'Govt for labour reforms but not hire-and-fire'

The UPA government wants labour reforms but is not in favour of hire-and-fire policy, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today.

Addressing a seminar organised by the All India Trade Union Congress (AITUC) here, he said rigidities in labour laws was affecting the job market and raising the production cost of companies, especially in the manufacturing sector.

"We have categorically said that we are not in favour of hire-and-fire. There should be some flexibility in labour laws. We need to find a consensus," he said. This, he added, was all the more necesary because only 8 per cent workforce in the country was part of the trade unions.

MP and former RBI governor Bimal Jalan said there was a need to change the focus of the Budget from taxation to other issues like power and infrastructure. To this end, the government should stabilise all tax rates for a fixed number of years, he said.

"Remove the distinction between Plan and non-Plan and let's talk about capital expenditure. Let the Planning Commission concentrate on creation of assets," he said.

Pointing out disparities in the taxation system, Jalan said a citizen earning Rs 10 crore a month might not have to pay taxes while another earning Rs 10,000 a month might have to.

"All depends on the source of income...Why don't you enumerate one priciple that the tax will be the same for everyone," said Jalan.

CII Infrastructure Committee Chairman Vinayak Chatterjee made a strong case for investment in infrastructure "China invests 11 per cent of the GDP in infrastructure and India just 3.5 to 5 per cent. What bothers us the most is the infrastructure," he said.

Making a case for more planning, he said, "This nation seems to run without any capital plan."

Chatterjee sought to "dispel the notion" that private investment in infrastructure was privatisation "Don't confuse private capital and private technology with privatisation," he said.

Economist Professor Prabhat Patnaik questioned the direction of economic policy. "It exposes the peasantry to world prices. Per capita income of agriculture-dependents has gone up by five per cent in the nine years till 2003-04 which means virtual stagnation. Per capita foodgrain absorption is the same as in 1945," he said.