The Karnataka bill on private sector quotas 

The recent proposal by the Karnataka government to introduce reservations for locals in the private sector has sparked significant debate. The Karnataka State government employment of local candidates in the Industries Bill, 2024 mandates 50% reservation for locals in managerial positions and 75% in non-managerial posts. If eligible candidates are not available, the industry must train local candidates within three years and employ them. A nodal agency will be appointed to implement the law.

Chief Minister Siddaramaiah’s Congress government argues the bill is necessary to provide adequate employment opportunities to locals. A local candidate is defined as someone born in Karnataka, domiciled in the state for 15 years, and proficient in Kannada. Candidates must have a secondary school certificate with Kannada as a language or pass a Kannada proficiency test.

The bill includes penalties ranging from Rs 10,000 to Rs1 lakh for breaches and a six-month limitation period for prosecution. However, following significant backlash, the bill has been put on hold. The Karnataka cabinet will discuss the issue in detail in its next meeting to decide the future course of action.

Chief Minister Siddaramaiah stated on social media that the bill is temporarily on hold and will be revisited. While the bill aims to ensure job security for local youth, many fear its potential negative impact on the state’s and country’s overall growth. Critics draw parallels between the Mandal Commission’s impact in India and the current job quota scenario in Bangladesh, calling the bill a flawed idea.

Industry Leaders Criticize the Bill

Media reported that the top industrialists and IT firms in Karnataka have voiced concerns that the state’s proposed reservation bill could hinder industry growth, impact jobs, and force companies to relocate.

Kiran Mazumdar-Shaw, Executive Chairperson of Biocon Limited, warned against jeopardizing Karnataka’s leading position in technology. She emphasized the need for exemptions for highly skilled recruitment, stating, “As a tech hub, we need skilled talent. While the aim is to provide jobs for locals, we must not affect our leading position in technology by this move.”

PhonePe founder and CEO Sameer Nigam criticized the bill, questioning its fairness. He highlighted his own experience, stating, “My father worked in the Indian Navy and was posted all over the country. His kids don’t deserve jobs in Karnataka? I build companies and have created 25,000 jobs across India. My kids don’t deserve jobs in their home city? Shame.”

R K Misra, Co-Chairman of ASSOCHAM Karnataka and Co-Founder of YULU, also condemned the bill. He called it a “short-sighted” move that could scare away Indian IT and Global Capability Centres (GCCs), adding, “Mandate local reservation and appoint a government officer in every company to monitor. This will scare Indian IT and GCCs.”

Balancing Employment and Rights

In recent years, several states have pursued policies mandating local reservations in private-sector employment, aiming to curb unemployment among local youth and ensure they benefit from the state’s economic activities. However, these measures have sparked controversy and faced legal and social challenges, reflecting the complexity and contentious nature of such policies. Local reservation policies, while well-intentioned, are fraught with challenges.

In 2021, Haryana implemented a law requiring 75% reservation for local candidates in private sector jobs with salaries up to ₹50,000 per month. This policy aimed to address unemployment among local youth but faced stiff resistance from industry bodies. Businesses argued that the law would disrupt operations and limit the availability of skilled labour. Ultimately, the Punjab and Haryana High Court declared the act unconstitutional, citing violations of fundamental rights and constitutional morality.

Andhra Pradesh’s Employment of Local Candidates in the Industries/Factories Act, 2019, similarly reserves 75% of jobs for locals across various sectors. While intended to provide adequate employment opportunities for local youth, the law has struggled with implementation. Businesses expressed concerns about finding suitably skilled local candidates, and the legislation has faced legal challenges and delays.

Karnataka’s recent efforts to mandate local reservations follow in the footsteps of Andhra Pradesh and Haryana. However, these laws inherently discriminate among Indians, curbing the constitutionally protected freedoms to move and earn a livelihood across the country. The Punjab and Haryana High Court struck down Haryana’s law partly on these grounds, emphasizing the violation of constitutional morality and fundamental rights.

Analysts warn that the push for local reservation risks reintroducing the dreaded “inspector-raj,” where bureaucrats gain undue power to determine compliance.

While the intention behind local reservation laws is to support local employment, they often face legal, administrative, and ethical challenges. Balancing local employment needs with constitutional rights and economic efficiency remains a contentious issue in India’s policy landscape.

To understand the potential implications of the Karnataka Bill, it is essential to revisit the aftermath of the Mandal Commission report in the 1990s. Established in 1979, the Mandal Commission aimed to identify socially or educationally backward classes and recommend measures for their advancement. One of its significant recommendations was the implementation of a 27% reservation for Other Backward Classes (OBCs) in government jobs and educational institutions.

The implementation of the Mandal Commission’s recommendations, intended to address historical injustices and provide opportunities to the marginalized, led to widespread protests, social unrest, and a deeply polarized society. The immediate impact was an upheaval in the social fabric, with many upper-caste individuals feeling disenfranchised. Moreover, the focus on quotas overshadowed the need for systemic reforms in education and skill development, which are the need of the hour for sustainable upliftment.

Constitutional Provisions and Judicial Precedents

India’s Constitution enshrines several articles that frame the legal backdrop for equality, non-discrimination, and affirmative action. Article 14 ensures equality before the law and mandates that any reservation policy must be based on reasonable classification and not be arbitrary. Articles 15 and 16 prohibit discrimination based on religion, race, caste, sex, or place of birth but permit affirmative action for socially and educationally backward classes.

Article 19(1)(g) guarantees the right to practice any profession or conduct any business, with reasonable restrictions in the public interest. Article 21’s right to life includes the right to livelihood, allowing reservation policies impacting employment to be contested if they infringe on this right. Additionally, Articles 38 and 39 mandate the state to promote the welfare of the people and ensure adequate livelihood means, guiding policy formulation including reservations.

Several Supreme Court cases have shaped reservation policy interpretations. In Indra Sawhney vs Union of India (1992), the Court upheld reservations for backward classes in public employment but imposed a 50% cap and excluded the ‘creamy layer’ of economically advanced individuals. The Nagaraj vs Union of India (2006) case reaffirmed the 50% limit and the need for quantifiable data to demonstrate backwardness and inadequate representation. Pradeep Jain vs Union of India (1984) addressed domicile-based reservations in educational institutions, emphasizing minimal and necessary measures to address backwardness. These constitutional provisions and judicial precedents collectively guide the implementation of reservation policies, balancing affirmative action with the principles of equality and non-discrimination.

Short-term Political Gains vs. Long-term Growth

While the Karnataka Bill may offer short-term political gains by appealing to local sentiments, it compromises long-term economic growth. Political decisions driven by populism often overlook broader economic and societal implications. The Karnataka Bill risks repeating past mistakes, and as India marks 75 years of independence, it is crucial to move towards reducing discrimination and corruption and fostering robust job opportunities based on merit. Bill undermines meritocracy. Private enterprises need the ability to attract the best talent to remain competitive. Imposing quotas can lead to a mismatch between job requirements and employee capabilities, affecting productivity and growth.

Moreover, quotas in the private sector could exacerbate the brain drain, as talented individuals might seek opportunities abroad where merit and skills are the primary employment criteria. This exodus of skilled professionals can deprive the country of valuable human resources essential for development or the growing IT industry may shift its base to some third country.

The Way Forward: Focus on Skill Development and Education

Instead of implementing quotas, the government should prioritize skill development, education, and creating an enabling environment for businesses. Here are some recommendations:

Investing in Education: A robust education system is the cornerstone of a skilled workforce. The government should invest in improving the quality of education at all levels, ensuring that students are equipped with the knowledge and skills required for the modern job market.

 Promoting Vocational Training: Vocational training programs can bridge the gap between education and employment. By providing practical skills and hands-on experience, these programs can make the youth more employable and reduce the dependency on quotas.

Strengthening Public-Private Partnerships: Collaboration between the public and private sectors can enhance skill development initiatives. Companies can play a significant role in designing curricula, providing training, and offering internships that align with industry requirements.

Merit-based Incentives: Instead of quotas, the government could introduce merit-based incentives for companies that hire and train local talent. This approach can encourage businesses to invest in skill development while maintaining their competitive edge.

The Karnataka Bill on private sector quotas, while well-intentioned, is a misguided approach that could have far-reaching negative consequences. Drawing lessons from past experiences, and legal fallouts, it is evident that such policies can lead to social unrest, economic inefficiencies, and brain drain. Instead of resorting to quotas, the government should focus on enhancing education, promoting skill development, and fostering an environment that enables the youth to compete and excel. In doing so, we can ensure sustainable growth and development not only for Karnataka but all across the country.

 The author is National Editor

Greater Kashmir