Economics India

Saturday, April 08, 2006

Quotas for Private Sector & Government Supported Educational Institutions such IITs? A Politically Cautious Debate Underway

On eve of elections in some states, UPA government ministers are making promises to voters that they would propose a Constitutional amendment to require the private sector to introduce job reservations for scheduled castes, scheduled tribes and other backward classes, which currently enjoy such privileges mainly in government organizations and public sector institutions.

The Constitutional provisions that reserve jobs to scheduled castes, scheduled tribes and other backward classes in the government sector for the past over five decades were intended to reduce, if not end, the social discrimination contributed by the age-old caste system on the basis of which the Indian society was organized for the past over five thousand years. Remarkably, the country has made much progress in this area in a relatively short period of fifty years -- the UPA government now wants to deepen the process by extending job reservations to private secotr organizations.

Initially, UPA government was talking about requiring the private sector to implement job quotas for ST/SC and backward classes on a voluntary basis – but now it wants to pass a Constitutionnal amendment to enforce the quotas--- looks like even in educational institutions which received government aid, like IITs which currently admit students only on a competitive basis. The Law Ministry in the UPA government has recently announced that it does not agree with India's Attorney General’s view that there is no room in the Constitution for getting the private sector to implement quotas.

There is much debate going on in the country on this sensitive issue – but most political parties especially those not participating in the UPA government remaining very guarded – they surely would not openly oppose this move publicly. It seems that the question whether the “private sector” could legally be forced to implement a reservation policy as dicated by the government, will go to the Supreme Court to determine its constitutionality! Yes, the Constitution can be amended provide UPA government secures at least two-thirds majority at the center.

Meanwhile, at least on the question of reservation of seats in government-supported educational institutions like IITs, BJP has taken a position that this will discourage merit and damage India's reputation as a talent hub. One of the BJP Vice-Presidents is reported to have said that "India has world-class merit, especially in science and technology, but the UPA's reservation proposals, which are nothing but manifestation of the Congress-led government's 'great' appeasement policy, will just damage India's reputation as a talent hub and discourage merit". This is indeed a bold statement for BJP to make at a time when there is much erosion in the support it enjoys.

Let us watch what how India's social scientists and economists say on this issue ... usually as the experience goes, they will also tend to be "cautious" --- with their characteristic “intellectual integrity” often failing them! The private sector believes that while the quota system may have certain social benefits, it will certainly affect its "efficiency" -- a cost to be borne by the society in general and the owners/investers in particular. The issues involved are highly complex and politically sensistive -- far greater that what one sees in the case of Affirmative Action Programs in U. S. A.


  • Quotas for the private sector: Is this a regressive or progressive policy?

    India's labor policy is already regressive in many ways --introducing job quotas in the private sector will be something like adding a last straw on the camel's back at a time when India's economy is beginning to grow at a reasonable rate -- higher than the traditional Hindu growth rate of 4%!

    However, for the affected communities who claim that they are being left behind due to social discrimination, job quotas may indeed be a sign of social progress and more equitable growth!!

    It seems India is not yet ready for true "market clearing" mechanisms which means that economic growth will continue to remain constrained on this account.

    To improve labor productivity, India must soon implement broader labor policy reforms that will allow performance based hire and fire policy -- which will alone will help eliminate the adverse impacts of quota-based job policy on the economy, while improving its social fabric.

    For this to happen, India would a need social safety net that will provide unemployment allowances to all -- both rural and urban labor.

    The recently launched Rural Employment Guarantee Scheme is a good beginning -- gradually, this scheme would need to expand to provide more benefits and cover urban labor.

    By Anonymous Anonymous, at 4:56 AM  

  • I do not understand what is wrong with increasing the quota from say the present level of 22.5% to 45% for minorities? I agree with the view of the anon.

    By Anonymous Anonymous, at 5:18 AM  

  • This comment has been removed by a blog administrator.

    By Blogger Ramesh G. Deshpande, at 9:24 AM  

  • You will appreciate the problems with the reservation policy in educational institutions when your son/daughter eligible for admission to an IIT on the basis merit is denied admission for the reason that 50% of the seats are taken by candidates who are eligible on the basis of caste but not necessarily on merit. This appreciation will be more when you have no money to send your kid to a private school or abroad. What is the difference between a poor child born in say brahmin community and a poor child born in other castes? Poverty hurts all equally irrespective of their caste --- then why unequal treatment that disregards merit as detemined by common objective tests?

    After 50 years of independence during which period some four generations have received the preferred treatment, time has come to get rid of special treatments to so-called backward communities -- otherwise they will never come out of this habit of receiving special treatments. This nonsense must stop as soon as possible.

    Instead of giving special treatment to some castes, why not abolish all castes in law so that no one has to even mention in the job/school admissions, to which caste he/she belongs? By creating new distortions, the government seems to be perpetuating the caste system that has riddled the society for long --enough is enough!

    When Mahatma Gandhi called the "untochables" as Harijans -- Veer Savarkar appealed him not to do so saying that all people are "Harijans" and instead asked him to support total abolition of the caste system by law. The polliticians in India are exploiting the caste system for their own benefit and not helping the real victims of poverty -- which could happen to be in any community. Any government assistance should be need-based including the use of Affirmative Actions!!

    By Anonymous Anonymous, at 9:42 AM  

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