Rigid labour laws hindering growth: Basu

World Bank chief economist Kaushik Basu on Monday made a strong pitch for easing India's rigid labour laws, saying these were hurting India's growth.

He said providing flexibility to companies in dealing with changes in demand pattern would also boost employment instead of decreasing it, especially in the organized sector.

''India's labour market is over-regulated. India's rigid labour laws are hurting India's growth ... flexible labour laws will help organised and unorganised sectors,'' Dr Basu said at a World Bank event in New Delhi to release the 'World Development Report 2013: Jobs'.

''If we will create a legal environment, there would be much demand for these workers ... so we need a regulatory framework but we need greater flexibility in the labour market. But we don't want completely free labour market,'' Basu, who earlier was chief economic advisor to India's ministry of finance, said.

The debate on amendments to the Contract Labour Act and the Industrial Disputes Act has been going on for years, but the proposals have never come even close to implementation in fear of a political backlash, especially from trade unions.

Basu's prescription is in line with the Word Development Report, which noted that accelerating urban development and increasing labour flexibility are keys to creating jobs in more productive activities, and thus sustaining growth and reducing poverty in India, especially when the working age population is increasing by seven million each year.