New Delhi, June 28: The World Bank today urged India to phase out the remaining limits on foreign direct investment and ease restrictions on hiring and firing of workers.

It also asked Indian educational institutes to remove bureaucratic hurdles to private sector contribution.

The bank’s advice comes at a time when the Left has put the government in the dock over divestment of public sector units, the rise in fuel prices and suggested brakes on the “privatisation of education”.

“India should attract FDI more effectively, given the importance of FDI in the generation of and dissemination of global knowledge and the role that they can have in domestic research and development,” the bank’s report said.

“This should include removing regulations on foreign investments and encouraging FDI in research and development into the country.”

The report said the measures are vital for India to succeed in the competitive global economy.

If the country wants to become the world’s third-largest economy by 2015, it must develop a system of lifelong learning, formal and informal, from childhood through retirement, the bank said.

The report, titled ‘India and the knowledge economy: Leveraging strengths and opportunities’, asked universities to strengthen their partnership with industry so that the fruits of research yield applications that give economic value.

For this to happen, the report suggested, curricula must be reformed to include the development of skills that better meet the needs of the private sector.

For instance, universities should offer flexible, cost-effective job training programmes that enable students to quickly pick up new skills ? as demanded by a changing market and new technologies ? aligned with the needs of firms.

The report urged the government to set up a national fund to support and stimulate grassroots innovations, especially those that meet the needs of the poor. These innovations must be converted into a viable business plan, particularly for job creation.

The World Bank has charted a course for India in other matters, too, saying it must address the problems in the use and transfer of land and in updating bankruptcy procedures.

The country should speed up infrastructure reforms and mobilise state governments, which are the “key to the Indian economy and its modernisation”.

The bank said India needs to further develop information, communication and telecommunication applications to bring the benefits of connectivity to rural areas.

“We are planning to have two pilot projects in India that will focus on infrastructure,” said Michael F. Carter, the bank’s country director for India. “The first pilot project would be on electronic governance and the other on the ways to provide telecommunication to rural areas.”