MacroScan (Printable Version) - The Debate on Reservations in the Private Sector

It is commonplace to say about debates that they ''generate more heat than light'' or that ''the opposing sides have missed the essential point''. But here is one debate where it is difficult to say either. The Indian debate has definitely generated both a lot of heat and light, and there are clearly valid points made at both ends of the spectrum. So the discussion on reservation policy is rich indeed, full of insight and careful reflection, even if the statistical basis on which various arguments are based is not ideal and there remain large gaps in our knowledge about the full extent of existing social discrimination and the actual effects of past reservation policies.

Reservation in public sector education and employment is a particularly (but not uniquely) Indian practice enshrined in the Constitution, a legal form of affirmative action designed to provide greater opportunities to communities and social groups that have been traditionally deprived and excluded.

The emotions generated by reservations are well known (witness the public agitations at the time of the partial implementation of the Mandal Committee recommendations on backward caste reservations in 1990). But the more recent interest in the subject was awakened by the promise made by the UPA government in its Common Minimum Programme in 2004, to provide for reservations in the private sector.

Subsequently, the controversial Supreme Court ruling on reservation in private higher education institutions and the consequent moves towards enabling legislation in this regard have further stoked the fire. The resulting spate of articles on the subject has been of such fecundity that ordinary citizens can be forgiven for feeling quite bewildered and unable to wade through the differing positions.

How useful, then, to have a book which brings together almost all the important recent writing on the subject, from all the different (and often violently differing) perspectives. (''Reservations and Private Sector: Quest for Equal Opportunity and Growth'', edited by Sukhdeo Thorat, Aryama and Prashant Negi, New Delhi: Indian Institute of Dalit Studies and Rawat Publications, 2005) The book covers a wide range of approaches to the issue, from reviews of the theoretical literature on discrimination and market behaviour, to debates on the issue of reservation versus merit, to the relationship with globalisation and to caste and identity politics, to a broader consideration of other remedies and other forms of affirmative action.

The book is especially useful because it includes all kinds of contributions, from thoughtful scholarly articles to more polemical and passionate journalistic writings, and from all sides of the debate, so that it provides a comprehensive sense of the issues and positions that are currently under discussion. It also covers various aspects and possible mechanism of affirmative action, in both education and employment.

A reading of this volume clarifies some points that are of central importance in approaching the entire issue of social discrimination and its remedies, including affirmative action and reservation in the current context.

Several articles effectively debunk the supposed contradiction between reservations on the one hand and merit and efficiency on the other. There is substantial theoretical literature on the co-existence of markets and discrimination (whether in terms of caste, community or gender), and on how such discrimination reduces the efficiency of the economy - in which case affirmative action to reduce such discrimination can only increase efficiency. In any case, it is well known that Indian private sector also employs wide ranging discriminatory practices (such as inheritance determining managerial control, preferential employment based on social networks, and so on) which are inherently inefficient.

It is now widely accepted across the world that diversity makes economies (and indeed, firms) more rather than less competitive. The example of countries like Malaysia, which combined a very severe and restrictive form of reservation and other affirmative action with remarkable economic growth for several decades, points to this. So the debate between merit and affirmative action is exposed as fundamentally false.

The empirical evidence also points squarely to the strong and still pervasive persistence of social discrimination (which can be related to, but is not the same as, economic disparity) in India. So extensive is this, that few would deny the reality of continued discrimination and exclusion, and certainly even the opponents of reservation in this volume accept this reality. Rather, the debate appears to hinge more on the precise form that affirmative action should take.

Those who oppose the policy of reservation operate primarily with the following arguments: perceptions of ''victimhood'' and the creation of democratically undesirable identity politics; inequalities within the specified communities, which allow a ''creamy layer'' to take advantage of the reservations and benefit unduly while depriving the rest of the community; the rigid and inflexible nature of the instrument of reservation, which does not allow for more creative modes of affirmative action; the privileging of some caste-based discrimination while ignoring other and possibly more undesirable forms of exclusion; the compression of the notion of social justice into only reservation, instead of encompassing broader socio-economic policies such as land reform and other asset redistribution, strategies of income generation, etc.

There is certainly some relevance to each of these points, and no one would deny that the system that has operated in India thus far has been inadequate not only in addressing these issues, but even in achieving the goals set in terms of filling the allocated quotas even in public education and employment. Yet even these failures are indicators of the continued prevalence of widespread social discrimination, which operates in addition to other forms of inequality of access.

Thus, one of the problems of the system of reservation in the public sector is that there has been no institutional mechanism of incentives and disincentives to ensure effective affirmative action. At the moment, there are ''legal'' requirements for filling certain quotas, but there are no penalties for public institutions that do not fill them, or rewards for those that more than fulfill them. That is at least part of the reason why so many quotas remain unfulfilled.

However, while reservations have been inadequate and relatively rigid instruments of affirmative action, they do have certain advantages which explain why they have been preferred. They are transparent, inexpensive to implement and monitor and therefore easily enforceable. Any other system of affirmative action must have these attributes in order to be practical. The problem with systems based on periodic audit of institutions to check on their ''diversity'' is that do not have equal transparency and enforceability.

This is not to discredit the possibility of other instruments of affirmative action being developed - indeed, the very complexity of the discrimination and exclusion in Indian society suggests the need for a multiplicity of instruments which would work together to create more democratic and equitable outcomes.

The basic issue, of course, is that the roots of discrimination go much deeper, in that social and economic disparities are deeply intertwined, although in increasingly complex ways. Certainly, the lack of asset ownership among Dalit and other deprived communities is critical in determining other forms of discrimination. And deprivation in terms of early access to quality education is increasingly becoming the most crucial determinant of subsequent life achievement for many socially and economically marginalised groups.

So the debate on reservation in the private sector must be seen within a broader perspective, as being a policy that would definitely not affect ''efficiency'' of private sector functioning, but still would go only a small part of the way in correcting historically entrenched and still pervasive social discrimination.



Themes > Current Issues	15.10.2005


The Debate on Reservations in the Private Sector

Jayati Ghosh

It is commonplace to say about debates that they ''generate more heat than light'' or that ''the opposing sides have missed the essential point''. But here is one debate where it is difficult to say either. The Indian debate has definitely generated both a lot of heat and light, and there are clearly valid points made at both ends of the spectrum. So the discussion on reservation policy is rich indeed, full of insight and careful reflection, even if the statistical basis on which various arguments are based is not ideal and there remain large gaps in our knowledge about the full extent of existing social discrimination and the actual effects of past reservation policies. Reservation in public sector education and employment is a particularly (but not uniquely) Indian practice enshrined in the Constitution, a legal form of affirmative action designed to provide greater opportunities to communities and social groups that have been traditionally deprived and excluded. The emotions generated by reservations are well known (witness the public agitations at the time of the partial implementation of the Mandal Committee recommendations on backward caste reservations in 1990). But the more recent interest in the subject was awakened by the promise made by the UPA government in its Common Minimum Programme in 2004, to provide for reservations in the private sector. Subsequently, the controversial Supreme Court ruling on reservation in private higher education institutions and the consequent moves towards enabling legislation in this regard have further stoked the fire. The resulting spate of articles on the subject has been of such fecundity that ordinary citizens can be forgiven for feeling quite bewildered and unable to wade through the differing positions. How useful, then, to have a book which brings together almost all the important recent writing on the subject, from all the different (and often violently differing) perspectives. (''Reservations and Private Sector: Quest for Equal Opportunity and Growth'', edited by Sukhdeo Thorat, Aryama and Prashant Negi, New Delhi: Indian Institute of Dalit Studies and Rawat Publications, 2005) The book covers a wide range of approaches to the issue, from reviews of the theoretical literature on discrimination and market behaviour, to debates on the issue of reservation versus merit, to the relationship with globalisation and to caste and identity politics, to a broader consideration of other remedies and other forms of affirmative action. The book is especially useful because it includes all kinds of contributions, from thoughtful scholarly articles to more polemical and passionate journalistic writings, and from all sides of the debate, so that it provides a comprehensive sense of the issues and positions that are currently under discussion. It also covers various aspects and possible mechanism of affirmative action, in both education and employment. A reading of this volume clarifies some points that are of central importance in approaching the entire issue of social discrimination and its remedies, including affirmative action and reservation in the current context. Several articles effectively debunk the supposed contradiction between reservations on the one hand and merit and efficiency on the other. There is substantial theoretical literature on the co-existence of markets and discrimination (whether in terms of caste, community or gender), and on how such discrimination reduces the efficiency of the economy - in which case affirmative action to reduce such discrimination can only increase efficiency. In any case, it is well known that Indian private sector also employs wide ranging discriminatory practices (such as inheritance determining managerial control, preferential employment based on social networks, and so on) which are inherently inefficient. It is now widely accepted across the world that diversity makes economies (and indeed, firms) more rather than less competitive. The example of countries like Malaysia, which combined a very severe and restrictive form of reservation and other affirmative action with remarkable economic growth for several decades, points to this. So the debate between merit and affirmative action is exposed as fundamentally false. The empirical evidence also points squarely to the strong and still pervasive persistence of social discrimination (which can be related to, but is not the same as, economic disparity) in India. So extensive is this, that few would deny the reality of continued discrimination and exclusion, and certainly even the opponents of reservation in this volume accept this reality. Rather, the debate appears to hinge more on the precise form that affirmative action should take. Those who oppose the policy of reservation operate primarily with the following arguments: perceptions of ''victimhood'' and the creation of democratically undesirable identity politics; inequalities within the specified communities, which allow a ''creamy layer'' to take advantage of the reservations and benefit unduly while depriving the rest of the community; the rigid and inflexible nature of the instrument of reservation, which does not allow for more creative modes of affirmative action; the privileging of some caste-based discrimination while ignoring other and possibly more undesirable forms of exclusion; the compression of the notion of social justice into only reservation, instead of encompassing broader socio-economic policies such as land reform and other asset redistribution, strategies of income generation, etc. There is certainly some relevance to each of these points, and no one would deny that the system that has operated in India thus far has been inadequate not only in addressing these issues, but even in achieving the goals set in terms of filling the allocated quotas even in public education and employment. Yet even these failures are indicators of the continued prevalence of widespread social discrimination, which operates in addition to other forms of inequality of access. Thus, one of the problems of the system of reservation in the public sector is that there has been no institutional mechanism of incentives and disincentives to ensure effective affirmative action. At the moment, there are ''legal'' requirements for filling certain quotas, but there are no penalties for public institutions that do not fill them, or rewards for those that more than fulfill them. That is at least part of the reason why so many quotas remain unfulfilled. However, while reservations have been inadequate and relatively rigid instruments of affirmative action, they do have certain advantages which explain why they have been preferred. They are transparent, inexpensive to implement and monitor and therefore easily enforceable. Any other system of affirmative action must have these attributes in order to be practical. The problem with systems based on periodic audit of institutions to check on their ''diversity'' is that do not have equal transparency and enforceability. This is not to discredit the possibility of other instruments of affirmative action being developed - indeed, the very complexity of the discrimination and exclusion in Indian society suggests the need for a multiplicity of instruments which would work together to create more democratic and equitable outcomes. The basic issue, of course, is that the roots of discrimination go much deeper, in that social and economic disparities are deeply intertwined, although in increasingly complex ways. Certainly, the lack of asset ownership among Dalit and other deprived communities is critical in determining other forms of discrimination. And deprivation in terms of early access to quality education is increasingly becoming the most crucial determinant of subsequent life achievement for many socially and economically marginalised groups. So the debate on reservation in the private sector must be seen within a broader perspective, as being a policy that would definitely not affect ''efficiency'' of private sector functioning, but still would go only a small part of the way in correcting historically entrenched and still pervasive social discrimination.



© MACROSCAN 2005