Arm-twisting

Arm-twisting
Comment E-mail Print Share
First Published: Tue, Aug 14 2007. 12 03 AM IST
Updated: Tue, Aug 14 2007. 12 03 AM IST
The debate on the need for job reservations in the private sector refuses to go away.
The Uttar Pradesh (UP) government on Friday took the retrograde step of announcing tax concessions to companies that agree to reserve 30% of their jobs for members of select castes. Now Andhra Pradesh, too, is contemplating the same steps as UP.
Had the sops been made as a general measure to attract enterprises in industrially backward UP, the situation could perhaps be looked at sympathetically. Yet, even that would be in defiance of economic logic, since such measures are mere price distortions. Reservation in employment is not only inexcusable, but also violates any liberal order. But what is a liberal order for a state that pioneered political rent seeking and now hopes to perfect it by arm-twisting businesses?
What is clear is that Mayawati is indulging in the questionable use of executive authority. The Supreme Court has on various occasions held that it is unconstitutional to create different classes of citizens for the ostensible purpose of furthering welfare without taking into account the nexus between such goals and the policy in question. The powers that be in UP realize these constraints in creating new “laws”, hence the brute abuses on the executive side. Even as the Union government deliberates on the matter, the Mayawati regime marched ahead insouciantly.
It is doubtful if the “policy” will achieve the desired goals. Serious industrial players are chary of investing in UP. Established businesses in the state want to run away. The one essential public good required for the smooth functioning of any enterprise, law and order, is missing from the state.
While the Mayawati government has made some noise about improving this, the fact is that security is almost a private good in the state: One has to buy it. In many cases, it is part of the package deal with a strongman (or a strongwoman, for that matter). If the regime of the day does not favour a business, its existence is in peril. One can view the reservation-cum-sops policy in this light. The policy also has to be seen in tandem with efforts at “economic” criteria for reservations that Mayawati has tried to put in place in view of her “social engineering” in recent elections.
At the same time, such “offers” are revealing. They are a reflection of the mindset of those who make them in the first place. Purely on economic and financial grounds, such sops are a “compensation” for hiring individuals who would not find employment elsewhere. The state government, of course, would deny this. The rebuttal is simple: If the candidates for employment were fit in the first place, they would be hired. That the government has to resort to such tactics says something else.
The likely result will be that those who want such favours are likely to be people who want to do little else. Such people are least likely to be entrepreneurs hungry for profits. Experiments like this fail. There is evidence, in a different context, from many other Indian states, where such “breaks” were given to businesses in the form of cheap land and power, and yet that failed to bring about an industrial spurt.
Here they will be saddled with employees who are likely not to possess the skills required to run a business.
The conjecture that the present dispensation is aware of such a possibility, cannot be ruled out. It wants “its” industrialists to have a share of the dwindling economic pie. If Mulayam Singh Yadav indulged in cronyism, so does the present regime, albeit in a far more devious manner. Will any Indian company be willing to set up shop in UP in the prevailing conditions? If such attitudes persist among politicians, Uttar Pradesh will remain what it is, the last letter in the acronym spelling sickness, Bimaru.
Do you think the new policy will help UP in any way? Write to us at views@livemint.com
Comment E-mail Print Share
First Published: Tue, Aug 14 2007. 12 03 AM IST