After nearly three-decades of the Indra Sawhney judgment, the Supreme Court on Monday said the 50 per cent cap on reservation laid down by a 9-judge bench in 1992, could be re-examined in view of subsequent constitutional amendments and the socio-economic changes that has followed.
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A bench headed by Justice Ashok Bhushan issued notice to all state governments and Union Territories whether reservation could be allowed to breach the existing 50 per cent limit, and also sought the Centre’s Economically Weaker Section (EWS) quota amendment.
The bench also comprising Justices L. Nageswara Rao, S. Abdul Nazeer, Hemant Gupta and S. Ravindra Bhat said: “States have to be given opportunity to have their say.”The observation came while the apex court was hearing a batch of petitions challenging the validity of the Maratha reservation.
The top court said this matter is not limited to just one state, therefore it is important to hear other states too, as its decision in the matter would have wider ramification. The top court will also examine the possibility of referring to Indra Sawhney’s judgment to a larger bench and it will begin day-to-day hearing in the matter on March 15.
“We are of the view that looking into the issues raised in this appeal and the consequences to the followed, it is necessary that final hearing of this appeal be completed as early as possible. One of the issues before this Constitution Bench being interpretation of Constitution (One Hundred-Second Amendment) Act, 2018,” said the top court.
The petitioners have challenged the Bombay High Court judgement passed in June 2019. They have contended that the Act, which provides for 12 per cent and 13 per cent quota to Maratha community in education and jobs violates the principle laid in the 9-judge bench judgement of the apex court in 1992, which capped the reservation at 50 per cent.
The High Court had upheld the Maratha quota, where it ruled that reservation should be 12 per cent in jobs and 13 per cent in education.
Haryana’s jobs-for-locals law is legally and economically unsound
Haryana might just have jeopardised its future as one of India’s leading States by enacting the Haryana State Employment of Local Candidates Act, 2020, which reserves 75 per cent of private jobs with a salary of below ₹50,000 for ‘sons-of-the-soil’. Like the jobs-for-locals law passed by Andhra Pradesh in 2019, which its High Court said ‘may be unconstitutional’, the Haryana law too is open to legal challenge.
It runs the risk of being struck down for being violative of Article 14 (right to equality), Article 16 (equality of opportunity in employment) and Article 19 (the clause pertaining to freedom of movement). The 2017 Report of the Working Group on Migration cites the Supreme Court ruling in Charu Khurana vs Union of India and others (2014) to observe that “restrictions based on residence for the purposes of employment (are) unconstitutional”.
What’s disturbing is that Maharashtra, Karnataka, Telangana and Madhya Pradesh have expressed similar intentions. Karnataka seems to have developed second thoughts; in Maharashtra, sons-of-the-soil politics has been around for decades. Telangana has so far refrained from passing a law. It has instead suggested a coordinated approach with industry to create local skilling capacities.
It is hardly surprising that industry is worried about the impact of Haryana’s labour rules on the IT and automobile sectors in Gurugram and Manesar, besides the industrial hubs of Rewari and Bahadurgarh. Ironically, industry was desperately praying for the return of migrant workers from Uttar Pradesh, Bihar and Odisha after the lockdown was lifted. It is obvious that the local labour market cannot close the gap.
Economic productivity depends on the free and efficient allocation of labour and capital. It is inexplicable that governments should focus on ease of mobility with respect to allocation of capital — making clearances simpler, rolling out tax incentives, easing availability of finance, smoothening bankruptcy procedures — but impose shackles on labour. Indeed, the jobs-for-locals law may give rise to new labour inspector raj. It will lead to labour shortages in some regions and unemployment in others, creating distress in regions where families depend on remittance incomes. An economy struggling to shake off the pandemic can do without these shocks.
To be sure, States are responding to a political economy problem — the impact of rapid development of places such as Gurugram or Bengaluru on displaced agrarian populations, who feel excluded from the process. But for inclusive development, the capacities of these populations need to be scaled up, with the States and industries investing in their education and training. Labour market nativism cannot be justified, in law or in economic terms.
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Steve Ovett, the famous British middle-distance athlete, won the 800-metres gold medal at the Moscow Olympics of 1980. Just a few days later, he was about to win a 5,000-metres race at London’s Crystal Palace. Known for his burst of acceleration on the home stretch, he had supreme confidence in his ability to out-sprint rivals. With the final 100 metres remaining,
[wptelegram-join-channel link=”https://t.me/s/upsctree” text=”Join @upsctree on Telegram”]Ovett waved to the crowd and raised a hand in triumph. But he had celebrated a bit too early. At the finishing line, Ireland’s John Treacy edged past Ovett. For those few moments, Ovett had lost his sense of reality and ignored the possibility of a negative event.
This analogy works well for the India story and our policy failures , including during the ongoing covid pandemic. While we have never been as well prepared or had significant successes in terms of growth stability as Ovett did in his illustrious running career, we tend to celebrate too early. Indeed, we have done so many times before.
It is as if we’re convinced that India is destined for greater heights, come what may, and so we never run through the finish line. Do we and our policymakers suffer from a collective optimism bias, which, as the Nobel Prize winner Daniel Kahneman once wrote, “may well be the most significant of the cognitive biases”? The optimism bias arises from mistaken beliefs which form expectations that are better than the reality. It makes us underestimate chances of a negative outcome and ignore warnings repeatedly.
The Indian economy had a dream run for five years from 2003-04 to 2007-08, with an average annual growth rate of around 9%. Many believed that India was on its way to clocking consistent double-digit growth and comparisons with China were rife. It was conveniently overlooked that this output expansion had come mainly came from a few sectors: automobiles, telecom and business services.
Indians were made to believe that we could sprint without high-quality education, healthcare, infrastructure or banking sectors, which form the backbone of any stable economy. The plan was to build them as we went along, but then in the euphoria of short-term success, it got lost.
India’s exports of goods grew from $20 billion in 1990-91 to over $310 billion in 2019-20. Looking at these absolute figures it would seem as if India has arrived on the world stage. However, India’s share of global trade has moved up only marginally. Even now, the country accounts for less than 2% of the world’s goods exports.
More importantly, hidden behind this performance was the role played by one sector that should have never made it to India’s list of exports—refined petroleum. The share of refined petroleum exports in India’s goods exports increased from 1.4% in 1996-97 to over 18% in 2011-12.
An import-intensive sector with low labour intensity, exports of refined petroleum zoomed because of the then policy regime of a retail price ceiling on petroleum products in the domestic market. While we have done well in the export of services, our share is still less than 4% of world exports.
India seemed to emerge from the 2008 global financial crisis relatively unscathed. But, a temporary demand push had played a role in the revival—the incomes of many households, both rural and urban, had shot up. Fiscal stimulus to the rural economy and implementation of the Sixth Pay Commission scales had led to the salaries of around 20% of organized-sector employees jumping up. We celebrated, but once again, neither did we resolve the crisis brewing elsewhere in India’s banking sector, nor did we improve our capacity for healthcare or quality education.
Employment saw little economy-wide growth in our boom years. Manufacturing jobs, if anything, shrank. But we continued to celebrate. Youth flocked to low-productivity service-sector jobs, such as those in hotels and restaurants, security and other services. The dependence on such jobs on one hand and high-skilled services on the other was bound to make Indian society more unequal.
And then, there is agriculture, an elephant in the room. If and when farm-sector reforms get implemented, celebrations would once again be premature. The vast majority of India’s farmers have small plots of land, and though these farms are at least as productive as larger ones, net absolute incomes from small plots can only be meagre.
A further rise in farm productivity and consequent increase in supply, if not matched by a demand rise, especially with access to export markets, would result in downward pressure on market prices for farm produce and a further decline in the net incomes of small farmers.
We should learn from what John Treacy did right. He didn’t give up, and pushed for the finish line like it was his only chance at winning. Treacy had years of long-distance practice. The same goes for our economy. A long grind is required to build up its base before we can win and celebrate. And Ovett did not blame anyone for his loss. We play the blame game. Everyone else, right from China and the US to ‘greedy corporates’, seems to be responsible for our failures.
We have lowered absolute poverty levels and had technology-based successes like Aadhaar and digital access to public services. But there are no short cuts to good quality and adequate healthcare and education services. We must remain optimistic but stay firmly away from the optimism bias.
In the end, it is not about how we start, but how we finish. The disastrous second wave of covid and our inability to manage it is a ghastly reminder of this fact.