This is a direct consequence of India’s labor laws. Why would I hire labor when I can substitute it with capital and not have to put up with draconian requirements?

India’s labor laws are among the stringest in the worls, on par with Germany and France. US is by and large “at will employment” country.

Only 8% of the Indians are in the formal economy, it is for their benefit and protections these laws were designed. Other 92% can go go hell!

Indian politicians rail about jobless growth or ‘non inclusive’ growth all the time, not realizing that capital and labor are interchangeable. When capital is freed, as happened in 1991, and labor laws keep labor under tight control, rational entrepreneurs take the cue and use capital instead of labor.




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