This essay makes a comparative assessment of labour institutions of China and India. China's drastic labour reforms were to some extent necessary for the creation of a free labour market, which then allowed unfettered industrial growth and rapid employment, although they also led to some adverse effects on income distribution and industrial relations. In contrast, India's inability and reluctance to reform its rigid labour laws might have significantly depleted the favourable effects of industrial deregulation in the organised sector. It remains to be seen how Indian investors cope with the old labour laws in a new economic environment.
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