FE Editorial : Cast them aside
The Financial Express
Posted online: 2010-08-04 21:55:56+05:30
The latest chapter of the Indian reservation saga involves the
Department of Industrial Policy and Promotion (DIPP), under the Union
commerce and industry minister Anand Sharma, telling the corporate
sector that companies benefiting from various government incentives
may be asked to reserve about 5% of employment needs for the SCs and
STs. This development has to be seen in continuity with the common
minimum programme announced by UPA-1, wherein "a national dialogue
with all political parties, industry and other organisations" was
promised to figure out how affirmative action should be handled. Even
at that time, the industry chambers—the Confederation of Indian
Industry, the Federation of Indian Chambers of Commerce and Industry
and the Associated Chambers of Commerce—expressed scepticism about
quota legislation. And the pattern is being repeated in the present
moment, where the chambers are once again arguing that reservations in
the private sector will adversely affect merit and efficiency.
Overall, this argument goes, India's comparative advantage will take a
hit if reservations become de rigueur. We must note that the objecting
parties are not against affirmative action per se. The question is
whether transmission losses between theory and practice are worth the
gains. There is evidence suggesting that such gains will not really
outweigh the pains.
Given India's demographic prospects and growth ambitions, we know that
that urbanisation, development and skills enhancement are going to
have explosive significance. We also know that these prospects and
ambitions are being addressed via public policy. But public policy
must consider the efficiency principle as seriously as it likes to
address the equity principle. Evidence from a range of sources points
to the inefficiency of reservations from education to the labour
markets. It isn't just about standards being lowered. There is the
issue of creamy layer cornering all available benefits, and then there
is the question of whether the resulting ghettoisation is actually a
desirable goal for a modernising nation. Does it merely reinforce
caste categories instead of mitigating them? Should the government not
focus on addressing the inequalities in opportunity that arise out of
a moribund education system, at primary, secondary and tertiary
levels? The problem of differential access to education and skills
cuts across caste barriers. Reforming that system is a lot harder than
attempting populist gimmicks like job reservations. Overall, the
proposal for caste-based reservation in the private sector appears
extremely suspect.
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