Localised Protectionism In Private Sector Is A Flawed Idea
Affirmative action, a tool introduced to bring the most economically and
educationally backward sections at par with the rest of the population, has now
at the hands of the populist governments turned into an assurance, albeit a
false one, of a shortcut to success.
Localised protectionism , also called as sons-of-the-soil concept, underlines
the view that a state specifically belongs to the people inhabiting it who
deserves special treatment, under the garb of affirmative action.
Paramount causes for the demand of this protectionism are agricultural and
economic crisis, unequal access to resources, lack of social security net,
unemployment and iniquitous access to education.
Recently, Haryana has become the fifth state to introduce the domicile
methodology wherein the state government is to reserve 75% seats in all private
sector jobs with gross salary under Rs. 50,000 per month for locals born in the
state or living there for five years.
Rationale behind the move is to provide qualified and trained local workforce to
the employers and to tackle unemployment among locals which will further
discourage the influx of migrants seeking low-income jobs, which has a
significant impact on infrastructure leading to proliferation of the slums.
Intended objective of domicile reservation should be seen in juxtaposition with
adverse consequences that it necessarily entails.
This new law is basically an exclusion policy, which aims to exclude people
of other states , having the tendency to create social tension and disharmony
which could be dangerous to the unity of a country and could lead to
fragmentation of the society. It could lead to balkanisation of India’s labour
market in contrary to the vision of having anintegrated and mobile labour market
in the country to achieve the objective of ‘One nation, One market’ of the
It is against the spirit of competition as the industries would hinder choosing
the meritorious candidates, irrespective of the linguistic background or
domicile of the person, to comply with the rule, which would impact the
competitiveness of the state as they have to lower their hiring standards. This
would spell disaster for the state’s economic growth by affecting the ease of
doing business, as ease of recruiting talent influences the index, which would
further lead to capital flight from the state and disrupt post Covid-19 recovery
of the private sector.
Incorporating such sweeping provisions have the tendency to open a Pandora’s
box, wherein there will be no stopping other states from coming up with similar
populist policies resulting in complete chaos. On the lines of Haryana,
Jharkhand is set to pass 75% local quota in private jobs. Even political
parties campaigning in Tamil Nadu are promising slew of sops including 75% jobs
to locals in the state industrial units.
To see this from the prism of constitutional mandate, suchlaw based on
residence, cannot stand the legal scrutiny as it violates article 14 which
speaks of equality of all citizens, article 15(1) and (2) which prohibits
the state from discriminating against any citizen on the grounds of religion,
race, place of birth etc, article 16(2) which prohibits discrimination on the
grounds of place of residence in respect of employment or office under the
state, article 19(1)(e) which grants every citizen the right to reside and work
or settle in any part of the country and article 21 of the constitution which
gives right to life to every citizen of the state.
It is article 16(3) which empowers the parliament to provide domicile based
reservation in public employment and jobs with local or any other authority
under a state but state governments don’t have any such powers to pass laws
directly on domicile-based reservation. Under Article 19(1)(g), all citizens
have a fundamental right to practice any profession or to carry on any
occupation, trade or business and by mandating private institutions to employ a
certain set of candidates , this policy constricts their right to carry on their
occupation freely, which will be a major leg of challenge to the law.
Supreme Court (SC) in a catena of judgements have decried this practice of
localised protectionism. In Dr.Pradeep Jain vs Union of India (1984)
case, SC noted that to regard the individual from one state as an outsider in
other state would be to deny him his constitutional right and to derecognise the
essential unity and integrity of the country by treating it as if it were a mere
conglomeration of independent states.
Further in Kailash Chand Sharma vs. State of Rajasthan (2002), SC has
held that sweeping measures taken by the state on the considerations of localism
is not sanctioned by the constitutional mandate of equality and liable to be
rejected on the plain terms of Article 16(2) and in the light of Article 16(3).
Also, in both the judgements of Indira Sawhney vs. Union of India (1992)
and M.Nagaraj vs. Union of India (2006), SC haveunderscored that
reservation cannot exceed beyond 50% unless there are extraordinary reasons to
justify why this ceiling has to be breached. Domicile based state law of Andhra
Pradesh is already challenged in the High Court and Haryana government law
challenged by Industrial units in the High Court was allowed to be withdrawn on
the grounds that state government is yet to enforce the act.
Incentivising the industry by giving lower electricity charges, offering land
use charges and in turn asking them to invest in skill development policies for
the locals might be a better approach. States must create an ecosystem where
more investment comes and hinder creating such provision which is conceptually
flawed, having little practical value beyond political jingoism and have the
tendency of fostering and strengthening narrow parochial loyalties based on
language and residence within a state.
Written By: Ayush Sarna - Assistant Advocate General, Punjab
Law Article in India
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