Speaking at a seminar organised by FICCI here, Sinha called for bringing more flexibility in labour laws to ensure higher productivity. ``There has to be a clear-cut policy on hire and fire. The workers have to be productive. The existing laws protect the interest of labourers at the cost of productivity,'' he told reporters.

The minister also reaffirmed the government's intention to go for partial privatisation in certain areas of government organisations and invite private participation in the insurance and banking sectors as part of second generation reforms. Sinha said the government was gearing up itself for a strict financial management to minimise the fiscal deficit which was posing a great threat to the country's future. ``In all probability, the next budget is going to be azero-deficit budget,'' he said while delivering the inaugural address at the national seminar on second generation reforms.

He said the government was determined to launch the second generation reforms as the country could no longer afford to waste time. ``Initially the process may hit the people hard, but there is no alternative to it. The reforms are the only instruments through which higher growth rate can be achieved and the malaise of poverty and unemployment can be dealt with effectively,'' he observed.

Braving all the rigours, the country would have to usher in the next phase of reforms and maintain eight to ten per cent economic growth rate for the next ten to fifteen years for a prosperous future, Sinha said. "We cannot remain content with six per cent growth," he said. Replying to questions from newspersons, the finance minister said in order to downsize the workforce for more productivity, job cut was a necessity.He hinted that there could be a greater thrust on VRS in the public sectorundertakings.

He, however, hastened to add that the government attached high priority on creating more job opportunities by undertaking various projects and promoting self-employment in a large scale. Talking in favour of privatisation, he said that health of the banking sector in the country has to be improved, adding that the aggregate NPA level would have to reduced and capitalisation norms be met.

In the absence of budgetary support and market inaccessibility for weak banks, the finance minister hinted that privatisation was the only way out.

However, the opposition to privatisation is very stiff, he regretted.As regards deployment of pension funds in the capital market, Sinha said that this was a contentious issue and people should demand for better returns instead of the government interest rate. This was possible only by engaging professional fund managers for pension funds. The finance minister also sought to dispel the notion that the government was being run at the behest of multilateraldonor agencies. He said that government was not having programme with IMF or any other donor agency.