Indian businesses are held back by an irrational fear of worker strikes

Source: The post Indian businesses are held back by an irrational fear of worker strikes has been created, based on the article “Do It The French Way” published in “ The Times of India” on 31st August 2024

UPSC Syllabus Topic: GS Paper 3- Economy

Context: The article argues that India’s private sector is hindered by an irrational fear of worker strikes, despite their rarity. It suggests that a strong, efficient public sector could dispel this fear and encourage private investment, drawing inspiration from successful post-WWII French models.

What is Holding Back Indian Businesses?

1. Indian businesses are hesitant to invest and expand due to a fear of worker strikes.
2. Despite data showing a significant decrease in strikes—only 34 in 2022 compared to 318 a decade ago—this fear persists.
3. This is much lower than in countries like Germany and the UK, which experienced 1,532 and 749 strikes respectively in the same year.

How Do Cultural Fears Impact Business Practices?

1. Cultural beliefs and fears influence Indian businesses to remain small and avoid expanding beyond certain limits.
2. In 2021-22, 79.2% of organized factories employed fewer than 100 workers. This limits productivity and reduces the potential for job creation in India.
3. This mindset is compared to historical fears, such as European colonials fearing indigenous rituals. Indian companies often stay small to easily navigate labor laws and avoid unionization.

What Should be Done?

1. Inspire Confidence through Public Sector: The public sector should set an example by creating efficient, quality-focused enterprises. This can help inspire the private sector to shed its fears and invest.
2. Learn from France’s Model: After World War II, France used its public sector to drive quality and efficiency, leading to rapid economic growth. India can replicate this by utilizing its highly qualified personnel.
3. Encourage Private Sector Growth: Once the public sector demonstrates success, private companies may be more willing to expand, hire more workers, and invest in research and development.

Question for practice:

Discuss how cultural fears and misconceptions impact the growth and expansion of Indian businesses, and what steps can be taken to overcome these challenges.