Reformers are upset with Prime Minister Manmohan Singh's persistence with the idea of job reservation in the private sector.
Having heard him at the New York Stock Exchange, they had begun to believe that Manmohan Singh still remained the same Manmohan Singh of the nineties -- singing praises of a system that could unleash the animal spirit among India's entrepreneurs and seeking foreign capital for investment in India.
Within a few weeks of that, however, they had to modify their belief. While addressing business leaders in Mumbai, Dr Singh returned to the agenda of the United Progressive Alliance government -- job reservation in the private sector.
Once again using Victor Hugo's famous phrase, the prime minister announced that job reservation in the private sector was an idea whose time had come.
He, of course, tried to allay the fears of the industrialists present at that meeting by assuring them that there would be no immediate law on this.
But certainly there was need for affirmative action on this front by industry and it would be better if such action was voluntary, he suggested.
The upshot of that meeting in Mumbai was the realisation among business leaders that along with tax reforms, minor doses of divestment of government equity in profitable public sector undertakings, and an easier flow of foreign investment, job reservation in the private sector was going to be an idea that the UPA government would persist with.
Business leaders are naturally disturbed and exploring various ways of avoiding the prospect of shouldering a new responsibility of providing compulsory employment to a minimum number of persons belonging to socially underprivileged sections of society.
Similarly, economic reformers are critical of the move that would create distortions and might pull back the economy's growth rate.
Is this a crisis? No, not really. Manmohan Singh has so far shown no sign of imposing job reservation on the private sector.
To be fair to him, all he wants is a full debate to work out a system in which the large numbers of underprivileged people in our society do not continue to feel that they have got a raw deal through reforms.
Who knows, the government in consultation with industry can come out with a new system that might meet the political ends of the proposal without substantially diluting or affecting the norms of economic efficiency and productivity.
Unfortunately, economic reforms in this country have largely meant privatisation, divestments, tax reforms, delicensing, import liberalisation, etc.
What has been completely forgotten is that reforms could also mean more options and better opportunities for a vast section of our population who live in abject social and economic conditions.
True, this might be Manmohan Singh's political agenda. But five years as finance minister in the PV Narasimha Rao government have taught him the importance of selling economic reforms to the poor and the underprivileged.
So, he is trying to repackage reforms so that his government and the party can also enjoy the political fruits of economic liberalisation.
In fact, what Manmohan Singh has proposed by way of a debate on job reservation in the private sector may well be an opportunity to introduce the much-needed changes in the job reservation policy that is already in force for all government departments and public sector undertakings.
A suggestion that is being examined is to introduce a fiscal incentive for jobs in the private sector. Indeed, this is an idea that is worth a serious thought.
Instead of forcing every private sector entity to employ a minimum percentage of its workforce from socially underprivileged sections of society (something which is almost impossible to enforce), the government could offer tax reliefs to companies to encourage them to increase the share of socially backward people on their staff.
Those companies which cannot provide employment to the backward people because of their nature of business or otherwise would lose out on the fiscal incentive that is provided by the government.
This is also an opportunity for modifying the existing system of job reservation in the government and public sector. For far too long has the policy on job reservation been governed by social backwardness defined by the caste or tribe to which a person belongs.
It is time the scope of the debate being started by Manmohan Singh on job reservation in the private sector was widened.
Let the definition of people qualifying for job reservation be changed to include only those who are economically backward. Fifty-seven years after Independence, job reservation can no longer be based on castes and tribes.
If you are below the poverty line, whatever be your caste or tribe, you should be considered eligible for any job reservation policy the government might introduce.
After the definitional change, the national debate could also consider introducing the proposed fiscal incentive system to cover jobs reservation in the government departments and public sector undertakings also.
A lot would be achieved if Manmohan Singh's national debate took the country closer to such changes in the job reservation policy.
So, what is being seen as a crisis could well be a window of opportunity. Industry and reformers should not fret. As long as the UPA government is at the Centre, there is no getting away from the idea of job reservation in the private sector.
Instead of resisting it, a more sensible approach would be to enter into the debate and bring about changes in the new proposed policy. Riding the wave of an inevitable change and guiding its course are always better than simply resisting it.
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