Reservations in private sector to dent investor sentiment, warns Assocham

The industry body said that at a time when the Indian economy is seeking positive triggers for growth revival, any political narrative on reservations in the private sector would bring in a big blow

Any move to introduce job reservation in the private sector will hit India's investment climate and political parties must avoid sending "wrong signals" to investors, industry body Assocham said on Monday. 

At a time when the Indian economy is seeking positive triggers for growth revival, any political narrative on reservations in the private sector would bring in a big blow, it said.

"Batting surely for affirmative action, India Inc is opposed to negate the perception advantage given by a jump in the World Bank Ease of Doing Business Index," it added.

Assocham said the industry is already tackling the challenges from the rollout of the Goods and Services Tax (GST) along with the short-term impact of demonetisation.

These comments come amid several political leaders advocating job reservations for SC/ST in the private sector.

The Lok Janshakti Party, led by Union Minister Ram Vilas Paswan, recently demanded job reservations in private firms. Similar demands have been made in the past by other political outfits as well.

Karnataka Chief Minister Siddaramaiah had made a case last year for extending the reservation policy to the private sector.

Assocham Secretary General D S Rawat said that political parties should "rather focus on creating an environment that helps such an economic pace that millions of jobs are created both in the public and private sectors, and are urged to avoid sending wrong signals to the global and domestic investors".

He said there is already a dearth of private sector investment with capacity utilisation in several sectors not going beyond 72-75 per cent.

"On top of it, if the political economy of the country is geared to populist sentiments, the environment for growth could be vitiated badly," he added.

Rawat cautioned that those states where the refrain of reservation catches up for short-term political gains could be avoided by investors who prefer a conducive environment and the least amount of political interference.

These states should rather focus on removing the bureaucratic bottlenecks for the industry and trade, he said.

Assocham said: "The industry is willing to engage with the government both at the Centre and states for projects in skill development, training, and hiring so that those at the bottom of the economic pyramid are handheld and upscaled.

"But any move towards reservation in private sector would be regressive," it added.