India has long been criticized for strict labour laws and burdensome business regulatory environment. This can also be easily substantiated by the fact that India is ranked 134 out of 189 economies in terms of ease of doing business by World Bank in 2014 (1). Indian labour market is subject to more than 50 central government laws and regulations that deals with range of subjects such as employment condition, social security, wages, industrial relations to name a few. As labour is a “concurrent” subject in Indian constitution, both state and central government can pass laws pertaining to this subject within their jurisdiction. As a result, there are numerous other state specific labour laws as well which varies from one state to other.
When a small Bank team, of which one of us was a member, first visited the project site in December 2004, it wasn’t exactly a picture-perfect scenario. We were deep in the Himalayas and it was the middle of winter. Barren mountainsides rose up all around us, the icy Satluj river flowed steadily down, and the wind was howling.
How could we possibly build a hydropower project in this forbidding terrain in a few years’ time? Stories of past challenges from the earlier Nathpa Jhakri project - about 15 kilometers upstream - came flooding into everyone’s mind. But failure was not an option. The Bank was reengaging in hydropower in India after a gap of more than 10 years, and a great deal was riding on each one of us.
Now, more than a decade later, we find ourselves standing before the almost-fully built Rampur powerhouse. As a wonderful coincidence, both of us happen to be present as the first of the project’s six units roars into operation and is synchronized with India’s northern power grid.
South Asia’s Commerce Ministers meet in Thimphu on July 24. Getting there would not have been easy for many of them, with no direct flights between Thimphu and four of the seven capitals. In June, when some of us convened for a regional meeting in Kathmandu, our Pakistani colleagues had to take a 20 hour flight from Karachi to Dubai in order to get to Kathmandu! This is symptomatic of the overall state of economic engagement within South Asia—in trade in goods and services, foreign direct investment and tourism.
South Asian countries’ trade policies remain inward-looking compared to other regions, and there are even bigger barriers to trade within the region. Today, South Asia today is less economically integrated than it was 50 years ago. Figure 1 below shows that intra-regional trade in South Asia accounts for less than 5 percent of total trade, lower than any other region.