On Friday (26th July), Azad Samaj Party MP from Uttar Pradesh’s Nagina and Bhim Army Chief, Chandra Shekhar Azad introduced a private member bill in Lok Sabha to extend reservations for the SCs, STs, and OBCs in the private sector. The bill is titled, ‘The Reservation for the Scheduled Castes, the Scheduled Tribes and the Other Backward Classes in Private Sector Act, 2024’.
Currently, reservations are only applicable in the public sector and there is no reservation in the private sector. The bill proposes to change this and extend reservation benefits to the SC, ST, and OBC communities in the private sector as well.
The bill introduced by Bhim Army Chief Ravan seeks to extend reservations in the private sector, educational institutions, and other establishments that have no government financial interest and employ at least 20 people.
The bill proposes that the Central government must incentivise private sector entities to implement reservations for SCs, STs, and OBCs by giving them special concessions and facilitating lower-interest loans through nationalised banks.
It also proposes that the government should present an annual report in both houses of Parliament to highlight all actions that have been taken under the Act, in case it is passed by both houses as well as get Presidential assent.
The proposed legislation also wants to make it mandatory for the Union government to frame rules to ensure the effective implementation of the Act (if passed).
The bill claims to rely on support from Articles 16(4) and 16(4A) of the Constitution. Incidentally, the said article permits reservations in public sector undertakings (PSUs) and financial institutions receiving government grants.
In his statement of objects and reasons, the Bhim Army Chief claimed that to ensure equitable growth and socio-economic upliftment, it is imperative to have representation from all sections of the society while highlighting the importance of the private sector in nation-building.
Private Member bill
Any Member of Parliament (MP) can also introduce proposed legislation in both houses of Parliament and it is known as the Private Members’ Bill. Just like any other bill proposed by the government, a Private Member bill, to become an act, must be passed by both houses and receive Presidential assent. Notably, such bills can only be introduced and discussed on Fridays.
Yesterday (on 26th July), as many as 31 private members’ Bills were introduced in the Lok Sabha. Congress MP Shashi Tharoor also moved a private member bill seeking to reserve 10 seats in the Lok Sabha for those below 35 years of age.
Nonetheless, it is pertinent to note that while Bhim Army Chief Chandrashekhar Azad has proposed to extend reservations for SCs, STs, and OBCs in the private sector, the Congress government in Karnataka recently proposed to extend reservations in the private sector for Kannadigas. Strikingly, the Cabinet led by Chief Minister Siddaramaiah had decided to present seven bills, including 100% reservation for Kannadigas in Category C and D jobs in all private industries in the state.
However, the legislation extending reservations in the private sector for Kannadigas triggered massive opposition from top Industry leaders and within the state government, forcing the state government to halt the proposed legislation for want of ‘further discussions’.
Ramifications of reservations in the Private sector
Extending reservations, either for locals or the backward communities, in the private sector could have long-term and far-reaching consequences for the economy as well as the social fabric of the country. The proposed legislation would have a chilling effect on meritocracy, ease of doing business, and investment opportunities, as well as could lead to social unrest.
As a well-established fact, India, or any other country plagued by Licence or quota raj, witnessed sluggish growth for several decades but it has grown leaps and bounds after the economic reforms in 1991 which liberalised the economy and unshackled private sector from needless legislative compliance.
At a time when companies are opting out of China and relocating to countries that have skilled labour, stifling meritocracy for vote bank politics, and pushing reservations in the private sector would be catastrophic. This would not only be dragging India back in this highly competitive race of ‘free’ and open market access for new companies, it would be undoing the progress in economic and other key parameters of Human development post the liberalisation era.
The strength of the private sector lies in the easy and flexible accessibility of factors of production, including skilled human resources. Barring the CSR aspect, the private sector links its outcomes with high standards of performance audits. However, with reservations in the private sector and elections always around the corner, companies would face mounting pressure from the ruling party in their state of operation to not fire employees despite audit reviews, as well as to improve recruitment from the communities forming political vote bank, thus putting a constraint on their say on Human resources.
This has the potential to limit the functionality of companies causing them to find an exit route to ensure their profit margin and escape the wrath of the government’s and administration’s restrictive measures like the job quota compliance. The government/police intervention in the day-to-day functioning of the company’s operation to ensure compliance would render the companies prone to “corruption”, and “bureaucratic red-tapism”, and send the state/country back to the “License quota raj” period, pre-reform era.
Furthermore, rather than striving to build an egalitarian society and uplift marginalised society, the bill’s introduction could lead to social unrest, like the protests during the Mandal era when reservations were made applicable only in the public sector which makes up roughly around 2% of the total workforce.
