COCHIN, 19 January 2003 — Prime Minister Atal Behari Vajpayee said yesterday his government was committed to accelerating economic growth and urged the states to speed up the process.
Vajpayee, in a speech to the Global Investor Meet (GIM) here in the southern state of Kerala, said strikes against reforms were harming the economy. "While workers’ interests should certainly be protected, is it in workers’ or the states’ interest to discourage investors through frequent strikes?" Vajpayee asked.
Vajpayee said the reforms that New Delhi was trying to implement were the outcome of "a well considered" and "long term strategy" to tap the country’s immense resources and talents.
"Let there be no doubt that our objectives continue to be the removal of poverty, employment generation, environmental protection and social and economic justice," he said.
But to achieve these objectives, India needs to accelerate economic growth and the key to this is increasing the competitiveness of industries and businesses with global standards by providing a conducive climate to investors, the prime minister said.
India introduced economic reforms in 1991 but the pace of implementation has been slow.
Contentious issues, like privatization of state-run units and labor reforms, have met with stiff resistance from within and outside India’s ruling coalition.
The government has only managed to raise 50 billion rupees ($1 billion) from privatization in the current year against a targeted 120 billion rupees from the proposed sale of stakes in 27 state firms.
India has attracted foreign direct investment worth just $23.7 billion since it embarked on its policy of liberalization in 1991 — roughly the same amount China received in a six-month period in 1999.
India’s low labor cost advantage is being whittled away by the fact that a strong trade union movement in the country makes it near impossible to retrench workers on a large scale.
In February this year, the Cabinet said it wanted to amend a 54-year-old industrial employment law and give employers the right to dismiss workers without government approval.
Industrial establishments employing less than 1,000 workers would be able to lay off staff or carry out closures without prior government permission, raising the threshold from 100 workers.
But trade unions have opposed the proposal tooth and nail. Industry experts say that with an inevitably more open trade regime, India’s salvation lies in being internationally competitive which requires sustained labor reforms.
Last year, the Planning Commission set an eight percent annual growth target until 2007. It said it was needed to lift all sections of the one billion population out of poverty.
Lauding the contributions of NRKs in the national economy, Vajpayee said: "I am amazed to know that as many as 2.5 million people from Kerala are working in different parts of the world, mostly in Gulf countries. Nearly half of the 550 billion rupees remittances from NRIs so far have come from your emigrant brothers and sisters, working as technicians, nurses, and teachers and scores of other professions."
Not only Kerala but India too has been enriched by them and earned praise for their talent and hard work, he said adding that he was also equally amazed at the paradoxes in the Kerala society. "On the one hand, your state has perhaps the oldest and strongest links with the global community. On the other, it sometimes exhibits a strange tendency to ignore the winds of change in the global as well as national economy. On the one hand, people from Kerala have shown exemplary entrepreneurship wherever they have ventured out in other parts of India and the world. On the other they do not feel inspired to invest in Kerala itself to start industrial and business ventures and create wealth and employment opportunities here," he said.
