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An identity driven economy

An identity driven economy
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First Published: Tue, Feb 09 2010. 08 55 PM IST

 Illustration: Jayachandran / Mint
Illustration: Jayachandran / Mint
Updated: Tue, Feb 09 2010. 08 55 PM IST
Reservation based on religious grounds has, historically, been disfavoured in India. There has been a consensus on not basing affirmative action on religious grounds since 1947. That consensus is unravelling. On Monday, the Andhra Pradesh high court ruled against reservations for Muslims under a law created by the state government in 2007. On the same day, the West Bengal government decided to pursue them aggressively.
Illustration: Jayachandran / Mint
One way to look at the matter would be as to how the two different groups, judges and politicians, evaluate the costs of such actions and then compare these with “real” costs.
Politicians often calculate costs and benefits on the basis of average costs. For example, if a particular policy measure (such as reservation based on religion) yields high electoral dividends, implementation is certain. Because costs fall on a large number of citizens, the average cost is low and is not felt at the individual level.
Judges look at costs differently. They base their arguments on Constitutional principles where the grounds for evaluating these costs are often clearly laid down. Their estimation of costs is usually based on its impact on individuals and not a group. The Constitution is, in general, biased against “group logic”, though there are important exceptions to that.
Since 1947, politicians have continuously expanded group logic while judges have resisted it. By the end of the 20th century, group logic had run its course: only reservations for women and religious groups were left. When West Bengal chief minister Buddhadeb Bhattacharjee announced a 10% reservation for Muslims in jobs, he was exploiting the last virgin patch of political territory.
The problem is that while political costs of caste and religious reservations are minimal, their economic and societal costs will be high. When combined, they could take the country in a dangerous, and potentially unknown, direction. Any modern economy is based on a “virtuous circle”: Individual ability and creativity power economic growth that in turn delivers benefits to individuals. Caste-based reservations militate against that but have been accepted for historical reasons.
Caste reservations combined with religion are a different matter: They have the potential to greatly slow this cycle. As it is, the Indian economy has a pronounced redistributive bias. A society where religious and caste entities determine entry to educational and employment openings could cement into an enclave type, identity-driven, economy leaving little scope for individual potential: Wealth is produced in one sector (private) and redistributed (via government taxation and spending) in another one. That will certainly fuel social tensions. Religious reservations promise a push in that direction.
Will reservations based on religion kill India’s prosperity? Tell us at views@livemint.com
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First Published: Tue, Feb 09 2010. 08 55 PM IST