Captain, a hole in your argument

First, all reservations are inefficient. They distort resource allocation and prevent resources from being used for the most productive purpose. This logic is not limited to the labour market. Reservation of some sectors for production by domestic industry (or services) and import barriers have the same outcome. As do reservations for small-scale industry. And don’t forget the capital market, with defaults and large NPAs (non-productive assets) locking up capital and preventing their most productive use. Doesn’t lack of exit also prevent the most productive use of land? The least we can do is be consistent and argue against all reservations in all product and factor markets, not just the labour market. Had industry been more forthright about advocating elimination of all inefficiencies, the argument would have been more convincing. Instead, we have arguments about level playing fields, when it suits industry. This sounds like having one’s cake and eating it too. Especially since differential treatment to different sectors isn’t alien to industry. What else explains queues in North Block at this time of the year?

Second, we know reservations exist, implicitly, if not explicitly. Look at the way cabinets are formed or look at the composition of different commissions. There must be representation from all sections of the community, all geographical regions. Look at the way sporting teams are drawn up. More explicitly, we have reservations for women and we also have reservations for SCs/STs in the government sector. I am not aware of industry chambers having opposed any of these. The argument that this doesn’t directly affect the private sector will not wash. After all, why does one object to public sector monopolies in sectors other than the one a company is operating in? Because inefficiencies in that sector impose higher transaction costs on my own sphere of operation. Forget sporting teams. But surely, reservation in government bodies has such negative externalities. As a matter of logical consistency, one should object to these.

Third, when talking about merit and efficiency, what are we comparing with what? Within the labour market, in arguing that reservations impede recruitment on the basis of merit, we automatically assume that in the absence of reservations, the best person for the job would have been chosen. Anyone who is familiar with the treatment SCs/STs generally obtain in India will find it difficult to buy this argument. Here is one sample from the National Human Rights Commission’s report. ‘‘The Patel Community of Devalia village in Amreily District was committing atrocities and practicing discrimination against the Dalits of the village. The Patels were preventing the supply of water, milk and butter milk and other essential commodities to the Dalits. They were not being engaged as labourers, and the Patel community even prevented the neighbouring villages from engaging them for labour work. Besides this, the Dalits were prevented from going out of the village, and the crops grown by them were being destroyed by the Patels in the presence of the police, who were mute spectators.’’ This is actually not as bad as it often gets. However, the argument that there is free mobility of labour and free entry into the labour market, or free access to credit, is a difficult one to swallow. The responsibility for implementing Articles 15 and 17 of the Constitution is not the state’s alone. In how many instances has industry taken up the agenda of freeing labour markets and removing discrimination? The argument that my company employs SCs/STs is neither here nor there. I am talking about the broader social agenda and this involves more than passing the buck to the state for land reforms and ensuring access to health and education for disadvantaged groups.

Take for instance, the Manu Smriti. According to this treatise, the dwellings of Chandalas must be outside the village. They have no right to wealth. Their sole wealth can be in the form of dogs and donkeys. If you read the Indian Express religiously, you will have noticed that even canine property is now open to question. Express reports (June 23) that in parts of India, Dalits are now not allowed to keep male dogs, because they corrupt chaste bitches that belong to the upper castes. To get back to the point, these groups were created to be slaves and their property can be seized by any Brahmana. Nor can their dead bodies be carried along roads used by upper castes. And so on. The argument that the Manu Smriti was composed two thousand years ago is not the point. Whenever it was composed, practice towards Dalits continues to exhibit norms prescribed by the Manu Smriti and other Dharmashastra texts. When the MP Government recently banned cow slaughter, it invoked the Manu Smriti as justification. The Manu Smriti is not a dead treatise. It is a living one. As such, the hypothesis that there is free entry and free labour mobility is impossible to establish. The counterfactual of merit and efficiency, in the absence of reservations, is simply not valid. In how many instances has industry taken up the negative affirmation agenda and done something to eliminate it?

There are reports that the chambers want a national debate on reservations. Excellent idea. But first let’s eliminate the baggage of 2000 years. How about providing a platform for debating the Dharmashastra texts and arguing for their prohibition? After that, we can have the debate on reservations.

Don’t get me wrong. I don’t think reservations are the answer either. But I don’t think arguing against reservations is the answer either.