India Aims To Boost Manufacturing Growth

Government eyes more flexible labor laws, greater investment.

NEW DELHI (AP) - India's government may consider more flexible labor laws and increased investment in infrastructure projects to boost economic growth, the finance minister said Wednesday.

Finance Minister P. Chidambaram also said the government may boost the development of skilled labor and give incentives to labor-intensive industries to raise the country's manufacturing growth rate to 12 percent annually from 9 percent last year.

The government says higher manufacturing growth is necessary to increase India's annual economic expansion to 10 percent from an average of 8.1 percent over the past three years and significantly reduce poverty. Nearly 400 million Indians live on less than a dollar a day.

Chidambaram's comments came in response to proposals by business leaders at a meeting Wednesday that included loosening up India's rigid labor laws to allow businesses to fire workers more easily.

''Many of the suggestions are very valuable. Of course, they will require study and further consultations within the government,'' he told reporters.

India's economy is among the world's fastest growing, but experts say the government must further deregulate the economy and embark on massive public investment in infrastructure to sustain or raise growth.

Businesses complain that India's rigid labor laws are biased against employers and often prevent them from making high-risk investments. But moves to change the laws have been resisted by leftist groups and some political parties, whose support is crucial to the governing coalition's parliamentary majority.

Chidambaram said the government may also investigate providing incentives for industries such as footwear and textiles that employ a large number of people.