Accelerating formalisation

India has become more formal job friendly with recent ESIC reforms

In 1965 Professor Milton Friedman warned India that the Mahanalobis economic model being adopted “threatens an inefficient use of capital by combining it with too little labour at one extreme and an inefficient use of labour by combining it with too little capital at the other extreme”. Unfortunately he was right; a dysfunctional labour law regime over the next 50 years ensured that most of our 6.3 crore enterprises have created informal jobs with low productivity that pay low wages. Much regulatory cholesterol still exists but last week’s repricing of health insurance premiums to reflect costs for the Employee State