Evaluating the Relationship between Economic Development and Labour Legislations (India as a Case Study)

In India, there is too much pressure emanating from the labour legislations which has led to the complicated Labour regulation system. The India Legislations are viewed as a major factor that negatively affects the economic growth of India. This paper thoroughly examined the interlinkages between labour legislation and economic development for India and also the Indian States. For taking into cognizance of the regulations governing the employment and labour markets in India as well as the effectiveness of the labour legislations, the Labour Legislation Environment Index (LLEI) has been viewed in this paper. In order to evaluate the economic development of the Indian States especially in respect to labour regulations and legislations, what was applied is referred to as the Economic Freedom Index (EFI). The outcomes of this evaluation attest to the availability of the optimistic connection between economic development and the labour legislation environment. Also, the perspective of entrepreneurs has been accounted in this research through the regulation of Business and Labour Index (RBLI) which entails the extent of freedom benefitted by the entrepreneurs in carrying out their businesses. The Pearson’s Correlation Coefficient value of 0.86 between the Regulation of Business and Labour Index (RBLI) and the Labour Legislation Environment Index (LLEI) values attests that all the states where labour regulatory system is effective, the entrepreneurs index referred to as the Country Economic Prudence and Performance Indicator (CEPPI) has been aggregated for India entailing the economic position of the country. At the ending aspect of the analysis, a Composite Index of Development known as the (CID) has been aggregated for most Indian States which also capture other significant connection between the Economic Freedom Index (EFI) and the Composite Index of Development (CID) of the Indian States and has also been further evaluated with the major issue of discovering if the states possessing general development are really well off or not in respect of the economic liberty. Gujarat, Tamil Nadu, Himachal Pradesh and Haryana are the states that applied a maximum value of Composite Index Development (CID) and also a maximum Economic Freedom Index (EFI) value

Keywords: Economic Development, Labour Legislation, Labour Legislation Environment Index, Economic Freedom, Regulation of Business and Labour Index