in 2006-07 it was 42 per cent.

However, the revelation comes when we try to find out how many cases were resolved in favour of the workers. While in 2005-06, in 92 per cent of prosecutions the employers were found to be guilty of violation of labour laws, the figure was drastically reduced to just 42 per cent in 2006-07, and in 2007-08 it further came down to 36 per cent. This statistics gives us more – in 2005-06, only in 35 per cent of inspected cases, convictions took place, in 2006-07 it was 17 per cent and in 2007-08 it was 23 per cent.

So, what does all this imply? The capitalists are already getting what they want. But the point is that they want more. In fact, they are being quite rational and honest when they want labour laws to be rationalised – after all these laws are obviously meaningless, when they can easily flout them and remain unconvicted.


  1. instead of basing your analysis on just one reply in the lok sabha by the junior minister, it would have been better to take the key laws that india inc wants changed, one by one, and then explain the changes needed under them and state why. that would be more explicit, detailed and comprehensible.

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