From quotas to quagmire: Employment act struck down in landmark India ruling

On Friday, November 17, the Punjab and Haryana High Court struck down the controversial Haryana State Employment of Local Candidates Act (HSECLA). What is the HSECLA? Furthermore, what are the larger implications of its judicial disqualification?

Simply put, the Act mandated 75% reservations for locals in all jobs paying less than Rs 30,000 a month in the state’s privately owned businesses and corporations.

Haryana residency was to be proven by a domicile certificate. The bill was introduced three years ago, in November 2020, by the government of Haryana, a prosperous state in North India. After being passed by the state’s legislature, it received the state Governor’s approval in March 2021, thus becoming law.

Quite expectedly, the HSECLA was considered both retrogressive and unprofitable by many employers and corporate leaders. Almost immediately, petitions were filed against the Act by various industry bodies, including the powerful Gurgaon Industrial Association.

Those who opposed the HSECLA argued that not only was it anti-meritocracy, but also unconstitutional. Gurgaon, or Gurugram, being one of India’s major tech hubs, with a plethora of leading multinationals, would also be severely and adversely impacted by such legislation.

It was bound negatively to impact competition, productivity, and a speedy recovery after the Covid-19 pandemic. The Punjab and Haryana High Court granted a stay on the Act.

Who or what was behind HSECLA?

Those who have followed my earlier column on Maratha reservations would easily guess that this was also a political move, this time by the powerful Jat lobby in the state. Represented by the ally of the ruling BJP, Jannayak Janata Party of Deputy Chief Minister Dushyant Chautala. During the 2019 assembly elections, reservation for locals was one of Chautala’s key promises.

While proposing the bill, the government argued that the “influx of migrants competing for low-paid jobs …leads to the proliferation of slums.” Arguably, it was to favour the locals who complained against more hardworking and needy outsiders stealing their jobs. Many of Haryana’s “sons of the soil,” who believe they have the first right to jobs in the state, are the numerically and powerful Jat community.

As with the Maratha reservations in another economically and industrially advanced state, Maharashtra, the reservation of locals would fundamentally alter India’s affirmative action process.

How? By reserving employment not necessarily for the most backward and disadvantaged sections of society but for the politically and socially influential communities.

Reservation, thus, instead of reforming or upending traditional hierarchies, becomes a way of reinforcing them. In Haryana’s case, it would also prevent employers from choosing those fittest for the job because of the 75% quota for locals.

Striking down the law, the Bench consisting of Justices GS Sandhawalia and Harpreet Kaur Jeewan called the Act unconstitutional: “We are of the considered opinion that the restrictions imposed in the Statute as such have far-reaching effects and cannot be held to be reasonable in any manner, which would warrant no interference... The Haryana State Employment of Local Candidates Act, 2020 is held to be unconstitutional and violative of Part III of the Constitution of India and is accordingly held ultra vires the same and is ineffective from the date it came into force.”

Does this spell the end of HSECLA?

No. The story may not end here. 2024 is an election year in Haryana. The Manohar Lal Khattar-led BJP coalition has a fragile majority. The Court’s ruling against the Act will dent its prospects for re-election.

The Haryana government is likely to go in for an appeal against the judgment. The increasing pressure on extending reservations in the states of India is not a new political development. But it has received fresh impetus across the country, as I argued in an earlier column on Bihar’s caste survey.

Unleashing another bout of “competitive backwardness,” the survey has strengthened the demand to increase reservations over and above the Supreme Court’s normative ceiling of 50%. Several states have already found means to dodge or escape this cap on quotas.

The HSECLA was one such way, with domicile rather than caste-based reservations. But what made it even more worrisome was its extension of reservations to the private sector. The larger question for India, which aspires to be a world-class economy and hub for manufacturing excellence, is how to cope with such moves.

The private sector has so far been exempt from job quotas based on caste, community, language, religion, or region.

Becoming globally competitive

Without a serious rethink and reform, if not an outright rejection of the quota system, it is hard to see India becoming globally competitive. But we cannot blame only the lack of political will when it comes to changing the system. After all, democratic politics is only a reflection of powerful social and cultural currents.

Change can come with a fundamental shift in the mentality of the people of India. Some signs of this are already evident on the ground, with increasing impatience of the youth with excessive state regulations and restrictions.

What is needed is visionary leadership, not just in politics but also in other domains such as culture, religion, and society, to articulate this shift.

Most people need to visualise and ascertain that they have better options before they give up what seems to be a sure shot at protecting their privileges.

When the populace at large recognizes that a fair and transparent system of equal opportunities rather than protected backwardness quotas is in everyone’s interests, reform and change are sure to follow.