Liberalization, Business-State Relations and Labour Policy in India

Abstract

India’s adoption of market reforms in 1991 signalled a major shift in its development strategy. An interventionist, inward orientation gave way to a more external outlook and a decentralized policy-making structure. Private investment displaced public investment as the engine of growth and this, in turn, had considerable consequences for the nature and content of policy making in the country. While the reforms of 1991 were far-reaching, authors such as Kohli (2004, 2006a, 2006b) and Rodrik and Subramanian (2005) suggest that the initial signs of a shift in India’s development strategy were noticeable in the 1980s. Whatever the specific timeline of India’s economic liberalization, there is little doubt that the process has had major economic and political ramifications. One area that has undergone a striking transformation since 1991 has been the relationship between the state and business. In broad terms, this chapter is an attempt to understand the evolution of business-government relations in the era of economic liberalization in India and its subsequent impact on one area of public policy — labour policy. Specifically it tries to answer the following questions: How have economic reforms affected business-state relations? What impact has this had on policy-making more generally and labour policy more specifically? What constrains corporate influence in these policy spheres and what is required to bring business preferences in line with the goal of inclusive development?