The World Bank has praised India for its rapid economic growth but was critical of the country's labour laws, caste system, gender inequality and imperfections in capital market that were widening inequality.
"The best available estimates suggest that inequality in India has been rising, but with no solid assessment of by how much," the World Development Report, titled Inequality and Development, said.
Pitching for labour reforms, the report said: "Poorly designed or inappropriate government intervention can also be inefficient and bad for long-term growth."
Referring to labour laws envisaged in Industrial Disputes Act of 1947, it said: "States that amended the legislation in the direction of reinforcing security rights of workers and other pro-labour measures had lower output and productivity growth in manufacturing sector than those who did not change it or made it more flexible."
"Relatively protective legislation may have reduced opportunities for workers -- especially the majority without a formal sector job," it said.
People belonging to the scheduled castes in India have low chances of mobility in a village of rural India, it said.
Pointing to gender ininequality, it said: "Certain areas of rural China and northwest India, the opportunity itself depends on one predetermined characteristic -- sex. These regions have significantly more infant boys than girls because of sex-selective abortion and differential care after birth."
Stressing on "level playing field in both politics and economics" of developing countries, it said greater inequality can underpin faster growth.
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