Is India shooting itself in the foot over quotas?

New Delhi, May 1:

The Manmohan Singh government’s policies on foreign direct investment (FDI) and reservation of jobs in the private sector for the underprivileged are beginning to show signs of schizophrenia. While on the one hand the government is inviting multinational companies - ‘the B-52s of capitalism’, according to economist Jagdish Bhagwati - to invest in India, some

of its spokesmen are also arguing in favour of imposing the quota system of employment on the private sector.

Clearly, the two efforts are contradictory. It is patent enough that no investor will bring his money to India if he has to reserve jobs in his establishment for certain categories of employees belonging to the Dalits (Scheduled Castes), the Adivasis (Scheduled Tribes) and the intermediate (or backward) castes. Already the corporate leaders in India have protested against the government’s proposal, arguing that their companies will lose their competitive edge if they are compelled to employ sections of people identified by the government for preferential treatment.

As the chief economist of the Asian Development Bank, Ifzal Ali, has warned that job reservations in the private sector co-uld lead to a flight of capital and skilled labour from India. “After so long India has become a glo-bal player”, he has said. “Now why should we go back?” A possible alternative to mandatory quota system will be to introduce a programme of voluntary affirmative action by the corporate sector. Proposals to this effect have already been made.

These include special training for Dalits, Adivasis and the intermediate castes to enable them to secure employment more easily. It has also been suggested that the businessmen should procure a considerable part of their raw material and other requirements from these sections of society, thereby promoting a new generation of entrepreneurs among them. This bottom-up process of social empowerment is expected to yield better and more long-lasting results than the top-down quota system, which tends to breed a sense of complacency among the beneficiaries because of the virtually guaranteed availability of jobs. This may be the reason why there hasn’t been any marked improvement in the conditions of Dalits and tribespersons who have been enjoying reservations for half a century.

For the government and the Indian political class, however, the proposals on affirmative action do not have much appeal for they have a fairly long gestation period before their positive effects can be felt. The politicians are not willing to wait for what may prove to take five or six years or even a decade for initiatives of this nature begin to bear fruit. Instead, what they are seemingly interested in is to make a grand gesture of instant action in favour of the downtrodden in the hope of winning immediate political support from the targeted communities.

It is the same intention of quick gains that is responsible for the neglect of education at the primary level, which suffers from poor student-teacher ratio and high dropout rates. Had the political class been genuinely interested in uplifting the socially and educationally deprived, it would have paid far more attention to this sector which, in turn, would have ensured that the Dalits, tribals and the intermediate castes would not need the crutches of special treatment. But like affirmative action, educational measures at the grassroots level also take a long time to show results.

If the question of reservations in the private sector hadn’t come to the fore till now, the reason is that the Dalits and ot-her groups were absorbed in India’s vast public sector establis-hment, which functioned within the closed economy of ‘socialist’ pretensions and high tariffs. It didn’t seem to bother the political class that more th-an half of them ran at a loss, th-ereby proving to be a severe dr-ain on the exchequer. It was on-ly the balance of payments cris-is in early ‘90s caused by such ‘socialistic’ policies that forced India to open up its economy.