In a bigger and bolder role as the chief economist of the World Bank, former chief economic adviser Kaushik Basu said on Monday that India needed to make contract labour easier to boost jobs, and do away with outdated laws that inhibit employers from expanding their businesses. "We should not treat it as a taboo topic," Basu said of labour laws as he spoke about the World Development Report this year, which pleads for policies to boost urban growth in small town India through better infrastructure and law and order to draw in investment.

Basu cited the example of the fashion industry, which he said is scared of hiring workers when orders were high because it would not be able to lay off workers when orders dipped.

"India is on the side of over-regulation," he said. "In the end, having greater flexibility of labour laws will benefit worker. Flexibility does not mean a right to fire as market fundamentalists think. Flexibility means allowing freedom of contract."