Business Standard

<b>Jaimini Bhagwati:</b> Are reservations futile?

Excessive and prolonged reservations have had unintended and possibly net negative consequences


Jaimini Bhagwati
India's Constitution wisely provided for affirmative action in favour of the socially and economically disadvantaged. Over the past 65 years such favourable treatment has been significantly widened and enhanced well beyond the levels and time periods envisaged by the founders of the Indian republic. Currently, the benefits for scheduled castes (SCs), scheduled tribes (STs) and other backward classes (OBCs) include reservations of seats in Parliament, state assemblies, panchayats, and educational institutions, as well as jobs in government and the public sector. However, excessive and prolonged reservations have had unintended and possibly net negative consequences.

The history of reservations goes back at least to the Hunter Education Commission of 1882; around 1901-02, reservation of seats was introduced in several educational institutions around the country. In 1932, Britain as the colonial power cynically proposed a divisive communal award. This award mandated separate electoral representation for Dalits and for adherents of various religions. Mahatma Gandhi was strongly opposed to segregation in representation but ultimately agreed to a compromise with Dr Ambedkar.

Independent India's constitutional provision for reservations of electoral seats was meant to expire in 60 years, and should have been over in 2010 - but has been extended till 2020. Reservations in employment in government or the public sector, originally 15 per cent for SCs and 7.5 per cent for STs, were intended to last for 10 years till 1960. These reservations in jobs have repeatedly been extended, with the latest extension again till 2020.

The reality is that instead of reservations being gradually phased out for SCs and STs, this practice has been widened since 1993 to include other backward classes (OBCs). The word "classes" instead of "castes" has provided the discretion to periodically add to the list of communities which qualify as OBCs. To the reservations for SCs and STs, which add up to 22.5 per cent an additional 27 per cent has been provided for OBCs. Some state governments such as Tamil Nadu and Andhra Pradesh have prescribed job reservation quotas at higher than 50 per cent, which were either struck down by courts or are lingering in appeals in the Supreme Court. There is periodic clamour too for reservations in promotions, and for it to be extended to the private sector.

Large numbers of skilled and well-educated Indians continue to seek better remuneration or living conditions in West Asia, Gulf and developed countries. It is possible that high levels of reservations in educational institutions and jobs, has contributed to this outflow of talented persons. Commenting in the 1970s on this issue Abid Hussian, a former commerce secretary and ambassador to the US, was reported to have said "better brain drain than brain in the drain".

More seriously, it is a travesty that almost no one in public life speaks frankly about reservations. Have reservations helped the poorest and those who live in remote parts of rural India? The Socio-Economic and Caste Census (SECC), conducted between 2011 and 2013 and released on July 3 indicates a fairly bleak picture. Out of a total of 179 million households in the country, the income of the highest earning member in 133 million households, that is 74.5 per cent of the population, is less than Rs 5,000 per month. It is illogical, therefore, that a central government order dated May 27, 2013, on "revision of income criteria to exclude socially advanced persons/sections (creamy layer) from the purview of reservation for OBCs" stipulates that the income ceiling of parents of children seeking to qualify for the OBC quota is Rs 50,000 per month. It is also absurd that low-income Muslim, Christian or other minority households are excluded from the category of OBCs. Given the low income levels of an overwhelmingly large proportion of Indian families, perhaps family income below Rs 25,000 per month should be the norm to be eligible for any form of reservation not just for OBCs, but also SCs and STs. Further, all reservations could be phased out by 2020.

A number of domestic and foreign observers often refer to the World Bank's country rankings on "Ease of Doing Business" and in 2015, India's overall ranking is 142 out of 189 economies. In the context of such inter-country comparative evaluations, it would be useful to know the extent to which OECD countries, which can now afford to provide social security, unemployment, health and other benefits, ever used reservation quotas based on parentage. The expected prickly counter-argument would be that India is unique in terms of caste-based discrimination and hence there can be no valid comparison on reservations with other countries.

Readers of this newspaper would be aware of the 1919 book Economic Consequences of Peace by John Maynard Keynes. The excessive monetary reparations sought by the victors of the First World War and the apathy of some Germans were among the contributory factors that led to the Second World War and the Holocaust. Drawing an extremely tenuous parallel with current conditions in India, it is pertinent to ask what have been the economic consequences of reservations. Going further one could also question whether it is enough for us to claim that we are professionals, academics, journalists, government officials and so on, and it is somebody else's business to create a just, transparent and caring India by participating in risky electoral politics.

Clearly, the various forms of hate crime and inequities that disadvantaged Indians face cannot be corrected just by reservations. In episode after episode of violence or corruption around the country there is an immediate demand for a CBI investigation. Well, the irony is that on July 7 the Supreme Court has suggested an investigation into the role of former CBI Director Ranjit Sinha in the 2G and coal scam probes. Consequently, it would be useful if the government were to ask an external consulting company such as McKinsey or the World Bank to evaluate the manner and extent to which reservations have helped the weaker sections.

To sum up, the central government needs to commission a comprehensive report for Parliament on the extent of and justification for continued affirmative action. This would help us to understand the full contours of what are the precise benefits, for whom, and the extent to which the targeted have benefited. This is important since the other side of the coin of reservations is an inevitable decline in standards of performance.

The writer is currently the RBI Chair Professor at ICRIER
Disclaimer: These are personal views of the writer. They do not necessarily reflect the opinion of or the Business Standard newspaper

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First Published: Jul 16 2015 | 9:50 PM IST

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