State intervention and labour market in India: issues and options

State interventions into Labour policies in India are directed towards ensuring both job security and income security. In this paper we look at likely impact of such policies. The laws are found to serve the organised workers primarily while large masses of unorganised workers are without any security. To escape legislations, employers have substituted labour by capital, hired casual workers, and set up ancillary units. Consequently, output elasticity of employment has consistently declined and there is marked casualisation of workforce. Legislations have thus institutionalised and perpetuated labour market dualism. Reforms herein are necessary but should be implemented in a careful and phased manner to avoid deteriorating conditions in both the sectors in the name of uniformity. Linking retrenchment with Area Regeneration Programmes; upgrading employability quotient through training; allowing employers to transfer workers between units; providing easy credit and technical consultancy; and cooperative formation would help the workers.