Thursday, March 4, 2021

Haryana - Breaking something which is working (The Haryana State Employment of Local Candidates Bill – 2020 aka Reservation in Private sector)

DLF Cyber City (courtesy: Wikipedia)
urgaon/Gurugram is one of the largest IT hubs in India. Located just 30km away from New Delhi, this city is part of the National Capital Region. The rise of Gurugram started when Maruthi Suzuki opened their plant there. A couple of decades later GE came. This was followed by DLF acquiring large swaths of land and building a modern city. Numerous companies came and set up their base or operations there. Proximity to the national capital, helped a lot in its growth.

You might be thinking why I am talking about Gurugram when the title states 'The Haryana State Employment of Local Candidates Bill'. Well, let us come to that, 

As per the 'Haryana State Employment of Local Candidates Bill',

a) 75% of jobs in the private sector, which offers a salary of less than 50,000 rupees/month, is reserved for people from the state.
b) 10% of that quota should be filled from the district where company is located.
c) Reservation is initially for a period of 10 years.
d) The rule is applicable to all companies, partnership firms, societies, trusts, limited liability partnership firms, and any person employing 10 or more people.
e) Objective is also to discourage, migrants seeking low-paid jobs.
f) Private establishments can claim exemptions if candidates of desired skills are not available. This is subjected to evaluation by a government officer.
g) Companies must register all employees who earn less than 50,000/month on a designated portal within 3 months of the bill coming into effect. 
h) Employer cannot hire a new person if this registration is not completed.  
i) Failure to provide 75% of new employment to local candidates will attract a fine between 50,000 to 2,00,000 rupees. An additional penalty of 1,000 rupees till they comply.

First, this law might not even be constitutional.

Second, Haryana and her industrial sector functioned just fine without these laws. Every state needs to reduce the unemployability rate but by generating more jobs and skilling the people; not by forcing private companies to work as government companies. Tomorrow other states can also restrict private jobs to their own domiciles; which is very much against the concept of India as a single country. Already ever-increasing percentage of reservations are depriving people of the opportunity in the government sector. The reservation was originally meant for SC and ST, who did indeed deserve that. However, nowadays every group that can assemble a bunch of people to show strength (and bring a region to stand still) demands reservation, and political parties gave in for their demand. 

A lot of people earn less than 50,000 a month. This covers most of the industrial, SME workforce. If a person likes to start an establishment of 100 people, which may make good profit using cheap migrant labour (partially) must employ 75 locals with higher wages. Probably that person might drop that idea; and we may import that item from China.  

This law also brings back the inspector raj. A government employee must certify that the company is compliant or people with the required skills are not available. This decision-making power is equivalent of giving those government servants an ATM machine. Inspector raj and license raj broke India and collapsed our economy in the past. We need to reduce the overbearing power of the government not to boost it. 

When I mentioned Gurugram, I also mentioned a lot of companies. Maruthi Suzuki was then owned by the Government of India and Suzuki Corp of Japan. GE is a US-based multinational.  Owners of DLF are from Uttar Pradesh. Other prominent companies in Gurugram Cargill India, Coca Cola, Honda, Oracle, Ericson, Pepsi, Google, Nestle, Hindustan Unilever, Reckitt Benckiser, Panasonic, Samsung, Accenture, Deloitte, KPMG, IBM, EY, Escorts Group, Hero Moto Corp, Alcatel, Sony, Whirlpool India, Bharti Telecom etc are from outside and generated a lot of opportunities for locals and provided a lot of revenue for state government. Remember a good percentage of Haryana’s revenue comes from Gurugram.


In the politically charged climate of the area, where farmer agitation is still going on this is a kind of offer to placate the people. This way government can take the easy way out; don’t have to worry about how to generate new jobs, but to take away the jobs which are already created by someone using their hard work. 75% reservation was the political promise of Jannayak Janta Party (a member of ruling BJP alliance). 

The irony of the fact is, in 2008 one of the founders of JJP, Ajay Singh Chautala (former MP and father of current Deputy Chief Minister of Haryana), and 53 others were charged in connection with the appointment of 3206 junior basic teachers in Haryana during 1999 and 2000. He and his father, Om Prakash Chautala (former Chief Minister of Haryana) was sentenced to 10 years imprisonment by a New Delhi court. The verdict was later upheld by Delhi High Court and the Supreme Court.

Reservation is a double-edged sword. It's good when applied in the right quantity for uplifting the scheduled tribes and those people who are at the bottom of the Indian social ladder and suffer just because they are born. However, providing reservations to groups, which forces the government hand for that by bringing the state to a standstill or providing it as a way to win elections has a long-term impact. Once provided, it’s not easy to take it back. 

Ironically, India is one of those rare countries where people fight for inclusion in the backward category. Bringing reservation to the private sector is not just immoral but criminal. They are already struggling under the Indian system which works extremely slow and where contract enforcement is a miracle. The state should do something for locals by generating jobs and opportunities; not by pushing people from other states away. Always remember, a huge number of companies operating in Haryana and providing jobs to locals are not from Haryana. Also, a lot of people from Haryana are working in other states and other countries. 



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