OECD Economic Surveys: India 2007
OECD's first economic survey of the Indian economy. It opens with a broad overview of economic developments over the past twenty years, showing how India has grown to become the third largest economy in the world. It then examines a series of specific policy areas including the unbalanced growth across states, competition policy and reforming India's product and service markets, improving the performance of labour markets, improving the financial system, improving the fiscal system, improving infrastructure, and upgrading the educational system. For each policy area, a series of recommendations is made. This book includes StatLinks, URLs linking tables and graphs to Excel® spreadsheets with the underlying data.
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Improving the performance of the labour market
Over the past decade, labour market outcomes have improved in India, with net employment rising markedly for the economy as a whole. However, these gains have arisen primarily in the unorganised and informal sectors of the economy, where productivity and wages are generally much lower than in the formal organised sector. It is only India’s organised sector that is subject to labour market regulation, and here employment has fallen. The role of employment protection legislation in affecting employment outcomes is controversial both in the OECD area and in India. This chapter looks at the impact of employment protection legislation and related regulation on the dynamics of employment in the organised sector of the economy, using newly constructed measures of national regulation and state labour reforms. We find that while reforms have taken some of the bite out of core labour laws, more comprehensive reforms are needed to address the distortions that have emerged.
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