The Maharashtra government has extended its caste hiring quotas into the booming private sector. Because if you happen across an avian that lays ovoids of gold, the first thing to do is to throttle her.
“We’ve already been suffering under many constraints, like socialist economic planning and labour restrictions,” says Rahul Bajaj, chairman of Bajaj Auto, the world’s largest manufacturer of scooters and motorcycles and one of India’s largest companies. “If we implement reservations, we’ll have no way to become internationally competitive.”It’s another example of legacy capture, where programs intended to be temporary are never discontinued. The system adjusts to the new baseline, the constituencies sucking on the taxpayer teat spend part of the windfall on lobbying, and the subsidies are only ever expanded (e.g. U.S. timber subsidies, weapons programs that the Pentagon doesn’t want but can’t cancel):
Many say the constitution intended reservations as a temporary measure. But the rising political clout of low-caste Indians (who make up some 50% of the population) prevented the programme from being discontinued. Instead, it was expanded to include Indians from lower-middle positions in the caste hierarchy… Singh’s reforms made a mockery of the affirmative-action policy, entitling over 90% of the population in some states to reserved jobs.
And the new regulations provide yet another stream of bribery revenue for government employees to look the other way:
Perhaps the haphazard and incomplete enforcement of reservations in the public sector offers a clue to the likely fate of the Maharashtra law. In the end, it might only apply to companies in which the government holds a stake.
The debate closely echoes that over affirmative action in the U.S.:
“Take the Nadars [a South Indian caste]. They’re filthy rich and yet they get preference over [higher-caste] Brahmins everywhere in Tamil Nadu. For all the things Brahmins did [to the lower castes] 100 years ago, you can’t keep penalizing them,” says K. Mahesh, chairman and managing director of Sundaram Brake Linings.
The reservations restrict the hiring market, similar to a no-bid government contract. But a Dalit leader conflates business efficiency with racism:
When industry suggests that requiring companies to fill positions with Dalit personnel will erode efficiency, it implies that Dalits are by nature incompetent, he argues. “I would say the very tone and tenor of these reactions against reservations from the corporate leaders constitutes reason enough for reservation in the private sector.”
Maharashtra has sparked a debate on whether the Indian government should adopt its quotas. For a nation still struggling with the yoke of a centrally-planned economy, that would be a major step back. Helping the poor get a leg up is a worthy goal, but it’s best accomplished via economic growth and transparent markets. Let’s hope prime minister Manmohan Singh, a free marketer and financial reformer, shoots down this trial balloon.



