 "'Manufacturing stagnates due to strange labour laws'")
"India's manufacturing sector has stagnated because we have very peculiar structural labour laws. Flexible labour laws will help both organised and unorganised sector," Desai said at an event on Friday.
India's biggest failure in terms of growth has been its failure in increasing manufacturing growth, he said.
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The manufacturing sector has stagnated at about 16 per cent of the Gross Domestic Product (GDP), with India's share in the global manufacturing at only 1.8 per cent, according to Planning Commission data.
This is in stark contrast to the experience of other Asian nations at similar stages of economic development, particularly China, where manufacturing constitutes 34 per cent of GDP and 13.7 per cent of world manufacturing - up from 2.9 per cent in 1991.
Desai further stressed upon the need to move at least half of the rural population out of rural areas to increase productivity of labour force.
"Productivity gap between agriculture and services is 1:9. The only way we can remove poverty is by increasing productivity of our labour force. 60 per cent of our population is in rural areas. So we must move at least half of our rural population out of rural areas," he said.
Labour reforms have been pending in India for long. Amendments to various laws have been awaiting parliamentary approval.
India has a plethora of labour laws dealing with trade unions, provident funds, industrial disputes and industrial establishments.
The country's economic growth rate, meanwhile, has fallen to a decade low of 4.5 per cent in 2012-13.
As per the estimates of Central Statistical Organisation, the economy is likely to grow by 4.9 per cent in the current fiscal, ending March 31.