Imagine you’re working hard & planning how you will join a leading startup in the Silicon Valley of India and then you get to know a local from that state will be given preference for the same position.
Sounds scary… right? Well, that’s the nightmare the employees are facing in Bengaluru after the Karnataka Quota Bill.
Thankfully, the bill hasn’t been passed yet.
Then how did the Karnataka quota bill become the talk of the town? Not just that… It even made PhonePe trending on Twitter.
So what exactly happened? Let’s find out!
(A) Karnataka Quota Bill
On July 15, 2024, the Karnataka cabinet approved a new draft bill called the State Employment of Local Candidates in the Industries, Factories and Other Establishments Bill, 2024. This bill says that 50% of management jobs and 70% of non-management roles in the private sector should be reserved for local candidates, also known as Kannadigas.
So, what does this mean?
Essentially, Karnataka wants to ensure that more job opportunities in the private sector go to locals. But who counts as a local? If you’ve lived in Karnataka for at least 15 years and know Kannada, the local language, you’re considered a local, regardless of where you originally come from.
Now, you might be wondering, what happens to people who move to Karnataka from other states? Will they be jobless?
Not necessarily. They just need to live in Karnataka for 15 years and learn Kannada to qualify as locals.
Crazy! No?
Karnataka isn’t the first state to come up with such an idea. Some of the other states were-
- Haryana: Less than a year before Karnataka’s decision, Haryana had a similar bill. However, the Punjab and Haryana High Court struck down that bill. The court argued that the law was too restrictive and impaired a person’s right to carry on occupation, trade, or business. Haryana’s government has challenged this decision in the Supreme Court, and the case is still pending.
- Andhra Pradesh: Similarly, Andhra Pradesh passed a law in 2019 that mandated 75% reservation for locals in private sector jobs. However, this law hasn’t been put into effect yet, and its constitutional validity is still being challenged in the state’s High Court.
Now, back to Karnataka. On July 17, 2024, the Karnataka government decided to delay the implementation of this bill due to severe backlash from the industry. This means that, for now, the reservation of jobs for locals in the private sector is on hold.
In short, the Karnataka Quota Bill aims to create more job opportunities for locals by reserving a significant portion of private sector jobs for them. However, it’s facing challenges and delays, much like similar laws in other states.
(B) How the Quota Bills are Unconstitutional?
Let’s dive into why quota bills like the one proposed in Karnataka often run into trouble. These issues boil down to some key protections guaranteed by the Indian Constitution.
Article 14: Right to Equality
Article 14 ensures that every citizen is treated equally under the law. Now, imagine if a law gives preference to locals over non-locals for jobs. This is seen as unfair discrimination against non-locals.
Article 19(1)(g): Freedom to Practice Any Profession
This article guarantees that every citizen has the right to practice any profession or carry on any occupation, trade, or business throughout India. By reserving jobs for locals, the quota bills restrict people from other states from working in Karnataka.
Article 16(2): Equality of Opportunity in Employment
Article 16(2) is all about ensuring that job opportunities are open to everyone, without discrimination based on factors like religion, race, caste, sex, descent, place of birth, residence, or any of them. When a quota bill reserves jobs for locals, it’s imposing restrictions based on residency.
(C) Economic Perspective: Does this Domicile Job reservation make sense in the Private Sector?
When it comes to the economic side of things, domicile-based job reservations in the private sector can be quite problematic. Here’s how-
Quality of Workforce
As told in the introductory part, the hiring of a local person who isn’t the best fit for a job is hired over a more qualified non-local. This means that businesses might not get the skilled workers they need, leading to a shortage of talent. Over time, this can hurt the overall quality and efficiency of the workforce in the state.
Business Compliance Challenges
For businesses, these kinds of laws add layers of complexity. They have to follow state-specific rules, and not complying can result in hefty fines and penalties. On top of that, businesses face increased compliance costs, as they need to constantly prove they are adhering to these regulations. This can divert resources away from more productive uses and burden companies with additional administrative tasks.
Impact on Investment
One of the biggest economic concerns is the impact on investment. Policies like these can scare away capital investment, making the state less attractive to investors. When businesses see such regulations, they might think twice about setting up shop or expanding in that state. This can hurt the state’s economic prospects in the long run.
Case Study: Haryana
Let’s look at a real-life example. In FY23, Haryana, which was once a popular destination for investments, especially in skill-driven sectors like automobiles, saw a sharp decline. Its share of new investment projects in the country dropped to a six-year low of 1%, down from almost 3% the year before. Total investment outlays in the state fell by 30%, from nearly Rs.56,000 crore in FY22.
This decline pushed Haryana from the ninth-best state for new investment projects to the thirteenth. Many believe this drop had a lot to do with the introduction of Haryana’s job reservation law, which was later quashed by the state’s High Court.
Specific Impact on Karnataka
In Karnataka’s case, such a law could negatively affect the real estate sector. More than half of the mid and senior-level employees who come to Karnataka from other states invest in local property. If these employees are discouraged from coming to Karnataka, the local property market might take a hit.
Additionally, there’s the construction labor market to consider. Real estate developers in Karnataka already face a shortage of construction workers, with about 80% coming from outside the state, mainly from places like Jharkhand, Odisha, and Bihar.
A reservation for locals could disrupt this crucial workforce, making it harder for construction projects to be completed on time and within budget.
Migration Trends
To understand if Karnataka really needs such a law, we can look at migration trends. Despite the constitutional issues, these laws often emerge due to political pressures and might be drawn up hastily without thorough consideration of the details.
Political Motivations
Take Maharashtra as an example. In 2008, the state government mandated that private companies receiving state incentives reserve 50% of supervisory jobs and 80% of non-supervisory jobs for locals. Even though data in 2019 showed that locals held 84% of supervisory jobs and 94% of non-supervisory jobs, the government still pushed for more local representation.
This suggests that such laws might be more about political relevance than actual economic need.
(D) Does Karnataka really need this Quota Bill?
Let’s take a closer look at whether Karnataka genuinely needs this quota bill, based on some interesting facts and figures-
Migration Data
First, let’s talk about migration. According to the 2011 census, about 4% of India’s population lived outside their state of birth. Although this figure is over a decade old, it gives us a baseline. More recent data from the Centre for Economic Data and Analysis (CEDA) in 2021 shows that some states have a high percentage of interstate migrants. For instance, Delhi has the highest at 65%, followed by Goa, Meghalaya, Arunachal Pradesh, and Punjab.
But what about Karnataka?
Well, Karnataka’s percentage of interstate migrants is much lower, at less than 10%. This suggests that interstate migrants aren’t taking away a large number of jobs from local residents in Karnataka.
Job Market Dynamics
Given this data, it seems the influx of people from other states isn’t a significant issue for Karnataka’s job market. So, the idea that local residents are losing out on jobs to outsiders doesn’t hold much water here.
The Need for Data Analysis
Before implementing such a law, it might be wise for the government to conduct thorough data analysis. They should assess whether the perceived problem of job scarcity for locals due to interstate migration is real and significant. It’s essential to base policies on solid evidence rather than assumptions.
(E) Alternative Approaches: What should the Karnataka Government do?
Instead of relying on reservation laws, there might be better ways to create jobs for locals. For instance, the government could focus on-
- Incentivize Local Industry Growth: One effective approach for the Karnataka government is to provide incentives for the growth of local industries. By supporting local businesses, the state can create more job opportunities for residents.
- Skill Development Programs: The government should invest in training programs to equip locals with the skills needed by these industries. This can ensure that the local workforce is well-prepared and competitive.
- Industry Engagement: Engaging with industry representatives is crucial. The government could hold regular meetings with industry leaders to understand the specific skills they require. This direct feedback can guide training programs and curriculum development.
- Future Job Trends Analysis: Employing think tanks to analyze future job trends can provide valuable insights. These analyses can help the government anticipate which industries will grow and what skills will be in demand.
- Adjusting the Education System: Based on these insights, the government can adjust the education system to better prepare locals for future job markets. This can ensure that locals secure jobs based on merit rather than relying on reservation quotas.
These approaches might be more effective and less controversial than imposing job reservations.
(F) How did the Karnataka Quota Bill make PhonePe trend?
You might be wondering how a government rule could make a company trend online. Well, that’s exactly what happened with PhonePe because of the Karnataka Quota Bill. Let me break it down for you-
The Quota Bill Drama
As you know, the Karnataka Quota Bill was supposed to reserve jobs for local residents. This idea didn’t sit well with everyone, especially Sameer Nigam, the CEO of PhonePe. His strong reaction on social media made PhonePe the talk of the town.
Sameer Nigam Speaks Out
Sameer Nigam didn’t hold back. He posted on X (formerly Twitter) about how this bill could unfairly hurt non-locals, including his own family. He said-
“I am 46 years old. Never lived in a state for 15+ years. My father worked in the Indian Navy. Got posted all over the country. His kids don’t deserve jobs in Karnataka? I build companies. Have created 25000+ jobs across India! My kids don’t deserve jobs in their home city? Shame.”
This post blew up, getting over 366,000 views. People started talking about how unfair the bill was to those who’ve moved around a lot and contributed to the country but don’t count as locals in Karnataka.
The Backlash
Nigam wasn’t alone. Big names like TV Mohandas Pai and Kiran Mazumdar-Shaw also slammed the bill, calling it “regressive” and “unconstitutional.” They warned that it could push businesses out of Karnataka and make it harder to find skilled workers.
The public outcry was so loud that Karnataka’s Chief Minister, Siddaramaiah, decided to put the bill on hold. This shows how powerful public and industry opinions can be.
Final Note
The buzz around the Karnataka Quota Bill is a reminder that governments need to balance helping locals with keeping a skilled, diverse workforce for economic growth!
