Moneycontrol
Nov 07, 2017 06:58 PM IST | Source: Moneycontrol.com

Reservation in private sector – an idea that needs a quiet burial

Making the private sector players recruit people based on the family into which they are born interferes with rights of the entrepreneur to choose the person he wants to work with.

Shishir Asthana

This debate refuses to die down. With the country always on election mode politician of all shades have kept the fire of reservation and quota burning.

With public sector companies either closing down, being sold off or simply getting wiser by stopping recruitment, few jobs are created in the public sector. Not happy by keeping deserving students away from low priced government educational institutions, politicians now want to exploit the private sector to help them in handling their dole and keep their vote bank satisfied.

This time around Chief Minister of Bihar, Nitish Kumar, has taken the initiative in raising the bogey of reservation. Defending his decision of providing reservation in jobs that are outsourced by the state government Nitish Kumar added that he was in favour of reservation for backward classes in private sector jobs.

Nitish Kumar said: “It is our personal opinion that existing provisions of reservation should be extended in private sector also. But there should be a debate on the issue at the national level. A final decision on the issue will be taken by the Parliament."

Politicians have for a long time wanted to have an influence on the private sector for personal gain – monetary or political. Projects have been cleared to ‘help’ the private sector in the politician’s constituency or banks have been nudged to extend loans to certain companies. A substantial portion of the current non-performing assets (NPAs) in the banking system is on account of political benevolence.

But private sector has, thankfully, been spared from reservations. While there is a strong case for reservation based on economic condition a blanket extension to all backward classes based on their caste or religion that too in the private sector is uncalled for.

In any case, the private sector does more than its share of lifting. Subject to a series of direct and indirect taxes from state and central government plus various surcharges on the taxes the private sector is already burdened with various levies.

As if the taxes were not enough government in the last few years have asked companies to spend a portion of their profit on corporate social responsibility (CSR). In other words, they are being asked to do government’s job of improving the living standards of the population.

The current demand is to block a portion of the jobs for the backward class. Already, companies that are setting up plants employ locals on whose land the plants are being constructed, thereby satisfying the local quota obligation. Making the private sector players recruit people based on the family into which they are born interferes with rights of the entrepreneur to choose the person he wants to work with.

Unfortunately, reservation is now being looked as a birth-right by many groups. Patels in Gujarat and Marathas in Maharashtra have through their numbers demonstrated that they can compel any government according to their will.

At a time when upgrading oneself to a higher strata of society is the norm globally, it is bewildering to see groups want to be classified as backward in India.

Reservations based on caste and religion is an idea which is surviving way past its sell-by date. Post-independence, four generations of people of backward caste have enjoyed preferential treatment. Even within these castes there are economically challenged people who are unable to enjoy the benefits of reservations. Further, there are many vacancies in the government organization that cannot be filled because they cannot find the right ‘backward candidate’ for whom the seat is reserved.

There was a solid reason for reservation in the early years of independence. However, like all well-meaning policies, this too got exploited with politicians adding their own group of people based on caste to the list of backward communities.

Arm-twisting private sector players to employ people through reservation will impact their freedom of operation. Government is talking about ease of doing business and bringing in labour reforms. Under such a situation taking away partial rights of companies to select their candidates will be a jolt to good work done.

Private sector players are reluctant to invest in the country over the last few years. Such policies on employment will help them firm up their decision of not investing.

Nitish Kumar, however, is right on one count. There needs to be a debate on the reservation, but not for extending it to the private sector but to rein in reservations so that deserving students and candidates of future generations do not have to migrate in order to secure better prospects.

Since the government is taking steps to pass on benefits directly to the targeted audience through various programmes like Direct Benefit Transfer (DBT) it is time to pass on the benefits of reservation to the economically backward class irrespective of their caste or religion.

For more research articles, visit our Moneycontrol Research Page.

tags #Economy

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