Local quota in the private sector

Syllabus: GS Paper 2 – Government Policies and Interventions for Development in various sectors and Issues arising out of their Design and Implementation.

Context: Punjab and Haryana High Court invalidated the legislation enacted by the Haryana government, which aimed to secure a 75% reservation in private sector employment for the state’s residents.

Source: The Hindu | Editorial dated 18 November 2023

Reservation in India

• Reservation is an affirmative action process addressing historical injustices in education, scholarship, and employment.
• Its purpose in India is to offer equal opportunities, social improvement, and economic prosperity to those historically disadvantaged section of population.
• Reservations cover areas such as legislative seats, government positions, and admissions to higher educational institutions.
• Initially, post-independence, reservations were limited to Scheduled Castes (SCs) and Scheduled Tribes (STs).
• Constitutional amendments later granted the government the authority to make specific arrangements for the social and economic advancement of the economically weaker sections.
• The original Indian Constitution only allowed legislative quotas for ten years until 1960 (Article 334), but subsequent changes extended the duration of quota reservations in legislatures.
• The Indian caste system has historically marginalized “lower castes,” hindering their growth and integration into mainstream society.
• Reservation policies aim to rectify past injustices and address the social and economic disparities caused by the caste system.
• Consequences of this historical marginalization are still evident to a significant extent in contemporary India.

Constitutional Provisions

• Preamble Emphasis:
  • The Preamble underscores the principles of “social, economic, and political justice,” striving for a society devoid of discrimination and prioritizing the well-being of its weaker members.
• Part XVI – Reservation for SC and ST:
  • Part XVI of the Constitution is dedicated to the reservation of Scheduled Castes (SC) and Scheduled Tribes (ST) in both Central and State legislatures.
• Articles 15(4) and 16(4) – Government Services Reservation:
  • These articles empower state and central governments to allocate reserved seats for members of the SC and ST communities in government services.
• Articles 330 and 332 – Parliamentary and State Legislative Representation:
  • Article 330 deals with the reservation of seats for SCs in the Parliament, while Article 332 pertains to the reservation of seats for SCs and STs in State Legislative Assemblies.
• Article 243D – Panchayat Reservation:
  • Article 243D mandates the reservation of seats for SCs and STs in every Panchayat, ensuring their representation at the grassroots level.
• Article 243T – Municipality Reservation:
  • According to Article 243T, every municipality is obligated to reserve seats for SCs and STs, ensuring their participation in local governance.
• Introduction of Article 16(4A):
  • Parliament has introduced Article 16(4A), empowering the state to implement reservation in promotions, specifically in favor of Scheduled Castes (SCs) and Scheduled Tribes (STs).
• Introduction of Article 15(5):
  • The 93rd Amendment Act, 2005 introduced Article 15(5) into the constitution. Which empowered the state to enact laws reserving seats for backward classes of citizens in educational institutions.
• Introduction of Article 15(4) and Article 16(4):
  • The 103rd Constitutional Amendment Act, 2019 introduced Article 15(4) and Article 16(4) into the constitution. empowered the state to enact laws providing 10% reservation in jobs and admissions in educational institutions for Economically Weaker Sections (EWS).

Reservation in Private Sector

• Haryana State Employment of Local Candidates Act, 2020:
  • Enacted by Haryana in early 2022, this act mandates job reservation in the private sector, reserving 75% of jobs with monthly salaries up to Rs. 30,000 for local candidates.
    • Applicable to firms with 10 or more employees, the act requires them to reserve the specified percentage of jobs for candidates with domicile in the state.
    • Employers falling under the ambit of this act must register all employees earning a gross monthly salary or wages not exceeding Rs. 30,000 on the designated portal accessible through the official website of the Labour Department, Haryana.
• Similar Initiatives in Other States:
  • Other states, such as Andhra Pradesh, Madhya Pradesh, and Jharkhand, have also introduced job reservation bills or laws, aiming to reserve a significant portion of private jobs for local residents.
  • In Andhra Pradesh, the Legislative Assembly passed a job quota bill in 2019, similarly reserving three-fourths of private jobs for local candidates.

Benefit of Private Reservation

• Article 16 of the Indian Constitution doesn’t prohibit domicile-based reservation, making it constitutionally valid.
• Private sector reservations create new employment opportunities for a large number of young individuals.
• Implementation of such provisions can help overcome setbacks like recent stagflation, fostering development and uplifting infrastructure.
• Higher employment levels boost the morale of citizens, particularly benefiting unemployed youth by providing incentives.
• Hiring local individuals encourages spending within the local economy, fostering job creation and economic growth.
• The legislation discourages the influx of migrants seeking low-paid jobs, preventing strain on local infrastructure and the proliferation of slums.
• The policy ensures the elimination of inherent biases in the corporate sector against minorities and Dalits, promoting fairness in employment.
• Domicile reservations support individuals who prefer jobs over farming, addressing the scarcity of private sector employment opportunities.
• Local employees are likely more familiar with the local language, culture, and business environment, contributing to enhanced productivity and efficiency in the workplace.

Challenges of Local Reservation

• Unconstitutional: Reservation in the private sector is argued to be unconstitutional, as it allegedly violates the Right to Equality (Article 14), Right to Practise any Profession or Occupation (Article 19), and Right to Livelihood (Article 21) under the Indian Constitution.
• Impact on investment: The example of Haryana shows that local reservation laws can have a detrimental impact on investment. In 2022, Haryana witnessed a 30% decline in investments, causing it to drop from the ninth-best state for new investment projects to the 13th rank in 2022-23.
• Harmful to the business environment: Implementation of reservation policies is seen as harmful to the business environment, contradicting government initiatives aimed at improving the ease of doing business.
• Skilled professionals: Imposing reservations on gig and platform companies could lead to a severe talent crunch, impacting the availability of skilled professionals in various industries.
• Equality and brotherhood: Reservation in favor of the local population is argued to undermine core values of “equality and brotherhood,” potentially creating tensions between locals and migrants. This, in turn, is seen as a threat to the peace and security of society
• Freedom of employers: Critics argue that reservation policies infringe on the freedom of employers to select the most qualified candidates based on merit.

“Sons of the Soil” Doctrine

• Historical Context:
  • Domicile politics, often referred to as “Sons of the Soil,” has a long history in India, and Haryana’s recent enactment is not unique.
  • The concept of “sons of the soil” or nativist movements gained prominence in the 1960s and 1970s in certain regions of India.
  • States like Maharashtra, Andhra Pradesh, Karnataka, and Madhya Pradesh have previously introduced laws favoring locals in private job preferences.
• Definition:
  • The “Son of the Soil” doctrine asserts that a state explicitly belongs to the main linguistic group inhabiting it, emphasizing the rights of local residents or the “sons of the soil.”
• Reasons Behind the Doctrine:
  • Cultural Prejudice:
    • Nativist movements often stem from cultural prejudice. The more ethnically or culturally dissimilar immigrant populations are perceived, the stronger the opposition tends to be.
  • Economic Model Challenges:
    • Insufficient employment opportunities generated by the Indian economic model contribute to the rise of nativist movements. The competition for jobs becomes a pressing issue.
  • Rising Aspirations:
    • The increasing aspirations of the local middle class play a role in fostering support for “son of the soil” ideologies.
  • Politically Driven Consolidation:
    • Politicians with vested interests use the “sons of the soil” narrative to consolidate their voting base. An example is the Shiv Sena in Maharashtra, employing this approach for political gains.
    • The “Son of the Soil” doctrine, fueled by cultural, economic, and political factors, has manifested through nativist movements, reflecting the complexities of identity, economic challenges, and political strategies in various regions of India.

The Supreme Court Interventions

• Supreme Court Ruling (2002):
  • In 2002, the Supreme Court declared that giving preference to applicants from a specific region of Rajasthan for government teacher appointments was unconstitutional.
  • The ruling emphasized that reservations should be based on backward classes rather than solely on residence or domicile.
• Andhra Pradesh Rules Struck Down (1995):
  • In 1995, rules in Andhra Pradesh that favored candidates who had studied in the Telugu medium were invalidated.
  • The reason cited was that such preferences were deemed discriminatory against more meritorious candidates, reinforcing the principle that selection criteria should be based on merit rather than regional or linguistic factors.

What Must Be the Way Forward

• Balanced Implementation: Implement reservations without hindering free movement, striking a balance in regional considerations.
• Periodic Reevaluation: Regularly reassess reservation impact, allowing for adjustments based on evolving needs.
• Constitutional Compliance: Ensure policies align with the Constitution, safeguarding citizens’ fundamental rights.
• Addressing Root Causes: Tackle unemployment by investing in health, education, and skill development for sustainable job growth.
• Long-Term Solutions: Prioritize skilling programs, incentives for local hiring, and need-based reservations over blanket approaches.
• Review Mechanism: Establish ongoing reviews to gauge reservation scheme effectiveness and relevance.
• Skill Development Focus: Emphasize skilling programs to enhance local youth competitiveness in the labor force.
• Incentives for Companies: Introduce company incentives for hiring locally, fostering collaboration with communities.
• Economic Recovery Emphasis: Focus on economic recovery, attracting investments for sustainable job creation.
• Competitiveness in Free Market: Foster an environment supporting skill development, education, and ease of doing business to enhance local competitiveness.