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Reform labour laws to enhance ease of doing business, create jobs: Survey

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Reform labour laws to enhance ease of doing business, create jobs: Survey

NEW DELHI: Flexible labour laws will allow firms to grow larger and reap economies of scale, raise productivity, create jobs and spur higher growth, a survey of companies by NITI Aayog and IDFC institute showed on Monday.

"Reforming labour laws and achieving greater flexibility in their implementation can greatly help enhance the ease of doing business," said the survey of 3,276 manufacturing enterprises, including 141 early stage firms. It said that firms in the labour-intensive sectors find compliance with labour-related regulations particularly onerous and this fact translates into firms avoiding labour intensive sectors.

"A large number of firms in labour intensive sectors report that finding skilled workers, hiring contract labour and firing employees was a major obstacle," the survey, which was conducted in 2016, said. It further recommended faster reforms in the power sectors, facilitatation of entry and exit of firms, levelplaying field for small and large firms, improvement in access to finance and informing firms about the improvements in ease of doing business norms.

The survey does not rank states as it focusses on specific aspects of the business environment. "Ranking, while useful, especially to foster competitive federalism, may mask the reasons behind the outcome," sources said. According to the survey, on an average it took enterprises about two years to resolve a legal dispute and there is wide disparity across states. On an average, firms faced around 46 hours of power shortage in a typical month. It took firms 118 days to set up a business. The World Bank's Doing Business survey shows that it takes 26 days to set up a business but this is restricted to Delhi and Mumbai.

The survey showed that enterprises in high-growth states are significantly less likely to report major or very severe obsta cles in land, construction-related approvals, environmental approvals and water and sanitation availability relative to enterprises in low-growth states. Firms located in highgrowth states also report 25% less power shortages in a typical month, compared to firms in low-growth states.

Source: The Times of India

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