India Markets open in 5 hrs 42 mins

Private sector quotas start, MP sets the ball rolling

The Financial Express
Private sector quotas, government jobs, caste based reservations, private sector, MSME, EWS upper-castes, Maratha quota, Indra Sawhney judgmen

Given how government jobs are either declining or growing very slowly, a large number of politicians have been keen to introduce caste-based reservations in the private sector, both in education as well as in jobs. Fortunately, however, better sense has prevailed and, at least so far, there has been no reservation; in all probability, the fear was that the courts would strike it down as being unconstitutional since the government doesn't fund the private sector. The first step towards such quotas, albeit a bit hesitant, however, appears to have been taken in Madhya Pradesh. Like many other states, Madhya Pradesh's policy on MSMEs that avail of some government benefit, like low-cost land or some tax-holiday, requires that the bulk of jobs (in this case, 70%) be reserved for locals; whether this can actually be implemented, though, is a different question. In the case of Gujarat, despite having an 85% reservation for locals, there is a very large proportion of migrant workers in many industries.

What makes the Madhya Pradesh policy different, a report in The Indian Express points out, is that the MSMEs that get these benefits must also ensure that SC/ST/OBCs get representation; the policy does not mention any reservations for the EWS upper-castes, though. It is, however, not clear how stringently this provision will be implemented, and how much time local firms will get to implement it in full.

What is clear, though, is that this is the thin end of the wedge, and over time, other states could also start implementing such a policy. In the case of farm loan waivers, for instance, once prime minister Narendra Modi promised these in the run-up to the Uttar Pradesh assembly poll, it was followed by a rash of similar promises by other states. And, in the case of quotas, while a 50% ceiling that emanated from the Indra Sawhney judgment was taken to be the laxman rekha for decades, once states like Maharashtra came up with a Maratha quota, other states ended up following suit; Madhya Pradesh raised the OBC quota from 14% to 27% some months ago. Indeed, by introducing the 10% quota for economically weak upper castes, the central government, too, decided to ignore the cap prescribed by the Indra Sawhney judgment. Put another way, there is nothing to stop the spread of a bad idea. That is why, it is very important that this new law be challenged at the earliest since the boundaries of reservations are constantly being tested; sadly, the courts have not resisted this. Indeed, they have aided the spread of reservation-in the case of reservations in promotions or in higher education, for instance-on many occasions.