Labour Policy Reform and Labour Market after Economic Liberalization in India*

Dong-Hyeon Jung, Sung-Il Choi, Jun-Hyeon Cho and Ji-Yong Jang

International Area Studies Review, 2007, vol. 10, issue 2, 193-219

Abstract: In 1991, Indian government initiated economic reforms as quite revolutionary. The risks of runaway inflation and default on interest payment to foreign creditors persuaded the Government to borrow from the International Monetary Fund (IMF) and the World Bank on condition of fiscal and economic reforms. The impact of recent economic changes due to reforms on the labour market reveal a mixed picture. While the pace of employment generation picked up after the initial years of reform, the recent years have witnessed reduction in employment growth. Even the most ardent supporter of liberalization would agree that, regardless of how well a Government manages the transition from a regulated to a liberal economy its immediate impact is bad and unjust. It is bad because it reduces economic welfare and unjust because the costs of adjustment fall disproportionately on the poor. Despite liberalization of trade, industry and finance, no law relating to labour has been amended much less repealed so far. This means that the basic material conditions of labour in India will continue to be determined primarily by the macro-economic processes rather than by worker-specific legislation.

Keywords: Indian Economy; Economic Reform; Labour Policy; Labour Market (search for similar items in EconPapers)
Date: 2007
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Persistent link: https://EconPapers.repec.org/RePEc:sae:intare:v:10:y:2007:i:2:p:193-219

DOI: 10.1177/223386590701000212

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