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Reservations (Affirmative Action) in India’s Private Sector

By Dweep Chanana ⋅ May 1, 2006 ⋅  Email this post ⋅ Post a comment

The caste system is well known. Less well known is the positive discrimination, in favor of the less privileged sections of society. By establishing quotas, India’s reservation system goes far beyond the American Affirmative Action. In the public sector between 50-75% of all jobs are reserved for various castes.

By some miracle, some parts of the establishment had escaped this system. The premier Indian Institutes of Technology and Indian Institutes of Management had been mostly exempt, as had been the private sector. Now,15 years after the last debate on reservations was lost by the ‘upper castes’, it has started again. The government has started calling for reservations in the private sector, as have most populist political parties. These demands are not new, but what is new is the extensive public exposure and support form political parties (not surprising).

Private companies, particularly the highly successful service companies in the IT sector have opposed the move, with some even threatening to go to court. They argue that such quotas will negatively affect their competitiveness. Yes it will, but they are wrong to use that as their argument, for then they cannot win. Here are other reasons to use:

1. Quotas do not work. In most higher education institutions, quotas remain unfilled because of a lack of candidates. Students from tribal groups often drop-out well before they can reach university level. Clearly, the primary and secondary education systems are faulty. Moreover, it is often the richest among the backward castes that use - and reuse - the quotas. They do not go to those that need them the most.
2. Providing social opportunity is the state’s responsibility, not that of the private sector. By asking companies to provide reservation, the State is essentially shoving its responsibility - of giving each citizen of India an equal education and an opportunity at social mobility - onto the private sector.

I have problems with quotas that go deeper. Quotas based on caste do not work in a society as complex as India - where high caste groups can be poorer than low castes. And quotas do not provide incentives for lower castes to get out of the system - for instance by disallowing people to use a quota more than once. Most of all, if discrimination against someone is bad, then so is discrimination in favor.

Yet, none of these arguments will work in the Indian landscape. That quotas deprive companies of the best talent is probably factually correct, but politically not so. Companies must reframe the argument in terms of the actual flaws in the system - the need for ensuring all segments of society get the right education long before they reach employment. If the Indian corporates hope to win this argument, they must choose the right battlefield, before they fight the battle.