India's boom a bust for rural workers

Poor infrastructure and restrictive labour laws exacerbate rural-urban divide

Rural workers have been left out in the cold during India's economic boom, a recent report stated.

The annual Economic Survey, prepared by the Finance Ministry, found that while India's economy has grown at about eight per cent annually over the past three years, the average rural wage worker earned nearly 40 per cent less than his urban counterpart in 2004.

Unemployment, especially in villages and rural areas, has risen sharply in the past decade. In rural areas, the rates increased for males to nine per cent from 5.6 per cent and for females to 9.3 per cent from 5.6 per cent.

India needs to learn from China and bring in more flexible labour laws that would help create more jobs, the report stated. It also blamed the country's current laws that restrict workers' mobility and block new work opportunities for the increasing rural-urban divide.

To attract more foreign investors, the country needs to shore up its physical infrastructure, such as power, roads, ports and airports, and push for more liberal rules for foreign companies that want to invest in India, stated the report.

Foreign investors often complain about bureaucratic red tape and a lack of adequate infrastructure, it said. India still ranks in the bottom quarter of comparable nations in regards to the ease of doing business.

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