The Organisation of Economic Cooperation and Development (OECD) said on Friday that India must liberalise its labour laws as well as remove infrastructure bottlenecks before it can regain economic growth.
In its latest study, 'Going for Growth', the group of economically developed countries said momentum on reforms in India had slowed in the aftermath of the 1998 global financial crisis.
In a press conference in Sydney, the OECD further said India needs to address its infrastructure shortfalls and pervasive state control in business activities, among other things, to maintain robust growth.
"To maintain robust growth, India needs to address its infrastructure shortfalls, pervasive state control in business activities and unequal access to quality education.
"It also needs to reconsider overly stringent labour regulations, which hinder job creation in the formal sector and leave most workers with no formal labour contract and social coverage," the OECD said.
The OECD said the global economic crisis dented potential growth of many advanced economies, while some emerging economies are running into bottlenecks.
"A return to healthy and sustainable growth calls for ambitious and comprehensive structural reforms, covering a broad range of policy areas," it said.
In emerging economies, the OECD said policy priorities should include improving access to quality education, addressing physical and legal infrastructure bottlenecks and bringing more workers into formal-sector employment.
The OECD also warned that the world needs to boost productivity and lower trade barriers to avoid a new era of slow growth.