CONTRACT LABOUR ACT IN INDIA: A PRAGMATIC VIEW
In order to surpass the stringent labour regulations, the industry sector in India is largely resorting to contract labourers, who are governed by the "Contract Labour Regulation and Abolition Act of 1970". A primary survey carried out in Karnataka reveals that many of the stipulations made in the Act to safeguard contract labourers are not followed in practice. It has also been felt by the workers that collusive agreement between the labour inspector, the protector of law, and the principal employer (or the contractor) has aided the violation of law. This paper discusses some of the survey findings and formulates a game theoretic model to show why it is economically optimal to collude. It also examines theoretically whether any provision of reward for the labour inspector would help to protect the law.