Tightening India's "Golden Straitjacket": how pulling the straps of India's job reservation scheme reflects prudent economic policy.

• Date: 22 September 2009
• Published date: 22 September 2009
• Author: Jain, Sumeet
• Author: Jain, Sumeet

INTRODUCTION

The "Golden Straitjacket," (1) a set of free market policies implemented by national governments, is golden because it attracts foreign investment, and is a straitjacket because deviation from it will repel foreign investment. A country adorns the Golden Straitjacket when it transforms to a democracy and opens its economy. Manmohan Singh, India's Prime Minister, was the Finance Minister when India decided, in 1991, to abandon "quasi-socialist economics" (2) and don the Golden Straitjacket. Despite the fact that "the tighter you wear it, the more gold it produces," (3) India has not snugly embraced the Golden Straitjacket to date.

The Golden Straitjacket is tightened when, among other measures, a country deregulates its domestic economy to facilitate higher efficiency and profits. (4) Instead of deregulating its domestic economy, India has steadily broadened the reach of its constitutionally-enshrined job reservation scheme. Most worrisome for the Indian economy is the recent debate over making the leap from implementing purely public sector job reservations to also implementing private sector reservations. Therefore, rather than tightening its Golden Straitjacket in preparation for the intensifying globalization season, India is loosening this necessary garment.

This Note recognizes India's competing interests to promote employment equality for historically disadvantaged populations by broadening the job reservation scheme, on one hand, and to attract foreign investment by limiting its job reservation scheme, on the other. Part I of this Note analyzes India's historical disparities to gain an understanding of the need for employment-equalizing initiatives. Part II examines the constitutional provisions utilized to further employment equality. Part III tracks how political pressures, legislative policies, and broad judicial interpretation have expanded the scope of India's job reservation scheme in four directions since its inception. This Part notes the worrisome recent trend of the extension of the job reservation scheme to private sector employment. Part IV argues that India should not embark on a policy of private sector job reservations for three reasons. First, in line with the Golden Straitjacket hypothesis, India will repel foreign investment if it extends job reservations to the private sector. Second, reasoning that public sector job reservations have been more detrimental than beneficial, this Part submits that extending reservations to the private sector will only magnify the reach of an injurious scheme. Third, the magnitudinal insignificance of employment in the private sector means that reservations in the private sector will be largely inconsequential. Part V suggests a twofold solution to resolve the competing interests of promoting employment equality for historically disadvantaged populations and to attract foreign investment by limiting the job reservation scheme. First, consistent with the historically neoliberal economic policies of the U.S. executive and judiciary, India must adopt constitutional reforms to reflect a policy of economic deregulation that attracts foreign investment. Second, to alleviate the plight of historically disadvantaged populations, India, like South Africa, should provide incentives to private actors for promoting national employment equality objectives.

1. THE NEED FOR REMEDIAL MEASURES IN EMPLOYMENT

   Since the landmark case of Kerala v. Thomas, (5) decisions of the Supreme Court of India have recognized the need for remedial employment measures to "redress systemic inequality." (6) This systemic inequality stems from a causal chain dating back to the establishment of the caste system. (7) Even today, the sustained social, psychological, and economic discrimination of Scheduled Castes ("SCs") (8) and Scheduled Tribes ("STs") (9) manifests itself as tangible discrimination in the employment environment. (10) Such inequity in the labor market, in turn, creates stark economic disparities, (11) Due to their inferior economic situation, SCs' and STs' access to public resources is limited, (12) thereby impeding their ability to break free from this restrictive cycle. The enduring backward economic position of SCs and STs subsequently exacerbates the social prejudice they suffer. A causal chain, by which exclusivist social practices create economic inequalities, which in turn increase social isolation, maintains a traditional hierarchy that restricts SCs and STs to the base of Indian society.

   In Thomas, the Supreme Court adopted the "vertical perspective" to justify remedial employment measures to overcome the inequality perpetuated by the caste system. (13) According to this view, "the present is seen as a transition from a past of inequality to a desired future of substantive equality; the purpose of compensatory discrimination is to promote equalization by offsetting historically accumulated inequality." (14) In line with Thomas, Justice Hedge concluded in Viswanath v. Government of Mysore that "the nation's interest will be best served.., if the backward classes are helped to march forward and take their places in a line with the advanced sections of the people." (15)

2. CONSTITUTIONAL PROMOTION OF EMPLOYMENT EQUALITY

   The economic upliftment of SCs and STs was viewed as such a pressing concern at the time of India's independence that employment-related guarantees for SCs and STs are enshrined in the Constitution of India ("Indian Constitution"). Dr. Bhimrao Ramji Ambedkar, an exponent of the SC cause, was the chief architect of the Indian Constitution. Ambedkar's central belief that "[d]iscrimination against citizens by government officers in public administration or by private employers in factories and commercial concerns on the grounds of race or creed or social status should be treated as offenses" (16) became the cornerstone of the Indian Constitution's job reservation policy.

   The centrality of SC and ST economic welfare to the Indian Constitution is established with the preamble's pledge of equality. (17) In the employment realm, equality is promoted through two channels: "equality in law" and "equality in fact." (18)

   Article 16 of the Indian Constitution seeks to ensure the fundamental employment rights for so-called backward classes of citizens generally. (19) By codifying that there shall be equality of opportunity for all citizens and by further prohibiting discrimination in public sector employment, articles 16(1) and 16(2) provide equality in law. On the other hand, articles 16(4), 16(4a), and 16(4b), in granting state and national governments the authority to increase the presence and prominence of backward class individuals in public sector employment, tacitly further equality in fact.

   Article 46 (20) of the Indian Constitution, a directive principle, places a broad responsibility on the state and national governments to promote the "educational and economic interests of the weaker sections of the people, and, in particular, of the Scheduled Castes and Scheduled Tribes." (21) In placing this affirmative, albeit vague, duty upon governments to promote the economic interests of SCs and STs, article 46 is the germination point of a job reservation policy geared towards SCs and STs.

   Article 335, (22) a provision aimed directly at SCs and STs, brings to fruition Ambedkar's longstanding conviction of making public sector job reservations for SCs and STs. (23) The pressing priority to implement public sector reservations is highlighted by article 335's rule that claims of SCs and STs to government positions shall be taken into consideration consistent with the maintenance of efficiency of administration,

   "[p]rovided that nothing in this article shall prevent in making of any provision in favor of the members of the Scheduled Castes and the Scheduled Tribes ... for reservation in matters of promotion to any class or classes of services or posts in connection with the affairs of the Union or of a State." (24)

   Article 335's stance makes clear that reservations and promotions of SCs and STs in public sector jobs take priority over "efficiency of administration." (25)

   Article 335's call to establish a public sector job reservation policy for SCs and STs was realized through a 1950 Ministry of Home Affairs resolution. (26) The resolution reserved 12.5% of vacancies in central government positions for SCs and 5% for STs. (27) Similar reservation schemes exist at the state level, with reservations ranging from 5% to 25% for SCs and 3% to 80% for STs. (28)

3. THE BROADENING REACH OF JOB RESERVATIONS

   Political pressures, legislative policies, and broad judicial interpretation have expanded the scope of India's job reservation scheme in four directions. First, a legislative adjustment increased the quotas for SCs and STs in central government positions. Second, judicial interpretation of the Indian Constitution has allowed for the application of job reservations at the state level to backward classes. Third, this flexible judicial interpretation of extending job reservation beyond SCs and STs was crystallized with a legislative extension of reservations to Other Backward Classes ("OBCs"). Fourth, a relatively modern movement advocating private sector reservations has sought to lengthen the applicable reach of job reservations.

   1. Increased Quotas for SCs and STs

      First, SC and ST reservation quotas were raised to 15% for SCs and 7.5% for STs in 1970. (29) Largely a result of increased advocacy, the quota extension is attributable primarily to a growth in awareness of SCs' and STs' disproportionately inferior representation in the workforce.

   2. Extending Job Reservations to Backward Classes of Citizens at the State Level

      Second, the Indian Supreme Court interpreted article 15 of the Indian Constitution (30) to permit the extension of job reservations to backward classes of individuals. (31) In Balaji v. State of Mysore, (32) the Supreme Court held...