The die is
caste for corporate India By Sudha Ramachandran
BANGALORE - Indian Prime Minister Manmohan
Singh's advocacy of caste-based quotas for the
country's underprivileged in the private sector
has stirred a hornets' nest. Corporate India,
which fears that the move would undermine its
capacity to compete globally, has come out
strongly against the quotas. It is threatening to
take the issue to court.
the Confederation of Indian Industry last week,
the prime minister urged the captains of industry
to "invest much more in vocational training and
technical education, particularly for youth from a
less privileged background", and to commit
themselves "voluntarily to
making it [their company profile] more broad-based
and representative". Manmohan's appeal is seen as
a veiled warning to the private sector that if it
doesn't adopt caste-based job reservations on its
own, it might have them thrust down its throat by
At this stage, the prime
minister's suggestion is only a thought tossed on
the table of corporate bigwigs. Soon, it could
become the law of the land. The suggestion came
amid debate on quotas for castes broadly
categorized as Other Backward Castes (OBCs) in
premier educational institutions.
issue of caste quotas, which is ostensibly aimed
at uplifting the marginalized castes, is one that
often provokes heated debated and angry protests.
India already provides for 22.5% reservation of
jobs and seats in the public sector and
educational institutions for the Dalits (or
Untouchables as they were once called) and
Adivasis (tribals), which occupy the lowest rung
in India's social hierarchy.
In 1990, when
the government proposed reserving another 27% of
jobs for OBCs, violent protests - one student even
torched himself - exploded across the country.
Early this month, Human Resource Development
Minister Arjun Singh proposed quotas for OBCs in
India's premier technological and management
institutes, an announcement that has sparked
furious street protests by students.
the government is asking the private sector to
Proponents of caste-based
quotas in jobs and education argue that it is
necessary to create conditions to allow lower
castes - discriminated against and denied
opportunities for centuries - to climb the
economic ladder. Opponents maintain that quotas
militate against the concept of meritocracy.
Extending quotas is politically motivated, aimed
at garnering votes, they argue.
quotas in higher education and jobs that require
technical knowledge seem to have not worked in
improving access so far. Quotas for Dalits and
Adivasis, for instance, at the higher education
levels remain unfilled. About 68% of Dalit and
Adivasi children drop out before high school.
What's the point of all these reservations, ask
critics of quotas, if there aren't enough
qualified people within these castes to make use
Corporate India's basic quarrel
with quotas in the private sector is that they
would kill efficiency and weaken industry's
competitive edge just when it is getting ready to
take on the world. The Confederation of Indian
Industry (CII), the Federation of Indian Chambers
of Commerce and Industry (FICCI) and the National
Association of Software and Service Companies
(NASSCOM) are among the many industry associations
that have come out in criticism of quotas.
Anant Koppar, the president of the
Bangalore Chamber of Commerce and Industry (BCCI)
as well as MPhasis, told Asia Times Online that
caste quotas don't work in a competitive world
especially in the knowledge economy. He pointed
out that cost-effectiveness and quality had given
India an edge. "We cannot control cost completely
although we are still cost-effective. This makes
the quality of our services very important."
By making quotas based on caste a
yardstick for hiring rather than placing
importance on merit, India is compromising on
quality. "It is in danger of losing the edge with
regard to being a knowledge-based economy," Koppar
According to the Asian Development
Bank's chief economist, Ifzal Ali, "The changed
economic system in the era of globalization
demands that Indian companies must be one step
ahead of their competitors and cope with the
forces unleashed by competition."
companies that are in the service business and are
competing globally, caste quotas in hiring
employees are a bad idea. Pointing to the fact
that success in the service business is dependent
on the quality of people employed, Azim Premji,
chairman of the information-technology (IT) giant
WIPRO, has ruled out caste quotas in his company.
Last year, Infosys Technologies chairman Narayan
Murthy rejected the demand of Kannada linguistic
groups in Bangalore, which demanded quotas for
locals in IT companies.
IT companies are
arguing that they need to hire the best and
brightest, not adopt caste criteria to determine
recruitment. They believe that hiring less than
the best will erode their quality standards and
deprive them of the edge they currently have in
the world market. Jagadish Ramamurthy, chief
executive officer and co-founder of Chennai-based
Allsec Technologies, believes that if Indian
companies don't meet quality standards, "then
there is a chance of work being shifted to other
There is fear too that
caste quotas will encourage a brain drain, a
flight of skilled labor out of the country. Bright
students and employees deprived of seats in
educational institutions and well-paying jobs will
leave the country as they did in the past.
There is concern too over flight of
investment. Koppar warned that multinational
corporations would "pull out investment in a
phased manner" if caste quotas were imposed on the
private sector, as it wouldn't work for them in
the long run. "The MNCs [multinational
corporations] will not adjust to quotas," he
While the big corporates are
vocal in their criticism of the proposed caste
quotas, the voices of the small and medium
enterprises (SMEs), which are also part of the
private sector and would have to adopt the quotas
too, have been largely ignored. These are
enterprises employing some 25-30 people who might
not have to worry about being globally
competitive, but which need to work in a
cost-effective manner to be viable.
SME entrepreneurs want their work done and cannot
afford to hire people not fit for the job," Koppar
pointed out, stressing that the quota proposal
"has far-reaching implications, beyond its impact
on IT companies and corporates".
Bajaj, chairman and managing director of Bajaj
Auto, has said the reservations in the private
sector would only "take the country backward".
The government, meanwhile, is refuting the
arguments put forward by the corporates. Commerce
and Industry Minister Kamal Nath said at the CII's
annual meeting that "job reservations in the
private sector would not affect FDI [foreign
direct investment] inflows".
government, in an attempt at encouraging the
private sector, is considering extension of sops
and incentives to companies that adopt the quotas.
And in a bid to stave off the quotas being rammed
down its throat, the private sector is admitting
that it needs to "do something" to help those who
were historically disadvantaged. NASSCOM president
Kiran Karnik said the "best way of doing that is
to raise their ability to compete" and that could
be done through the right education and training.
The CII is said to be drafting a proposal
to meet the government halfway. Among the
initiatives it is considering is creation of a CII
fund for affirmative action, reserving at least
half of all dealership allotments for Dalits and
Adivasis and a 50% quota in mandatory
apprenticeships but without guaranteeing jobs.
Some are less conciliatory in their
approach on the issue. They are threatening to
take the matter to the courts.
government is considering draft legislation on the
issue in May. Meanwhile, political parties have
taken the issue to the streets. Several parties in
favor of quotas for OBCs came together at a rally
in Bangalore this week. They have threatened to
protest if 27% reservation to OBCs was not
provided in IIMs (Indian Institutes of Management)
and IITs (Indian Institutes of Technology) from
this academic year. They have criticized IT
leaders Murthy and Premji for not responding
positively to the demand for quotas in the private
The politicians and the private
sector have locked horns on the quota issue. But
while corporate India is preparing to battle it
out in the courts, students and politicians will
set the streets on fire. It promises to be a long
is an independent journalist/researcher based in